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What: Shares of diet drug developer Arena Pharmaceuticals
So what: Getting a prescription diet pill approved in the U.S. has been a tough slog for the companies that have set out to do it. Orexigen
Now what: So here's the thing when it comes to Arena. First, from Captain Obvious' desk, the FDA reached the agreement with Vivus, not Arena. Second, the FDA has promised to reconsider, not approve Vivus' drug -- they could very easily get the new application and say "You know what? We were right the first time. Rejected!" And finally, the consideration of approval will only be for obese patients that are unable to have children. The obesity market is huge (no pun intended), but you significantly cut down your addressable market when you put on a qualifier like "unable to bear children."
Obesity is a real problem, particularly here in the U.S., but the FDA is making it very clear that companies that want to sell diet pills are going to have to fight tooth and nail to get them approved for use by anyone. Like it or not, the FDA is the gatekeeper here, and so as long as it keeps that attitude I'd have trouble getting excited about any of these companies.
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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.