(Bloomberg) -- Arena Pharmaceuticals Inc. shares have nearly tripled since Chief Executive Amit Munshi took the helm in 2016 and now he's setting a new course as the company makes its foray into drug development for brain diseases.
A new subsidiary called Arena Neuroscience Inc. may focus on movement disorders like Parkinson's and Lou Gehrig's diseases, Munshi said in an interview. Arena also recently expanded a relationship with Beacon Discovery, the 2016 spinoff of Arena's drug discovery pipeline, and plans to reveal autoimmune disease targets later this year.
With the clock ticking on patent protections, “these are assets that were sitting on the shelf,” Munshi said of the neuroscience unit. If it's successful, Arena could spin out the unit, take on new private investors or sell it, he said. Between the neuroscience unit and the Beacon collaboration, Arena expects to start one new human trial each year for the next five years.
Shares of San Diego-based Arena have slumped since reporting a wider-than-expected second-quarter loss in August. Munshi blames some of the volatility on algorithms still tied to the company's former existence as the developer of an obesity pill that flopped.
Wall Street has been bullish on Arena's prospects, with nine of 11 analysts tracked by Bloomberg rating the company at a buy or equivalent. The average analyst price target of $66 suggests the stock may gain more than 40% in the coming year.
To contact the reporter on this story: Cristin Flanagan in New York at cflanagan1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Jeremy R. Cooke
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