This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Fans Rally 'Round Arena

The Biotech Mailbag is open.

My column on Arena Pharmaceuticals (ARNA - Get Report) and the looming release of phase III data on it's obesity drug lorcaserin seemed to hit a nerve with some die-hard Arena fans. Several people emailed to say I was too bearish and that I should not have quoted Canaccord Adams' analyst Adam Cutler, who downgraded the stock recently.

The flurry of Arena-focused email included (naturally) the tired claim that I was trying to drive down the Arena's stock price purposely at the bidding of my hedge fund overlords.

I stand by the column. It was a realistic look at the challenges Arena faces. Obesity drug development is fraught with risk, and the current drugs in development -- Arena's lorcaserin or the competing drugs from Vivus (VVUS - Get Report) and Orexigen Therapeutics (OREX - Get Report) -- haven't exactly inspired much confidence yet.

Biotech Select

Yes, Arena has engineered lorcaserin to avoid the cardiovascular toxicities seen with its chemical cousin fenfluramine, but at the same time, potential central nervous system side effects remain an under-appreciated risk.

Also under-appreciated by a lot of investors is how skittish regulators at the FDA and their counterparts in Europe are about the risk-benefit of any weight-loss drug. The bar for approval in this indication is going to be very high given all the safety missteps of the past.

Fat Americans are screaming for a pill that will help make muffin tops and beer guts disappear, but the FDA -- and ultimately the insurance companies who will be asked to pay for the drugs -- may not be as eager to deliver.

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
ARNA $4.19 0.00%
GILD $113.94 0.00%
OREX $4.84 0.00%
VRTX $124.80 0.00%
VVUS $2.49 0.00%

Markets

DOW 18,011.94 -28.43 -0.16%
S&P 500 2,109.60 -2.13 -0.10%
NASDAQ 5,076.5240 -6.4050 -0.13%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs