ARNA » Topics » PART I

These excerpts taken from the ARNA 10-K filed Mar 16, 2009.

PART I

 

Item 1. Business.

We are a clinical-stage biopharmaceutical company committed to discovering and developing innovative therapies offering significant medical advances and new options for patients. We are focused on discovering, developing and commercializing oral drugs in four major therapeutic areas: cardiovascular, central nervous system, inflammatory and metabolic diseases. Our lead drug candidate, lorcaserin hydrochloride, or lorcaserin, is being investigated in a Phase 3 clinical trial program for the treatment of obesity. Our broad pipeline of novel compounds targets G protein-coupled receptors, or GPCRs, and includes compounds being evaluated independently and with partners, including Merck & Co., Inc., or Merck, and Ortho-McNeil-Janssen Pharmaceuticals, Inc., or Ortho-McNeil-Janssen.

We focus on GPCRs because they are a validated class of drug targets that mediate the majority of cell-to-cell communication in humans. A high percentage of today’s prescription drugs target one or more GPCRs, and we believe that approved GPCR-based drugs target only approximately one third of the known non-sensory GPCRs. Selective targeting of specific GPCRs is intended to increase the likelihood of the desired pharmacology and minimize the risk of “off target” effects. We believe our GPCR-focused technologies and integrated discovery and development capabilities will allow us to continue to build our pipeline of unique and selective drug candidates.

We expect to announce around the end of March 2009 results from BLOOM (Behavioral modification and Lorcaserin for Overweight and Obesity Management), the first of two pivotal Phase 3 clinical trials evaluating the efficacy and safety of lorcaserin. BLOOM is a two-year, randomized, double-blind and placebo-controlled trial initiated in September 2006 that enrolled 3,181 overweight and obese patients. In December 2007, we initiated the second pivotal trial, BLOSSOM (Behavioral modification and Lorcaserin Second Study for Obesity Management). The BLOSSOM trial is a one-year, randomized, double-blind and placebo-controlled trial that enrolled 4,008 overweight and obese patients, and we expect to announce results for this trial around the end of September 2009. These two trials constitute our pivotal trial program for lorcaserin, and will be submitted to the United States Food and Drug Administration, or FDA, to support a New Drug Application, or NDA, for lorcaserin. In addition to our pivotal trials, we have a lorcaserin Phase 3 clinical trial called BLOOM-DM (Behavioral modification and Lorcaserin for Overweight and Obesity Management in Diabetes Mellitus), which is a one-year, randomized, double-blind and placebo-controlled trial that is expected to enroll approximately 600 overweight and obese patients with type 2 diabetes.

A standardized program of diet and exercise advice is included in all of the lorcaserin Phase 3 trials, and the primary efficacy endpoint in the trials is the proportion of patients with a 5% or greater weight reduction from baseline at week 52. We are also studying several key secondary endpoints, including changes in serum lipids and blood pressure and, in the BLOOM-DM trial, HbA1c levels and other indicators of glycemic control. In contrast to BLOOM, patients with preexisting FDA-defined valvulopathy and other echocardiographic abnormalities are included in BLOSSOM and BLOOM-DM.

In addition to lorcaserin, our other internal programs include programs evaluating APD791, APD916 and APD811, as well as earlier-stage research programs. Due to the current global economic challenges and our financial condition, we have temporarily suspended further clinical development of APD791 and delayed the planned filing of an Investigational New Drug, or IND, application for APD916.

APD791 is an oral drug candidate that we discovered and are investigating for the treatment and prevention of arterial thrombosis and other related conditions. We have completed Phase 1a and Phase 1b clinical trials of APD791 evaluating the compound’s safety, pharmacokinetics and pharmacodynamics in healthy volunteers. APD916 is an oral drug candidate we discovered and are investigating for the treatment of narcolepsy and cataplexy, and potentially for other indications. Subject to our financial resources and prioritization of lorcaserin, we intend to file an IND for APD916 with the FDA in 2009. We are also developing APD811, our preclinical drug candidate for the treatment of pulmonary arterial hypertension.

 

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In addition to internal programs, we have partnerships with pharmaceutical companies, including Merck and Ortho-McNeil-Janssen. Our Merck partnership is focused on niacin receptor agonists as treatments for atherosclerosis and other disorders. In February 2009, we announced that Merck initiated a Phase 2 clinical trial of a second generation oral niacin receptor agonist under our partnership. Our Ortho-McNeil-Janssen partnership is focused on receptor agonists of an orphan GPCR, known as GPR119, as treatments for diabetes and other disorders. In December 2008, we announced that Ortho-McNeil-Janssen initiated a first-in-human Phase 1 clinical trial of APD597, a novel, oral drug candidate discovered by Arena.

