Saturday, September 11, 2010

Lorqess, Countdown Continues

Arena Pharmaceuticals' Lorqess is moving into the final countdown. By late afternoon on September 16th, the verdict will come. Basically, the company lives or dies. Wins or loses. Succeeds or fails. Arena is a one trick pony product machine, to wit, lorcaserin, the fatty drug is its only real entity. Lorcaserin picked up the more pithy proprietary name, Lorqess, in anticipation of the upcoming marketing blitz. Since when has a "q" without a "u" become de rigueur?

This drug is a unique chemical and it has been covered both in this blog and elsewhere. It is not a remake of other drugs or drug combinations. The FDA Advisory Panel will review Lorqess and by the 16th and give it a green or red light. Inasmuch as the FDA usually lock steps with the Panel, green or red indicates ultimate approval or rejection.

The two key issues facing the Panel are safety and effectiveness. Safety-wise Lorqess has been great, BUT... First a similar acting product, fenfluramine, caused heart valve damage back a few years when it was part of the rage drug, Fen-Phen. Arena has carefully evaluated all of its test subjects for valvular damage and there has been NONE found. NONE. Second, as bad luck would have it, on the 15th, the Panel is going to review cardiac side effects from an already approved and released fatty drug, Meridia. Sibutramine (Meridia) has already been banned in Europe. Not that Lorqess is Meridia, but the mood of the Panel may be soured headed into the 16th.

In terms of efficacy, Lorqess does indeed work. No it is not an astounding fat melter, but subjects lost about 5-6% of body weight within year. As any dieter knows, some success breeds more success. Inasmuch as the obesity epidemic is just that, an epidemic, a safe and effective diet drug IS NEEDED. With the marketplace bereft of any adequate diet drug, Lorqess has the potential for great commercial success.

The hedge funds and other stock jockeys are favoring a short position for ARNA. See The guess is that Lorqess is going to meet the same Mr. Red Light as Vivus' diet drug Qnexa did in July. The share price of Arena, which ran up to $8 a month ago, closed at $7.01 on the 10th. Whether there is a further run up of price to the halt on the 16th remains to be seen. Naturally, the price of ARNA will rocket or plummet, green or red respectively, when trading resumes after the halt.

Pessimism has crept into the Lorqess saga. Hedge funds favor failure, but isn't that what they do? The market itself is jumpy, with little confidence and swagger. Every day, over and over, talking heads mouth double dip, September swoon and the dismal jobs report. It's really no wonder, dollar stores are in short supply of black crepe.

ARNA has become a crap shoot of major proportion. There is a chance to both make a lot and to lose a lot of dough. On Tuesday the 14th, the FDA Panel will release pre meeting notes. In-the-knowers will read between the lines and try to get a sense of the mood of the reviewers. The ARNA share volume should be popping and the price may swing decidedly. This hip hop will keep working through the 15th as Meridia takes the heat. If the Panel slams Meridia, as expected, just how will the Panel feel about another fat drug? In truth, that's just too hard to predict. Lorqess could be viewed as a Meridia redux and thus be given short shrift or Lorqess may be seen as a bright star against the darkness of Meridia. Who knows?

In times like these, it's best to slow things down. Work day to day, hour to hour. Due diligence and homework and common sense will rule. The name of the game with drugs is Safety and Efficacy.

Lorqess comes into the final countdown with both reasonable safety and reasonable efficacy. While the Panel could argue that there may be future, unknown complications with Lorqess, there are NONE to date. And if the Panel wants to to argue that Lorqess does not work "well enough", so it can. But the drug is efficacious. It does lead to a significant weight loss as compared to a mere 2% or so weight decrement with placebo.

No matter what, these are exciting times for Arena. It is fun to be part of the action, no matter the outcome. Doubtless though, the winners will be a lot happier than the losers. So it goes.

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