Weighing Arena's Obesity Drug: Biotech Mailbag

The Biotech Stock Mailbag is back from its one-week beachside hiatus.

First up, an email from Jo S., who writes, "As a shareholder of Arena Pharmaceuticals(ARNA Quote) and Biovest International(BVTI.PK Quote), I am attempting to gather as much information from the best analytical minds. Hence, my humble request that you comment on these two stocks in the current market.

"Arena's Lorcaserin seems to be quite satisfactory in terms of safety as the side effects don't appear to be too burdensome or life threatening. Nevertheless, the issue of efficacy is not so readily apparent with the available data. It is likely that the results of Arena's Blossom study will prove to be similar to that of their prior studies, too close to call in advance. What is your take on the question of whether or not Lorcaserin has the efficacy necessary for it to be approved by the FDA?"

Jo went on to ask about BioVest, but I wrote about the stock here and don't have anything new to add.

Jo's question about Arena, however, is timely since I expect phase III data from Vivus'(VVUS Quote) obesity drug combination Qnexa to be released very soon. Since Vivus, Arena and Orexigen Therapeutics(OREX Quote) are all seeking to develop their own obesity drugs, Arena's prospects in the very near term might hinge more on the strengths and weaknesses of the Qnexa data.

Ballpark, Street expectations are for placebo-adjusted weight loss in the 6-7% range from Qnexa's two phase III studies. In terms of safety, watch for rates of depression, mood disorder, suicidal thoughts and cognitive declines in Qnexa patients that are significantly higher than that in the placebo patients. Tolerability is always important for obesity drugs, so look for Qnexa patient drop-out rates of less than 50%.