Arena's Obesity Drug Safe for Trial

A safety board deems lorcaserin safe for continued phase III study.
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Arena Therapeutics

(ARNA) - Get Report

said Tuesday that an independent data safety monitoring board (DSMB) gave it the green light to continue its ongoing phase III trial on obesity drug lorcaserin.

The board found no substantial evidence of heart-valve damage six months into the Bloom study. The news brightens the program's risk profile, but investors still have to bet on safety data that will be assessed at 12, 18 and 24 months.

The DSMB review evaluated heart-valve damage, the culprit behind the 1997 recall of

Wyeth's

(WYE)

fen-phen (fenfluramine/phentermine) weight-loss drug. It's an important safety checkpoint for lorcaserin, which will have to continue to pass such evaluations further into the course of Arena's Bloom study.

The DSMB reviewed unblinded echocardiograms after patients had been dosed for six months in the study, looking for any differences in the rates of Food and Drug Administration-defined valvulopathy, or heart valve damage, in patients treated with lorcaserin vs. the control group. The results didn't meet predetermined stopping criteria.

In addition, Arena said the review confirmed that the rate of FDA-defined heart-valve damage in the placebo group was consistent with the company's statistical powering assumptions used to design the pivotal trial program. Consequently, increasing the trial enrollment isn't necessary. Also, analysts at Piper Jaffray said in a report Tuesday that they consider the absence of commentary on other psychiatric or neurological side effects as a positive.

The Street's Take

Analysts at Merrill Lynch and UBS now have a price target of $22 for Arena, and Leerink Swann raised its target to $21 from $16, saying the event lowers the program's risk profile. Looking ahead, Leerink Swann noted, "Based on previous clinical data with fenfluramine/phentermine, we believe

that with a favorable safety review at 12 months, the program would be largely de-risked, at least from a safety perspective."

The 12-month review will take place in the first quarter of 2008. Also, Arena is in discussions with the FDA to finalize protocols for two additional phase III pivotal trials scheduled to begin later this year. These studies are expected to evaluate daily doses of 20 milligrams and 10 milligrams vs. placebo over a one-year treatment period, with one of the trials evaluating patients with type II diabetes.

Arena gained in premarket trading Tuesday after the news was announced and then slid throughout the day as some investors sold, likely taking advantage of the higher price. Shares were down 68 cents, or about 5%, at $13.35 in recent trading.