Why Arena Pharmaceuticals Shares Lost Weight

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 fat-fighting pharmaceutical company Arena Pharmaceuticals (NASDAQ: ARNA  )  shed as much as 11% after the European equivalent to the U.S. Food and Drug Administration panel raised questions about the safety of its chronic weight management drug, Belviq.

So what: The Committee for Medicinal Products for Human Use, or CHMP, raised concerns over tumors in rats, valvulopathy, and psychiatric events. As noted by my Foolish colleague Keith Speights, the concerns regarding tumors in rats and valvulopathy were addressed in the CHMP's 180-day list of questions, but apparently not thoroughly enough for the panel's liking. Arena still expects a decision on approval or denial of Belviq in the first half of this year.

Now what: No soup for anybody... in Europe, that is! Today's caution flags don't preclude Belviq from being approved in Europe -- where rival VIVUS (NASDAQ: VVUS  ) had Qsymia flat out denied -- but it does make the approval process even more difficult. Arena is really going to have to show the CHMP and European Medicines Agency that the slight variations in the side effects listed above are relative to placebo and far outweighed by the benefit of the drug. While I do think that's possible, I wouldn't rule out a rejection of Belviq in Europe in the near term. I still do stand by my personal assessment that Arena is the better of the two drug plays in the fat-busting sector and expect Belviq to gain approval internationally before VIVUS' Qsymia.

Craving more input? Start by adding Arena Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.

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Read/Post Comments (6) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On January 22, 2013, at 3:18 PM, RSRdriver wrote:

    "benefits far outweighed by the benefit of the drug".

    Good luck with that!

    Face it, ARNA's pps is now on a 5 or 6 month nose dive with the inevitable downgrades. Not to mention the likely AMA rejections as well.

    Credit Suisse (a $6 price target) should be saying I told you so in about 2 weeks.

  • Report this Comment On January 22, 2013, at 7:53 PM, PhillyDan wrote:

    Yes Mr. RSRKnownothing, the benefits of Belviq do far outweigh any risks. No cancer in humans; no SS in valvulopathy, the general public shows more valvulopathy incidences than shown in the human studies.

    Rat tumor issue is resolved, more tumors in the control group than in the drug group. Benign tumors do not progress to malignant tumors, so don't play that stupid card Mr. knownothing...

    Fact is that you are an idiot, coward and just plain CR to boot.

  • Report this Comment On January 22, 2013, at 7:55 PM, PhillyDan wrote:

    BTW, if you ever really want to have a debate about the real facts instead of the lies you make up - anytime, anyplace RSRknownothing.

    How does it feel to be a bold-faced liar all the time....

  • Report this Comment On January 22, 2013, at 8:43 PM, feelinIrie wrote:

    HEY RSDRIVER,

    Still waiting for your reasoning on how a "BLACK BOX' LABELED, REJECTED IN EU, NOT ALLOWED RTO ADVERTISE Drug is better than Belviq??

    ARNA SHORTA ARE TOAST!

  • Report this Comment On January 22, 2013, at 11:17 PM, RSRdriver wrote:

    Look , just go back to your big, dirty, beer stained chair, turn on Kudlow and take it down a few revs.

    In the morning send your findings to the EMA get back in your chair and wait for their reply.

  • Report this Comment On January 24, 2013, at 4:41 PM, ReasonableRisk wrote:

    It makes sense that CHMP had questions, but sadly many were taken by surprise and panicked when the shorts used the news to attack. Why commonsensical? ARNA has continuing research on Belviq and the advisory committee should know the latest results and not last year's data used by the FDA when it approved Belviq last year. The main issues of concern seem to be valvulopathy and tumors.

    a. The BLOOSOM trial showed that Belviq decreased valvulopathy by 19% for those with preexisting conditions (12% vs. 31% for the placebo group). BUT, evaluation of valvulopathy requires a larger patient population to be statistically reliably, and with ongoing studies, CHMP member's may be interested in these figures.

    b. I am as concerned about anything increasing the risk to tumors as anyone, will protest when I am concerned, but I'm unconcerned about Belviq. In a two year study, mice subjected to 4 and 8 times the human dose had FEWER tumors than the control group. Only female mice subjected to 84 times the human dose (seriously overdosed), had more tumors (I'm sure Huston Whitney and Janus Joplin took less of their drugs before dying, may they RIP). Male mice with plasma concentrations 17-times the human dose did suffer more brain tumors. But, at clinical doses the human blood-brain barrier to Belviq is 70-times greater than mice. Again, published peer-reviewed research found no tumors in humans, but it is best for the advisory committee get an update.

    Efficacy of Belviq is distorted by shorters and those ignorant of the data (who repeat what shorts say without looking into the details). Fact: 17-23 % of patients (depending on dosage) lost at least 10% of their body weight. I have not teased apart the data, but I've seen a reliable source claiming 25% of responders lost more than 17.6% of their weight, which is BLOCKBUSTER quality if you started at 300 pounds and ended the year at 247. But to profit, shorters keep repeating Belviq's average weight loss (5%). Yet, doctors are to supposed to DISCONTINUE anyone who does not lose more than 5% in 12-weeks!

    When shorters cite the non-responder drop outs, it is a disservice to those in need of facts to survive and live well. Undoubtedly, some real people will die due to any delays instigated by shorters and bashers in the press. But, hey, it is survival of the fittest on Wall Street and bodies are to be expected along with those old retired folks losing it all on due diligence without knowing that the game on The Street is more important than facts. I just wish The Street will wake up and realize that real people need help and if they are lucky, they will respond to Belviq and if not, maybe the next drug.

    So was it fair for ARNA to be slammed on the news? No. ARNA's high was $11.39 upon FDA approval last June, before the recent run up and talk of Europe. We are on the doorstep of marketing Belviq and the price should be closer to $11.39 than its lows since MARKETING COULD BEGIN ANY DAY. The DEA comment period ended on Jan. 18th, final scheduling follows (average time ~30 days, recent fastest time was 19 days for Lunesta). If Eisai's waiver is accepted (as all others were) marketing begins without delay be it February or March.

    Since 35% of U.S. adults are obese (226 million), I estimate 28 million may be in the blockbuster results category. I can't wait for them to discover a novel approach for helping them. And then, ARNA may try Belviq on smokers hoping to end their addiction (research shows it helped reduce nicotine craving in rats).

    But, getting Belviq beyond Switzerland's boarders in Europe would be nice too.

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