Thursday, September 2, 2010

Arena Pharmaceuticals, Game Time

In a mere 2 weeks the decision of the FDA Advisory Panel, which is reviewing lorcaserin, will be revealed. Inasmuch as the FDA generally follows it Panel's advice, the opinion is make or break for Arena Pharmaceuticals. Lorcaserin is a novel drug, which so far has been both safe and effective.

Since obesity as a disease is a contentious issue, it is always problematic to consider a drug treatment for weak willed tubbies. Drugs for the malady obesity must necessarily be compared to the standard diet and exercise option in weighing relative safety, costing and effectiveness parameters. Fat people discrimination is impossible to remove from any evaluation of obesity as both a disease and a medication target.

Despite those concerns, a fat drug is NEEDED. The chubby epidemic is just that, an epidemic. America's obesity "problem" is out of control. The real kickers are the associated health costs of obesity. Looking at drapery fat is one thing, paying for all the vascular issues and diabetic reverberations linked to obesity is an entirely different societal concern.

Yesterday, Arena (ARNA) moved no where, range bound between $6.41-$6.63. Volume was so-so at a bit less than 6 million shares. The mini Pharma already has in place a contract with Eisai for production and marketing. So, if lorcaserin gains approval, some serious money will be generated. And with such a vast target market, some serious money will be made.

As each day goes by the finish line becomes more visible. This equity, absent bad news, is going to move UP as the days peel off. The Panel is scheduled to meet September 15-16. Although it is impossible to pick the pre Panel high point, thirteen is a nice number. It is time to jump in the arena or stay in the bleachers. This will be a fun ride, no matter what.

Here's a strategy. Buy x shares now, ride ARNA to $12, sell half of the shares, let the other half go through the meeting date. Or buy x share and let them ride through the 16th. Or buy x shares and take a modest profit as the price rises. Or, oh, whatever... Just get in the game.

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