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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Arena Pharma's Own Data Point to Weight-Loss Drug Rejection

SAN DIEGO (TheStreet) -- Last week's column on Vivus (ARNA) and Arena Pharmaceuticals (VVUS) drew some strong reactions from the Arena faithful, almost all of whom were spitting mad that I dared say publicly what almost everyone else already believes:

Arena's weight-loss drug lorcaserin isn't going to be approved any time soon. FDA, however, is getting ready to approve Vivus' Qnexa.

In particular, the "Areniacs" accused me of lying about lorcaserin and being paid off to write disparaging, false and misleading statements about Arena by short sellers and other criminal market manipulators. This paragraph, in particular, raised a fuss:

"Lorcaserin isn't much more than a placebo (a paltry 3% weight loss) with the added bonus of causing tumors in rats. Arena's has failed to disprove a link between the lorcaserin-fueled rat tumors and the potential for breast cancer in humans, despite the company's claims to the contrary. And let's not forget the risk of heart valve damage that still lingers over lorcaserin, a chemical cousin to the infamous and dangerous fenfluramine."

A personal injury lawyer from Michigan was so upset that he got together with a bunch of Arena retail shareholders -- financially conflicted all -- and wrote me a letter demanding a retraction to my "terrorist style hit-piece [sic] designed to put lorcaserin 10 mg BID in false light."

10 Stocks That Could Rise in Market Decline >>

Apparently, writing a column predicting the rejection of a weight-loss drug because it doesn't help people lose weight and is potentially unsafe is a terrorist act.

A retraction is not going to happen, but I will follow up and explain more fully why I believe FDA isn't going to approve lorcaserin based on the data available.

Some cautious words from Arena's recently filed 10-K to get started:

"We expect the FDA to conduct a benefit-risk assessment based upon the totality of the new and previously provided data to determine the approvability of lorcaserin. It is important to note that the FDA may analyze or weigh the data differently than we or others do. (Emphasis mine.)

"Others" include Arena bulls who post obsessively on stock message boards.

More warnings from Arena:

"In addition, the analyses we included in the resubmitted lorcaserin NDA include estimates based on certain assumptions and extrapolations. The FDA may accept our assumptions and extrapolations or may use different ones in analyzing the data, which could lead the FDA to reach different conclusions. (Emphasis mine.)

4 Stocks That Are Real Sleepers in 2012 >>

We already know FDA reached a "different conclusion" about lorcaserin during the first review. The drug was rejected. In doing so, FDA raised a number of safety issues and concerns focused mostly on lorcaserin causing tumors in rats and the potential risk for similar tumor formation (including breast cancer) in humans.

Arena re-analyzed old rat data and conducted some new rat studies to collect more data to alleviate the FDA's concerns about lorcaserin-fueled tumor growth. Arena bulls are convinced the new data exonerate lorcaserin. I look at the same data and walk away believing the opposite. At best, these new data are inconclusive i.e. the data neither confirm nor reject lorcaserin's link to tumor formation. That's not good, and coupled with concerns about lorcaserin's potential to cause heart valve damage and weight-loss efficacy not much greater than placebo, FDA will reject lorcaserin a second time.

Let's take a look at the evidence to support the "lorcaserin is not approvable" thesis:

Stock quotes in this article: ARNA, VVUS 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,501.65 -12.72 -0.08%
S&P 500 1,875.39 -4.16 -0.22%
NASDAQ 4,126.9670 -34.4910 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs