Arena to focus on R&D with new spinout and old candidates

As Arena continues its struggles with its marketed obesity med Belviq, the company has decided to all but concede defeat that this will not produce major sales--and is now moving its focus more deeply onto its pipeline in the hope that this will yield much-needed long-term revenue.

With this in mind, Arena ($ARNA) has this week launched Beacon Discovery, a spinout that will be independent of its parent company--although Arena will help it find pharma partners, have rights to some compounds from the new upstart and can get its hands on “certain rights to potential cash flows” in the future.

Beacon will focus on identifying and advancing molecules targeting G-protein coupled receptors (GCPRs) using targets that have been sitting in Arena’s pipeline.  

These receptors are transmembrane proteins on a cell’s surface that can interact with both the environment outside and inside the cell and play a crucial role in receiving chemical signals from other cells and, in response, activating certain cellular responses.

Arena says a high percentage of today’s prescription drugs target one or more GPCRs, with some estimates ranging between 30% to 50%.

Dominic Behan, Arena's co-founder, will serve as Beacon's CEO and move away from being Arena's CSO and board member to become the chair of Arena's SAB and a consultant to the parent company.

Beacon will need financial and other help from pharma partners to help get its research off the ground as Arena can’t be too much help, given that it has recently had to cut around 100 workers (73% of its workforce) to save cash.

Amit Munshi, parachuted in after founder and former CEO Jack Lief stepped down last year, has had to make a series of tough decisions for the company as it continues to only see a few million dollars a quarter for Belviq.

Even getting the sales and marketing help from Eisai hasn’t helped and in March, the Japanese pharma pulled back most of its reps given the little ROI it was seeing.

Back in June, Munshi shifted strategy by looking at the pipeline and away from Belviq, and this move is the latest in a series of changes aimed at stimulating its research efforts.

Arena, which has operations in California and Switzerland, currently has in it its pantry candidates for ulcerative colitis, pain and pulmonary arterial hypertension, and a $262 million collab with Boehringer on a CNS platform.

In fact, this deal focuses on GPCRs and will now see the German pharma work with Beacon on its programs.

“The formation of Beacon underscores both our commitment to transitioning Arena from a historically research-oriented organization to a high-performing clinical development organization and our commitment to maximizing the value of our assets,” said Munshi.

“We believe that Beacon has the potential to unlock the value of Arena's historical research platform for the long term benefit of patients and shareholders.”