Get Ready, Arena's Volume To Go Through The Roof (ARNA)

Posted in General, Options, pre-market 
March 29th, 2009

Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) is going to see perhaps a massive volume spike Monday based upon trial study results.  The company will be holding a conference call and webcast Monday morning, March 30, 2009, at 8:30 AM EST.  The topic is to be Arena’s top-line results from its BLOOM trial, the Behavioral modification and Lorcaserin for Overweight and Obesity Management).  This is to be the first of two pivotal trials evaluating the safety and efficacy of lorcaserin for weight management.

Shares closed on Friday at $4.50, up $0.36 or 8.70%.  Its 52-week trading range is $2.70 to $7.42 and its market cap is $338.7 million.  Which way the stock goes from here is going to be news-dependent.

The call option betting in this one has been very active ahead of this result.  There is an open interest of more than 110,000 call options alone for the month of April expiration, which is equivalent to 11 million shares on a fully leveraged basis.  We could even see post-options trading alone of more than 5 million shares alone due solely to options being traded.  This one trades only about 2 million shares per day.

As of last quarter it had just over $110 million  in pure liquid cash and equivalents, and it carried $36.7 million in accounts payable and $71.2 million in direct long-term debt.  That number is before a recent financing of $50 million.

This stock has been in “wait and see mode” pending the results.  Shares closed up big on Friday as many are expecting positive results, although the outcome will be forthcoming shortly.  Stay tuned, this could be one of the more active stocks Monday.

JON C. OGG

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