We intend to commercialize our drug candidates with partners or independently. We have not received regulatory approval for marketing or selling any drugs. We have also not generated commercial revenues from selling any drugs, other than in connection with manufacturing drugs for Siegfried Ltd, or Siegfried. We were incorporated in 1997.

PART I

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Item 1.Business.

We are a clinical-stage
biopharmaceutical company committed to discovering and developing innovative therapies offering significant medical advances and new options for patients. We are focused on discovering, developing and commercializing oral drugs in four major
therapeutic areas: cardiovascular, central nervous system, inflammatory and metabolic diseases. Our lead drug candidate, lorcaserin hydrochloride, or lorcaserin, is being investigated in a Phase 3 clinical trial program for the treatment of obesity.
Our broad pipeline of novel compounds targets G protein-coupled receptors, or GPCRs, and includes compounds being evaluated independently and with partners, including Merck & Co., Inc., or Merck, and Ortho-McNeil-Janssen Pharmaceuticals,
Inc., or Ortho-McNeil-Janssen.

We focus on GPCRs because they are a validated class of drug targets that mediate the majority of
cell-to-cell communication in humans. A high percentage of today’s prescription drugs target one or more GPCRs, and we believe that approved GPCR-based drugs target only approximately one third of the known non-sensory GPCRs.
Selective targeting of specific GPCRs is intended to increase the likelihood of the desired pharmacology and minimize the risk of “off target” effects. We believe our GPCR-focused technologies and integrated discovery and
development capabilities will allow us to continue to build our pipeline of unique and selective drug candidates.

We expect to announce
around the end of March 2009 results from BLOOM (Behavioral modification and Lorcaserin for Overweight and Obesity Management), the first of two pivotal Phase 3 clinical trials evaluating the efficacy and safety of lorcaserin. BLOOM is a
two-year, randomized, double-blind and placebo-controlled trial initiated in September 2006 that enrolled 3,181 overweight and obese patients. In December 2007, we initiated the second pivotal trial, BLOSSOM (Behavioral modification and Lorcaserin
Second Study for Obesity Management). The BLOSSOM trial is a one-year, randomized, double-blind and placebo-controlled trial that enrolled 4,008 overweight and obese patients, and we expect to announce results for this trial around the end of
September 2009. These two trials constitute our pivotal trial program for lorcaserin, and will be submitted to the United States Food and Drug Administration, or FDA, to support a New Drug Application, or NDA, for lorcaserin. In addition to our
pivotal trials, we have a lorcaserin Phase 3 clinical trial called BLOOM-DM (Behavioral modification and Lorcaserin for Overweight and Obesity Management in Diabetes Mellitus), which is a one-year, randomized, double-blind and
placebo-controlled trial that is expected to enroll approximately 600 overweight and obese patients with type 2 diabetes.

A standardized
program of diet and exercise advice is included in all of the lorcaserin Phase 3 trials, and the primary efficacy endpoint in the trials is the proportion of patients with a 5% or greater weight reduction from baseline at week 52. We are also
studying several key secondary endpoints, including changes in serum lipids and blood pressure and, in the BLOOM-DM trial, HbA1c levels and other indicators of glycemic control. In contrast to BLOOM, patients with preexisting FDA-defined
valvulopathy and other echocardiographic abnormalities are included in BLOSSOM and BLOOM-DM.

In addition to lorcaserin, our other internal
programs include programs evaluating APD791, APD916 and APD811, as well as earlier-stage research programs. Due to the current global economic challenges and our financial condition, we have temporarily suspended further clinical development of
APD791 and delayed the planned filing of an Investigational New Drug, or IND, application for APD916.

APD791 is an oral drug candidate
that we discovered and are investigating for the treatment and prevention of arterial thrombosis and other related conditions. We have completed Phase 1a and Phase 1b clinical trials of APD791 evaluating the compound’s safety,
pharmacokinetics and pharmacodynamics in healthy volunteers. APD916 is an oral drug candidate we discovered and are investigating for the treatment of narcolepsy and cataplexy, and potentially for other indications. Subject to our financial
resources and prioritization of lorcaserin, we intend to file an IND for APD916 with the FDA in 2009. We are also developing APD811, our preclinical drug candidate for the treatment of pulmonary arterial hypertension.

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In addition to internal programs, we have partnerships with pharmaceutical companies, including Merck and
Ortho-McNeil-Janssen. Our Merck partnership is focused on niacin receptor agonists as treatments for atherosclerosis and other disorders. In February 2009, we announced that Merck initiated a Phase 2 clinical trial of a second generation oral niacin
receptor agonist under our partnership. Our Ortho-McNeil-Janssen partnership is focused on receptor agonists of an orphan GPCR, known as GPR119, as treatments for diabetes and other disorders. In December 2008, we announced that Ortho-McNeil-Janssen
initiated a first-in-human Phase 1 clinical trial of APD597, a novel, oral drug candidate discovered by Arena.

