This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Biotech Stock Mailbag: Amarin or Arena Takeout?

Stocks in this article: AMRN ARNA CHTP FOLD VRTX AFFY NYMX

For the record, my biotech acquisition predictions for 2012 were Seattle Genetics (SGEN), Celgene (CELG), Biomarin Pharmaceuticals (CELG), Amag Pharma (AMAG), Onyx Pharma (ONXX) and Momenta Pharma (MNTA). I'm still waiting for a winner.

@pauldavidson11 asks, "What are your thoughts regarding VVUS approval and ARNA share price?

My thoughts or predictions, in no particular order:

Vivus' (VVUS) weight-loss drug, Qnexa, will be approved on July 17, in line with consensus investor expectations.

Qnexa's approval is secondary in importance to the restrictions and warnings expected in the drug's label. Learning how restricted (or not) the Qnexa label reads is likely to play a big part in how investors react on July 17.

Vivus shares at Tuesday's close of $29.93 are up 30% since April 9, when the company announced the three-month extension of its FDA review. This looks very much like a classic "run-up" into FDA approval decisions, which is often followed by a sell off. Don't be surprised if Vivus shares fall following Qnexa's approval exactly like Arena Pharmaceuticals' stock price sank following FDA approval of Belviq on June 27.

On that subject: At Tuesday's close of $10.02, Arena is down 14% since Belviq's approval. If you calculate from the intraday high on June 27, Arena shares are down 35%. The only people surprised by this contraction are die-hard members of the Arena retail-investor cult. Everyone else was sensible enough to realize that the steep climb in Arena's stock price leading up to Belviq's approval was not sustainable.

I'm not a believer in the super-blockbuster (read: multi-billion dollar) sales potential for Qnexa or Belviq. Both drugs offer short-term weight loss (Qnexa more than Belviq) but patients end up yo-yoing back to their original obese state. Sales will disappoint relative to expectations.

Here's a scenario I expect to play out with about 70% of people who try Belviq: Obese woman visits doctor, asks for Belviq. Doctor prescribes Belviq. Woman pays $150 for a month of pills. Starts taking pills, weight doesn't come off so quickly, even though she's trying to eat better and walk around the block in addition to Belviq. Month two rolls around, woman pays another $150 for her Belviq supply. She's frustrated with only three pounds lost. Salads for lunch replaced once again by potato chips and fast food. Too tired to walk. Month three: Another $150 for Belviq! Ugh! Forgets to take pills several times a week. More fast food consumed. The lost pounds return. Visits doctor, who asks if she wants to continue paying $150 per month for a diet pill that's not working. The answer is obvious. Hell, no.

2 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.02 -0.13 -0.00%
S&P 500 2,064.05 +2.82 0.14%
NASDAQ 4,755.2730 +6.8770 0.14%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs