Arena Shares Fall Most Ever After U.S. Panel Fails to Back Diet Medicine
Arena Pharmaceuticals Inc. had a record decline in Nasdaq trading after failing to win a U.S. advisory committee’s backing to sell an anti-obesity drug, its most advanced treatment in development.
The San Diego-based company tumbled $1.75, or 47 percent, to $1.99 at 4 p.m. New York time in Nasdaq Stock Market composite trading, the biggest drop since the company sold shares to the public in July 2000 for $18 each. Arena’s stock- market value fell to $222.6 million, according to Bloomberg data.
Arena has fallen 70 percent since Sept. 14, when Food and Drug Administration staff issued a report saying the drug, lorcaserin, may cause cancer and works only by a “slim margin.” A panel of FDA advisers said yesterday that the treatment doesn’t work well enough to justify risks when used long-term in overweight or obese people. While the FDA usually follows panel recommendations, it isn’t required to do so.
“The selected population studied demonstrated modest efficacy with this medication, and in my opinion the potential risks of the medication outweigh the potential benefits,” Heidi Connolly, a professor of medicine at the Mayo Clinic in Rochester, Minnesota, and a panel member, said yesterday.
No New Approvals
The FDA hasn’t approved a prescription drug for long-term weight loss since Swiss drugmaker Roche Holding AG’s Xenical in 1999. Xenical has been linked to liver damage, and Abbott Park, Illinois-based Abbott Laboratories’ 13-year-old Meridia was tied to heart attacks, strokes and deaths in an FDA staff review on Sept. 13. Earlier this week, the FDA advisory panel voted 8-8 on whether to recommend keeping Meridia on the market. In July, Vivus Inc. of Mountain View, California, failed to win an advisory panel’s backing for its diet pill Qnexa.
Lorcaserin, which has the proposed brand name Lorqess, is similar to fenfluramine, a component in the diet pill fen-phen, which was withdrawn from the U.S. market in 1997 because of links to heart-valve damage.
Peak global sales of lorcaserin may be $800 million in 2015 if the drug is approved, Jon Lecroy, an analyst at Hapoalim Securities in New York, said Sept. 14 in a telephone interview. Eisai Co. of Tokyo bought rights to sell the drug on July 1 and plans to give about a third of the revenue to Arena.
The companies believe the drug’s benefits outweigh its risks, said Jack Lief, Arena’s president and chief executive officer.
“Arena will work closely with the FDA as the agency completes its review of the lorcaserin new-drug application,” Lief said in an e-mail yesterday after the vote.
Eisai Co. of Tokyo fell 20 yen, or less than a percent, to 3,035 yen at the close of Tokyo trading. Orexigen Therapeutics Inc., which is developing a rival weight-loss pill, fell 72 cents, or 11 percent, to $6.05 in New York. An FDA panel will review San Diego-based Orexigen’s obesity treatment Dec. 7.
Two-thirds of American adults are overweight, raising their risk of diabetes, heart disease, high blood pressure and cancer, according to the 2008 National Health and Nutrition Examination Survey. More than a third of American adults are obese, measured as a ratio between height and weight.
Lorcaserin binds to a receptor in the brain that controls appetite while avoiding a separate target thought to have contributed to irregular functioning of heart valves in about 30 percent of people who took Wyeth’s fen-phen.
Sales of prescription weight-loss drugs dropped 11 percent last year to $153.7 million, according to IMS Health Inc., a research company in Norwalk, Connecticut. Of the almost 7.5 million prescriptions dispensed, four of every five were for generic phentermine, a fen-phen component still sold as a short- term appetite suppressant.
The FDA is scheduled to decide on lorcaserin by Oct. 22, Vivus’s Qnexa by Oct. 28, and Orexigen’s Contrave by Jan. 31.
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