Eisai Looks to Arena for Next Blockbuster

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Eisai Co., Ltd. has recently marketed two blockbusters in the US:

Aricept was an Eisai blockbuster for treatment of Alzheimer's disease. It is marketed together with Pfizer (NYSE: PFE). Aricept's patent has expired and Eisai/ Pfizer face competition from generic versions of Aricept.

Aciphex is another Eisai blockbuster, a proton pump inhibitor for treatment of GERD (gastroesophageal reflux) disease. Eisai marketed Aciphex together with Johnson & Johnson's (NYSE: JNJ) pharmaceutical arm, Janssen. Aciphex's patent is set to expire in May 2013.

Eisai will be marketing Belviq, the first FDA approved obesity drug in thirteen years, made by Arena Pharmaceuticals (NASDAQ: ARNA). Belviq has an excellent safety profile, excellent efficacy, and already many physicians have indicated it will be their first choice for treatment of obesity and its comorbidities. In a recent conference call, Craig Audet, Arena's Senior Vice President of Operations and Head of Global Regulatory Affairs, said:

“Eisai knows how to market blockbusters and has marketed several blockbusters successfully. They are looking for the next blockbuster and Belviq is going to be that product.”

This is not an unrealistic idea. Eisai has the promotion, sales, and marketing muscle. Arena has the perfect product, Belviq. The price will be nominal -- the only guidance we have is it'll be around the price of a cup of Starbucks per day). The target market is huge, ready and underserved. This ripe combination of the 4-P's (product, price, promotion, place) is a perfect recipe for making Belviq yet another blockbuster for Eisai.

Having experience marketing blockbusters is very important. Compare this with Vivus (NASDAQ: VVUS)'s situation as it tries to market Qnexa in the US (it was recently rejected in Europe): A highly restrictive product (REMS requirement); a product that carries a history of severe side effects such as birth defects and cardiovascular risks which make many doctors hesitant to prescribe it; a reduced target market as there are more female obese people than male and many of the females are in child-bearing age; a small sales force; no experience selling blockbusters.

Will Eisai seek a partner in marketing Belviq like it did with Aricept and Aciphex? Conceivably. A partner like Pfizer or Johnson & Johnson will fuel speculations about who Arena's European partner will be. I expect Arena will smoothly obtain European approval of Belviq sometime in the first or second calendar quarter of 2013 and it will seek a marketing partner for Europe. I also expect Arena to announce one more partner for another region, possibly South East Asia, by the end of this year.

Whether alone or with a partner, I am confident that Eisai can do an impeccable job of marketing Belviq. The company has been adding resources in preparation of launch, attending a number of seminars and educating physicians about obesity, and as soon as the DEA scheduling is complete I think we will hear a lot more from Eisai on how it plans to make Belviq the blockbuster everyone expects.

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The views expressed above are only opinions and are NOT investment advice and are NOT medical advice. Please always do your own research. I am long ARNA and have no positions in the other stocks mentioned above. To find out more about my interests please visit www.rezamusic.com . If you like to join my private Arena-related mailing list send an email to (info -- at -- rezamusic -- dot -- com).

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