By
Matt Koppenheffer
|
More Articles
June 27, 2012
|
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of diet-drug developer Arena Pharmaceuticals (Nasdaq: ARNA ) were tipping the scales today, gaining as much as 53% in intraday trading after the company's flagship drug was approved by the U.S. Food and Drug Administration.
So what: It's been 13 years since the FDA approved a diet drug, but Arena's Belviq has ended the drought. The regulator gave Belviq the go-ahead for treatment of patients with a body-mass index (BMI) of 27 or greater, which covers those classified as overweight and obese. Patients also have to have a condition associated with their weight, such as high blood pressure or type 2 diabetes.
Now what: Since an FDA advisory panel had given Arena's drug a thumbs-up back in May, the FDA's decision shouldn't come as a complete surprise to investors. However, there's been a particularly high bar for getting diet drugs through the approval process -- just ask Arena competitors VIVUS (Nasdaq: VVUS ) and Orexigen (Nasdaq: OREX ) -- so the final approval was hardly a slam dunk.
What there's little question of at this point is the size of the potential market for Belviq. But with the approval now in the bank, the next big hurdle for investors is how receptive the market will be and how quickly Arena and its marketing partner Eisai can ramp up sales.
Want to keep up to date on these stocks?
More Expert Advice from The Motley Fool
When it comes to do-or-die business, the biotech industry takes the cake. Arena Pharmaceuticals is one recent success story in the industry after gaining FDA approval for its innovative obesity drug. While the future looks bright for Arena, there are still plenty of obstacles ahead. In our brand new
premium research report on Arena Pharmaceuticals, we walk investors through the must know opportunities and threats facing the company. Since key news can develop quickly, we're also including a full year of updates for those who sign up.
Click here now to learn more.