Investors Pile Into Arena

This video is part of our "Motley Fool Conversations" series, in which health care editor/analyst David Williamson and consumer goods editor and analyst Austin Smith discuss topics across the investing world.

In this edition, David and Austin are back talking obesity drug makers. The companies have seen a lot of action with huge share price appreciation since the last video. Is the enthusiasm for approval justified, or are we witnessing a mini-bubble? Watch and find out.

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Austin Smith and David Williamson have no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (7)

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  • Report this Comment On April 05, 2012, at 5:24 PM, PhillyDan wrote:

    My only issue with the comments in this video is when I believe it was Austin referred to Arena's lorcaserin having a cancer risk. That is absolutely not correct. There was a cancer signal detected in female rats because of diagnostic uncertainty of the initial adjudication. But there has not been a cancer signal in all of the phase 2 and phase 3 clinical studies. It would be nice if the correct details were mentioned.

    Arena along with approval by the FDA selected 5 independent pathologists that re-adjudicated the female rat slides. Their findings were that the independent pathologists were able to distinguish between tumor types both benign and malignant, thus they did find diagnostic certainty. In addition, malignant tumors were greater in the control group (no drug) vs. the low dosage drug group and medium dosage drug group or 7x and 24x.

    Only at the 82X drug group, were malignant tumors greater than the control group. Thus there is a certain safety margin of 24X. In addition, it could be argued logically that the safety margin is higher than 24X, because, the next dosage level is 82X. Approximately, 25X meets the FDA standard for safety margin.

    I understand that they cannot give this level of detail in the video but Austin could have stated that the cancer signal was only detected in rats.

    Rats are not humans!

  • Report this Comment On April 05, 2012, at 6:00 PM, portefeuille wrote:

    Panel Recommends More Testing for Obesity Drugs ->

    Heart studies needed for obesity drugs, FDA advisers say ->

    Vivus, Arena Unlikely to Be Affected by FDA Obesity Panel ->

    There are currently 400/900/400 ARNA/OREX/VVUS shares in my fund with break-even of around $14.73/-13.27/-88.68 ->

  • Report this Comment On April 05, 2012, at 6:11 PM, portefeuille wrote:

    -> The "weight loss drug companies" position is currently in the green by around 400 * ($3.07 - $14.73) + 900 * ($4.06 - (-$13.27)) + 400 * ($22.53 - (-$88.68)) = $55417.

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