Arena's current $2 billion valuation is hard to justify given lorcaserin's mediocre weight-loss capability. I predict a strong launch of the drug fueled by extensive media publicity and word of mouth but sales will fizzle relatively quickly as the obese become disappointed and disillusioned about shelling out $100 or more per month for a pill that doesn't help them shed significant pounds or keep the weight off very long.

In case you think I'm biased against Arena only, I feel the same way about Vivus' Qnexa.

"LisaInBuffalo" writes, "I’m looking forward to your Mailbag column tomorrow and I have a small favor to ask. Could you please not be too harsh on Arena? Please! Please! We are having so much fun! I know that some of the Areniac’s are rude and inconsiderate (read:crazy) but most of us are pretty normal and cool like me. I was with you during your live blog of the Arena AdCom and you thought it would be a 23-0 vote and you know the FDA was very positive. I know that you think the drug is not the most efficacious but when it comes to obesity it’s hard for someone like you or me to understand. You look like a pretty fit guy and I’m 5’8 and 125 lbs. and have never had a weight problem, but I know many people who do.

"It is so hard for many overweight and obese people to lose weight through diet and exercise alone. Even if Lorcaserin helps them a little or moderately or in the case of top responders, significantly, it can give them the motivation they need to keep dieting and exercising. If dieting worked, then nobody would be overweight. Again, it’s hard for people like you and I to understand the predicament of the obese. Of a person who just looks at food and gains weight- they need help and Lorcaserin can help a lot of people. Not everyone, but no drug does that. Even Topamax is weight neutral for many people, but for those who do respond it works well. So, in closing, please Adam, let the party continue just a few more days. Keep up the good work. We all appreciate it."

Ampio Pharmaceuticals ( AMPE) update: Setback. FDA is requiring the company to conduct two new phase III clinical trials of its premature ejaculation drug Zertane in order to seek U.S. approval, the company announced Thursday.

As I noted in April, Ampio has been misleading investors about Zertane, claiming it had previously conducted a positive phase III study of the drug, which is simply a mint-flavored dissolvable tablet containing a low dose of a generic painkiller. In fact, this prior phase III study was actually a re-analysis of two shortened and failed studies conducted by Biovail, which ultimately gave up on Zertane.

Ampio had been hoping to convince FDA to allow the use of the old Zertane data to accelerate an approval filing in the U.S. but regulators here refused, telling the company instead that it must conduct two new phase III trials.

On a related note, Ampio management in late May sent shareholders a letter complaining about "rampant short selling" that is driving down the price of the company's stock, despite all its good works. In the letter (a copy of which I obtained), Ampio CEO Michael Macaluso asks shareholders to contact their brokers to request they stop lending out Ampio shares for short sales.

When management starts fixating on short sellers, trouble is usually not too far behind. We see evidence of that Thursday with the Zertane setback.

--Written by Adam Feuerstein in Boston.

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