Arena Pharmaceuticals (Nasdaq: ARNA) thinks it's tackled one of the issues the Food and Drug Administration wants addressed before it'll approve its obesity drug lorcaserin. But when your to-do list is as big as Arena's, shedding a few pounds isn't much to get excited about.

The FDA is worried about male rats that got brain cancer when given lorcaserin. Arena's theory is that rats have higher level of drug in their brain compared to humans, so there's no reason to worry about the animal studies.

Unfortunately you can't test the concentration of lorcaserin in a human brain like you would with an animal, so Arena is using a surrogate: the concentration in cerebrospinal fluid. For humans, the concentration of lorcaserin in cerebrospinal fluid was 1.7 times the level in the blood, compared to a ratio of 24 times higher for rats. Clearly humans aren't concentrating the drug like rats do.

But there's still the issue of surrogate endpoints; it's the concentration in the brains that matter. The company tested three species -- mice, rats, and monkeys -- and found a similar ratio of lorcaserin in the cerebrospinal fluid compared to the brain. Is it reasonable to assume that'll be true for humans as well? Absolutely, but the FDA isn't always reasonable.

Arena, Orexigen (Nasdaq: OREX), and VIVUS (Nasdaq: VVUS) have had such a hard time gaining approval because the FDA is extremely safety-conscious when it comes to obesity drugs. It pulled Abbott Labs' (NYSE: ABT) Meridia off the market, and I have a hard time seeing another one getting onto the market unless its safety record is impeccable.

Even if the FDA accepts the data and assumptions for the brain cancer issue, Arena still has to address concerns over mammary tumors and heart valve problems. If everything works out, Arena is easily a 10-bagger from here, but only the most risk-tolerant investor should be holding the company, because going to zero is still a very real possibility.

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