Arena Pharmaceuticals

Arena pharmaceuticals joins VVUS and OREX with an upcoming obesity drugs.  It is clear to see that an effective an FDA approved obesity drug could be a potential gold mine.  ARNA is currently trading in the low $3 range with an FDA PDUFA date of 10/22/10.  Currently ARNA is trading below its 200 and 50 day moving average and my be prime for a run-up.

Trading Style

I am going to mix trading common stock and options.  I already hold a small position in ARNA, but I will be looking to add more once the ASCO conference plays are complete. Currently October 16th options are running a little pricey, $.50 for $6 Calls, however I will be keeping a close eye on them and if they dip I will look to add. See below for more information on Arena and Lorcaserin, its FDA drug candidate.

From SeekingAlpha.com

Arena’s lorcaserin is a new chemical entity, not tested in combination with anything else. Patients had very significant weight loss in the first year, and at the recent American Diabetes Association meeting, Arena showed that continued treatment with lorcaserin helped significantly more patients maintain their weight loss in the second year, as compared to those on placebo. The diet and exercise guidelines in Arena’s Phase III trials were very minimal, so there was good patient compliance with only a 7% dropout rate due to adverse events. In general, there was a large subset of patients who saw rapid weight loss in the first four weeks, and those patients continued to be the best responders in the trial, losing far more weight than the average.

Because lorcaserin is of the same family as the recalled fenfluramine, heart valve safety was a major issue in the BLOOM and BLOSSOM trials. The data from both trials added together clearly will convince the FDA that lorcaserin has no negative impact on heart health. Remarkably, both trials actually showed it improved heart health, so I feel confident cardiac impact is a non-issue.

Finally, about 20% of the obesity docs surveyed by the company said they would prescribe lorcaserin with phentermine right from Day One. This should give a major boost to all the weight loss figures in the table above, and I expect LorPhen to quickly become the talk of the cocktail circuit and the most-requested regimen by patients. There is a critical mass point in the adoption of any new technology, where the S-curve really takes off, and it happens to be 20%. I expect the progress from 20% of the obesity doctors combining lorcaserin with phentermine to 80% ( the usual top of the S curve) doing so will take less than three years. It’s also helpful that weight loss in the first four weeks is a very good indication that lorcaserin will work well for a particular patient. If it isn’t working, the doctor can add phentermine for a while, and if that doesn’t work they can move on to one of the other two drugs.

From Arena’s website:

Lorcaserin for Weight Management

Our most advanced drug candidate, lorcaser/in, is for weight management, including weight loss and maintenance of weight loss. In December 2009, after completing a pivotal Phase 3 clinical trial program, we submitted a New Drug Application, or NDA, for lorcaserin to the FDA. The NDA submission is based on a data package from lorcaserin’s clinical development program that includes 18 clinical trials totaling 8,576 patients. In February 2010, the FDA accepted our lorcaserin NDA for filing and assigned a Prescription Drug User Fee Act, or PDUFA, date of October 22, 2010, for the review of our application.

The lorcaserin Phase 3 pivotal program consists of the BLOOM (Behavioral modification and Lorcaserin for Overweight and Obesity Management) and BLOSSOM (Behavioral modification and LOrcaserin Second Study for Obesity Management) trials, which evaluated 7,190 patients for up to two years. In addition to the pivotal program, we are evaluating the safety and efficacy of lorcaserin for weight management in obese and overweight patients with type 2 diabetes in our Phase 3 BLOOM-DM (Behavioral modification and Lorcaserin for Overweight and Obesity Management in Diabetes Mellitus) trial. We plan to file the results of BLOOM-DM as a supplement to the NDA.

The pivotal program showed that lorcaserin consistently produced statistically significant weight loss with excellent tolerability. The BLOOM and BLOSSOM results were comparable, and demonstrated the following key lorcaserin effects after one year of treatment:

• About two-thirds of patients achieved at least 5% weight loss and over one-third achieved at least 10% weight loss;
• On average, patients lost 17 to 18 pounds or about 8% of their weight;
• Secondary endpoints, including body composition, lipids, cardiovascular risk factors and glycemic parameters improved compared to placebo;
• Heart rate and blood pressure went down;
• Lorcaserin did not increase the risk of cardiac valvulopathy;
• Lorcaserin improved quality of life, and there was no signal for depression or suicidal ideation;
• The only adverse event that exceeded the placebo rate by 5% was generally mild or moderate, transient headache.

Post-hoc analyses of data from the individual pivotal trials also demonstrate lorcaserin’s efficacy:

• Based on a normal BMI of 25, lorcaserin patients in the BLOOM trial lost an average of one-third of their excess body weight;
• The top quartile of lorcaserin patients in the BLOSSOM trial lost an average of 16%, or 35 pounds, of their body weight.

Arena’s Pipeline

Disclaimer: Long ARNA

Tags: arna, FDA, obesity, october, pdufa, run-up