Shares of Arena Pharmaceuticals (ARNA) are on the rise on Tuesday after Bristol-Myers (BMY) said its Zeposia met the primary endpoints in Phase 3 ulcerative colitis study. Commenting on the news, Cantor Fitzgerald analyst Alethia Young told investors that she sees the data having a "positive readthrough" to Arena's own ulcerative colitis program.
ULCERATIVE COLITIS STUDY: Bristol Myers has announced results from True North, a pivotal Phase 3 trial evaluating oral Zeposia, or ozanimod, as an induction and maintenance therapy for adult patients with moderate to severe ulcerative colitis. True North met both primary endpoints, demonstrating highly statistically significant results for induction of clinical remission at Week 10 and in maintenance at Week 52. The study also met key secondary endpoints of clinical response and endoscopic improvement in induction at Week 10 and in maintenance at Week 52. The safety profile of Zeposia in the True North trial was consistent with that observed in previously reported trials, announced the company, which added that it will complete a full evaluation of the True North data and work with investigators to present detailed results at a future medical meeting as well as discuss these results with health authorities. Bristol Myers Squibb is also investigating Zeposia for the treatment of moderately to severely active Crohn's disease in the ongoing Phase 3 YELLOWSTONE clinical trial program.
'POSITIVE' READTHROUGH: Following the news, Cantor Fitzgerald analyst Alethia Young raised the firm's price target on Arena Pharmaceuticals to $88 from $68 and reiterated an Overweight rating on the shares. Bristol Meyers' positive topline data this morning from the pivotal study of its sphingosine-1-phosphate ozanimod in ulcerative colitis has a "positive readthrough" to Arena's etrasimod ulcerative colitis program, Young told investors. The analyst increased her view on the probability of success for etrasimod to 80% from 75% and is now "very confident" in its Phase 3 trial succeeding. Young also thinks that S1P1 as a class is shaping up to be a "big commercial opportunity" and increased her peak sales to $3B. Although limited Phase 3 details were given by Bristol, the analyst thinks Arena's etrasimod profile looked better than ozanimod in Phase 2 and she believes Arena's drug has the potential to be "best in class."
Voicing a similar opinion, Credit Suisse analyst Martin Auster also raised his price target on Arena Pharmaceuticals to $87 from $77, while keeping an Outperform rating on the shares. Auster views ozanimod's topline success as de-risking for the S1P class and sees positive read-through for Arena's etrasimod. Further, he has increased his view on the odds of success for etrasimod in ulcerative colitis following Bristol's report and continues to believe it has best-in-class potential in ulcerative colitis based on differentiated Phase 2 efficacy, high receptor specificity/no titration requirement, and additional advantages owing to a more rapid onset/offset.
PRICE ACTION: In afternoon trading, shares of Arena have gained almost 15% to $67.22.
Arena Pharmaceuticals
+8.53 (+14.53%)
Bristol Myers
-0.18 (-0.30%)