If you’re looking for pharmaceutical companies to invest in, you might want to brush up on what’s been happening in the sector as of late.
After Arena Pharmaceuticals (NASDAQ:$ARNA) announced that its experimental pulmonary arterial hypertension (PAH) drug, Ralinepag, reached the mark in a mid-stage trial yesterday, the San Diego-based company’s shares gained 45% in a pre-market trading session this morning. Elaborating on the details, the biopharmaceutical company disclosed that Ralinepag helped to improve pulmonary vascular resistance compared to patients who received the placebo treatment. Additionally, patients who took Ralinepag demonstrated a numerical improvement in six-minute walk distance.
Arena Pharmaceuticals is manufacturing Ralinepag in an attempt to grab a best-in-class designation. Essentially, this will help the company compete with companies that dominate the PAH sector, such as United Therapeutics (NASDAQ:$UTHR) and Johnson & Johnson (NYSE:$JNJ).
Though a pivotal trial will still need to occur in order to achieve this goal, the positive results from yesterday’s mid-stage trial is definitely a step in the right direction. That said, according to the press release, Arena plans on moving Ralinepag into a pivotal-stage trial very soon. Before it can do that, however, Arena will need to take advantage of this increase in its share price in order to raise a certain amount of capital through a secondary offering. At the same time, Arena might need to branch out and find a partner who is willing to help fund Ralinepag’s late-stage development.
Regardless, investors who haven’t bought shares of Arena might want to wait until the company’s financial house is in order. After all, secondary offerings are standard practice for when a small-cap biotech company announces positive results; even more so when one produces a spike in share price like this one.
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