BOSTON ( TheStreet) -- Thoughts and observations on obesity drug stocks as Arena Pharmaceuticals ( ARNA) gets ready to bring lorcaserin in front an another FDA advisory panel on May 10. My apologies for beginning with some shameless self promotion: I will be live-blogging the Arena FDA panel, providing eight hours-plus of continuous, play-by-play coverage and instant analysis as obesity experts review and ultimately pass judgment on lorcaserin's efficacy and safety. Don't miss out on all the excitement and suspense. More than 22,000 readers logged into my live blog of the Vivus ( VVUS) FDA panel in February, which resulted in a 20-2 vote in favor of Qnexa. I expect another big crowd on May 10, so mark your calendars. FDA has not yet announced the final roster for the upcoming Arena panel but five obesity experts have accepted invitations to participate, according to a memo posted to the agency's web site. One of these five obesity experts is Dr. Daniel Bessesen, a professor of endocrinology at the University of Colorado School of Medicine. Bessesen received a conflict of interest waiver to participate on the Arena panel because he's a member of a data safety monitoring board for a competing (but undisclosed) weight-loss therapy. The identities of the remaining four obesity experts invited by FDA to sit on the Arena panel have not been disclosed but the agency said one is a clinical endocrinologist (like Bessesen); the others are a bariatrician, a pediatric endocrinologist and epidemiologist. These five obesity experts will beef up the 10 sitting experts on the FDA's Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC), six of whom are also endocrinologists or have relevant expertise in diabetes and obesity. Key question for next week: Does an FDA panel stacked heavily with obesity drug experts help or hurt lorcaserin's chances for a positive vote? Eight endocrinologists/obesity experts sat on the Vivus FDA panel in February, with all but one voting to recommend Qnexa's approval. The overall panel vote was 20-2 in Qnexa's favor. Qnexa won in large part because treatment led to significant, clinically meaningful weight loss, which outweighed the potential risk of causing birth defects in children born to women using the two-drug therapy.
Lorcaserin's efficacy, by comparison, is inferior, even "marginal" in the words of FDA reviewers. How obesity experts weigh lorcaserin's benefit relative to the drug's safety risks -- rat tumors, potential for heart-valve damage -- will be a key focus of the May 10 panel. Four endocrinologists participated in the first FDA panel for lorcaserin back in September 2010, splitting their vote 2-2. Overall, the first lorcaserin panel voted 5-9 against approval. Of the ten current sitting members on FDA's EMDAC, four participated in the first lorcaserin panel. Three voted against the drug, obesity experts all: Emory University's Dr. Eric Felner, Dr. Lamont Weide of the University of Missouri and Edward Gregg from the Centers for Disease Control and Prevention. Voting in favor of lorcaserin at the September 2010 panel was current EMDAC chairperson Dr. Abraham Thomas of Henry Ford Hospital in Detroit, also an obesity expert. If predicting the actions and votes of FDA panel experts isn't difficult enough, FDA is likely to complicate matters by inviting additional experts to sit on the lorcaserin panel. Cardiologists have played a big role in all the obesity drug panels, weighing in on cardiovascular safety issues. Front and center in this debte has been Cedar-Sinai Medical Centers' Dr. Sanjay Kaul, so don't be surprised to see him show up again. Kaul was a "no" vote on lorcaserin at the first FDA panel. Will FDA also include experts in animal tumor formation and cancer given lorcaserin's controversial tumor-promoting effects? FDA will reveal the final roster for the lorcaserin panel on Tuesday, May 8 at the same time as it posts its internal review of the drug's efficacy and safety. You'll be able to find the FDA's briefing documents here. Arena short interest at 42.37 million shares (as of April 13) is at an all-time high going into the May 10 FDA panel. That's more than double the short interest in Arena from the beginning of the year. Arena shares are up 31% year to date, trailing Vivus (up 148%) and Orexigen Therapeutics ( OREX) (up 117%). Institutional investors aren't required to report their first-quarter holdings until the middle of May, after the FDA panel takes place, making it hard to determine how Wall Street is playing Arena.
The big surge in Arena's short interest is a hint, however.
Mutual fund giant Fidelity bought another 439,000 shares of Arena to boost its holdings to 4.66 million shares, according to a regulatory filing on Feb. 29. Smith Asset Management, a $2 billion equity fund, bought 337,000 shares of Arena to initiate a new position, according to a March 31 regulatory filing. Vivus added two big investors in the first quarter: Meditor Group bought 5.3 million shares to pad its total stake to 6.17 million shares, according to a March 20 regulatory filing. Eagle Asset Management started a new Vivus position, buying 1.83 million shares, according to a March 31 regulatory filing. --Written by Adam Feuerstein in Boston. >To contact the writer of this article, click here: Adam Feuerstein. >To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein. >To submit a news tip, send an email to: email@example.com. Follow TheStreet on Twitter and become a fan on Facebook.