Sunday, October 24, 2010

ARENA, Good News, Rats!

The saga continues. Arena Pharmaceuticals has released its reactions to the FDA's Complete Response Letter (CRL) to its new drug application for its weight loss drug lorcaserin (Lorqess).

Here it is,

The good news is that the FDA did not outright reject the application or call for a complete set of new studies. In essence, it requested that further evaluation of the rat mammary tumor issue be further explored. If a more thorough evaluation by toxicology experts can show that the rat issues are not significant, lorcaserin will likely gain approval.

The FDA has acknowledged that its Advisory Panel lacked a toxicologist. This gives Arena a chance to clarify the rat issue. It does appear that Arena was blindsided by the Panel's rat rant. The Company did not consider it had any safety issue with rat data at the time the Panel met. Disregarding the all too predictable shareholder lawsuits, it does not seem logical that the Company had any reason to believe or suspect the rat issue was relevant.

Arena will put together the necessary rat studies. Provided no real mammary tumor issues arise, lorcaserin may receive approval within a year. In this case, share price will remain stable for now and then be reflective of the ongoing rat evaluations and market conditions. It must be kept in mind Vivus' Qnexa comes up for FDA review next week and Orexigen's Contrave for Advisory Panel review in December.

Lorcaserin is effective. The word "marginal" keeps getting bandied about, but effective is effective. In addition, the drug has a great safety profile, particularly with its heart valve evaluations. The disease, obesity, for which lorcaserin is effective, is rampant and without much other drug treatment. Indeed there is a ready market for lorcaserin.

Rather than see the half empty glass of water,

Arena and its investors need to see that its CRL is a chance at reaching APPROVAL. If the rat tumor issue is as fallacious as it appears, things should move along quickly. Tomorrow Arena has its conference call. We'll see what's up... BUY, SELL or HOLD. Now there's a question... And so it goes.

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