SAN DIEGO (

TheStreet

) --

Arena Pharmaceuticals

(ARNA) - Get Report

insists it is on a "path forward" towards convincing U.S. regulators to approve its weight-loss drug, but that path is long and may end with the drug being rejected again.

Arena said it will spend the next year conducting new studies and collecting data in an attempt overcome the "rat cancer" concerns that, in part, compelled

FDA to reject lorcaserin in October

.

If the new studies yield the data Arena needs -- no sure bet by any means -- the company will re-file for lorcaserin's approval at the end of 2011. Under the best scenario, therefore, FDA won't be in a position to issue a second approval decision before the middle of 2012.

Arena shares fell 11% to $1.82 Wednesday as the company's disclosures once again deflated the unrealistic expectations of the company's most ardent supporters, many of whom believed this week's meeting with FDA would clear the way for a lorcaserin refiling in early 2011 and an approval soon after.

Michael Murphy, author of the

New World Investor

newsletter and a longtime Arena bull, had previously told his subscribers to expect a lorcaserin approval as early as February but no later than April 2011.

Instead, Arena is being forced to take lorcaserin back to the basics. New, preclinical studies need to be conducted to convince FDA that lorcaserin isn't responsible for mammary and brain tumors in rats and that the drug is safe for use in patients. A small study in 10 human subjects will also be required to measure the levels of lorcaserin in the brain.

This fall, Arena CEO Lief defended his company's decision to keep secret FDA's concerns about a possible link between lorcaserin and animal cancers, insisting the information wasn't material to the company or its shareholders.

Yet Wednesday, Lief outlined a plan by which Arena will spend the next 12 months and millions of dollars to run new studies focused exclusively on lorcaserin and rat cancers. Lief wasn't asked on his conference call whether he believes the lorcaserin "rat cancer" issue is now material to the company and its shareholders, perhaps because the answer is so obvious.

Arena focused most of its comments Wednesday on the cancer issue but said very little about how it intends to convince FDA to amend its previously stated conclusion that lorcaserin's weight-loss efficacy is "marginal."

A just-completed study of lorcaserin in diabetics will be submitted for FDA review, but those data are hardly impressive and, in some respects,

raise even more questions about lorcaserin's approvability

.

Not only did diabetic patients treated with lorcaserin lose just 3% of their placebo-adjusted weight after one year, but the study revealed a higher incidence of heart valve problems in lorcaserin-treated patients.

Arena counters with data showing that after one year, 37.5% of lorcaserin patients with diabetes did lose at least 5% of their body weight compared to 16.1% of placebo-treated patients.

FDA approves drugs when the benefits outweigh the risks, but data from the diabetes study, which FDA has not yet reviewed, could easily form the basis of another rejection letter on its own, even if Arena successfully argues away the rat cancer concerns.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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