The approval of a weight-loss drug from Arena Pharmaceuticals, Inc.(NASDAQ:ARNA) by the FDA was a plus for the company’s shares. The approval of the New Drug Application (NDA) for BELVIX XR CIV extended release 20 mg tablets is another milestone for the company as expressed by Arena’s CEO Amit Munshi, which shows its commitment to giving better options to those who are suffering from weight loss issues.
However, TheStreet Ratings bypassed the use of the approval to rate the company’s stock. Instead, it used “risk-adjusted” total return prospect over a 12-month investment giving it a rating score of D-. TheStreet Ratings explains that the score may have been occasioned by multiple weaknesses from various areas the likes of disappointing return on equity.
Market’s Reaction to the FDA News
Every change of news comes with different feelings both negative and positive. In this case, However, there were mixed reactions to the news surrounding the FDA’s approval of the drug. Despite the fact that some choose to embrace them others choose to criticize them pointing out on things like the company’s stock disappointing historical performance. Nevertheless, the news will with no doubt cause some movement in the market. For example, there was a $0.02 per share gain in the value of the stock resulting in $1.72 per share or 1.18% increase.
The approval also comes with a $10 million payment from Eisai Co., Ltd (ADR)(OTCMKTS:ESALY) that the company may use to run further development of the 20mg tablet which was designed in collaboration with Eisai, a Tokyo-based pharmaceutical company.
What more should be expected from Arena Pharmaceuticals?
The chances are that there is much more to come from Arena given the latest positive news. In any case, positive news is not only a motivator but a driving force to go an extra mile. The company may bank on the news to turn round its name of the horrible return on equity which has been adversely mentioned.