We intend to commercialize
our drug candidates with partners or independently. We have not received regulatory approval for marketing or selling any drugs. We have also not generated commercial revenues from selling any drugs, other than in connection with manufacturing drugs
for Siegfried Ltd, or Siegfried. We were incorporated in 1997.

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

PART II

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Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
STYLE="margin-top:6px;margin-bottom:0px">Market information

Our common stock is listed on the
NASDAQ Global Market under the symbol “ARNA.” The following table sets forth, for the periods indicated, the high and low sale prices for our common stock as reported by the NASDAQ Global Market.

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   High  Low

Year ended December 31, 2007

    

First Quarter

  $14.58  $9.96

Second Quarter

  $14.74  $10.34

Third Quarter

  $14.78  $10.56

Fourth Quarter

  $11.39  $7.76
   High  Low

Year ended December 31, 2008

    

First Quarter

  $8.68  $5.95

Second Quarter

  $7.35  $4.55

Third Quarter

  $6.99  $4.99

Fourth Quarter

  $6.14  $2.70

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

We have adopted a Code of Business Conduct and Ethics that applies to our directors and employees (including our principal executive officer, principal financial officer, principal accounting officer and controller), and have posted the text of the policy on our website (www.arenapharm.com) in connection with “Investor” materials. In addition, we intend to promptly disclose (i) the nature of any amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals, the name of such person who is granted the waiver and the date of the waiver on our website in the future.

The other information required by this item is incorporated herein by reference from the information under the captions “Election of Directors,” “Compensation and Other Information Concerning Executive Officers, Directors and Certain Stockholders” and “Section 16(a) Beneficial Ownership Reporting Compliance” contained in our proxy statement for the annual meeting of stockholders to be held in June 2009, or the Proxy Statement.

 

Item 11. Executive Compensation.

The information required by this item is incorporated herein by reference from the information under the captions “Compensation and Other Information Concerning Executive Officers, Directors and Certain Stockholders,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” contained in the Proxy Statement.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information relating to securities authorized for issuance under our equity compensation plans is set forth in “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” above in this Annual Report. The other information required by this item is incorporated herein by reference from the information under the caption “Security Ownership of Certain Beneficial Owners and Management” contained in the Proxy Statement.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated herein by reference from the information under the captions “Certain Relationships and Related Transactions” and “Election of Directors” contained in the Proxy Statement.

 

Item 14. Principal Accountant Fees and Services.

The information required by this item is incorporated herein by reference from the information under the captions “Independent Auditors’ Fees” and “Pre-approval Policies and Procedures” contained in the Proxy Statement.

 

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PART III

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Item 10.Directors, Executive Officers and Corporate Governance.

SIZE="2">We have adopted a Code of Business Conduct and Ethics that applies to our directors and employees (including our principal executive officer, principal financial officer, principal accounting officer and controller), and have posted the
text of the policy on our website (www.arenapharm.com) in connection with “Investor” materials. In addition, we intend to promptly disclose (i) the nature of any amendment to the policy that applies to our principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of
these specified individuals, the name of such person who is granted the waiver and the date of the waiver on our website in the future.

SIZE="2">The other information required by this item is incorporated herein by reference from the information under the captions “Election of Directors,” “Compensation and Other Information Concerning Executive Officers, Directors and
Certain Stockholders” and “Section 16(a) Beneficial Ownership Reporting Compliance” contained in our proxy statement for the annual meeting of stockholders to be held in June 2009, or the Proxy Statement.

STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> 





Item 11.Executive Compensation.

The information required
by this item is incorporated herein by reference from the information under the captions “Compensation and Other Information Concerning Executive Officers, Directors and Certain Stockholders,” “Compensation Committee Interlocks and
Insider Participation” and “Compensation Committee Report” contained in the Proxy Statement.

 





Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Information relating to securities authorized for issuance under our equity compensation plans is set forth in “Item 5. Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” above in this Annual Report. The other information required by this item is incorporated herein by reference from the information under the
caption “Security Ownership of Certain Beneficial Owners and Management” contained in the Proxy Statement.

 





Item 13.Certain Relationships and Related Transactions, and Director Independence.

FACE="Times New Roman" SIZE="2">The information required by this item is incorporated herein by reference from the information under the captions “Certain Relationships and Related Transactions” and “Election of Directors”
contained in the Proxy Statement.

 





Item 14.Principal Accountant Fees and Services.

The
information required by this item is incorporated herein by reference from the information under the captions “Independent Auditors’ Fees” and “Pre-approval Policies and Procedures” contained in the Proxy Statement.

 


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EXCERPTS ON THIS PAGE:

10-K (6 sections)
Mar 16, 2009
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