By Thomas Gryta
Arena Pharmaceuticals (NAS:ARNA) Inc.'s shares fell 15% as new concerns about its rejected weight-loss pill emerged and Wall Street questioned the ability of the drug developer to refile for approval by its stated year-end goal.
The San Diego drug developer disclosed plans late Thursday to cut 25% of its work force, and said the Food and Drug Administration is looking for multiple sets of new data on lorcaserin, including a possible 12-month study involving a possible link to certain cancers in rats and more information on heart-related risk.
The need to conduct more non-human studies, on top of the existing regulatory concerns, raises the hurdles to achieving market approval and may shed light on the FDA's concerns about the drug.
The FDA has shown a high bar for weight-loss drugs that would be taken indefinitely by millions of patients and the shadow of past failures—including the fen-phen combination that led to heart-valve problems in some patients—serves as a reminder that safety is the primary concern.
"We continue to remain increasingly cautious on eventual lorcaserin approval and expect continued weakness in the shares," said Barclays Capital analyst Jim Birchenough in a note to clients.
Shares of Arena are down 43% in the past 12 months because of a series of regulatory setbacks. It traded as high as $8 in July on hopes it would be approved for the potentially lucrative weight-loss market.
Arena is one of three companies trying to get a new obesity treatment approved in the U.S.
Vivus Inc. and Arena both had their drugs rejected by FDA panels and ultimately by the agency itself. Orexigen Therapeutics Inc.'s weight-loss drug Contrave, in development with Japan's Takeda Pharmaceutical (TKS:JP:4502) Co., got a positive recommendation from a panel in December and is expecting an FDA decision within days.
Arena, partnered to sell lorcaserin with Japan's Eisai (TKS:JP:4523) Inc., continued to express confidence in its timeline but acknowledged that it may face delays as it continues to talk with the FDA. It said Thursday that the agency wants the company to submit protocols prior to initiating certain studies.
After its October rejection amid questions about effectiveness and an association with cancer risk in rats, Arena executives met with FDA officials in December. Afterward, Arena projected a 2011 filing and said it might be able to shorten the timeline.
But many on Wall Street believe the latest update makes that timeline highly unlikely.
Notably, the FDA also has recommended that Arena expand its studies on the drug's activity on a certain receptor to further assess the risk of heart-valve problems.
An Arena spokesman said Friday that the reason for the request wasn't communicated by the FDA.
The issue of heart-valve safety is notable for lorcaserin because the mechanism of the drug is similar to that of fenfluramine, which was pulled from the market in 1997 and was used with the stimulant phentermine in the fen-phen combination that caused similar problems.
Late-stage studies of the drug, including more than 7,000 patients, had statistically ruled out a risk of heart-valve problems in accordance with criteria requested by the FDA, but a smaller study last year showed an imbalance in the problem. The company said that study was too small and wasn't designed to accurately measure the problem.
Among the multiple other issues, Arena is working on addressing the agency's concerns related to breast-tissue tumors in female rats, including showing that they are caused by a mechanism that is "reasonably irrelevant to human risk."
The agency initially recommended a three-month study, but following the December meeting it requested that Arena consider a separate 12-month study related to the issue, something that wouldn't be finished until sometime in 2012.
"If as Arena continues discussions with the agency and determines activities such as this one are viewed as requirements, the company might have to adjust its timeline for resubmission," the Arena spokesman said Friday, noting that the 2011 timeline "is possible."
Also, the company needs to submit data related to brain tumors that emerged in male rats. Because the cause of the tumors is unknown, Arena will focus on showing that an adequate safety margin exists for human use of the drug. The work will include non-human experiments and a small clinical study to measure lorcaserin concentrations in human cerebrospinal fluid.
The agency has also expressed concerns about the abuse potential for lorcaserin and recommended that Arena modify and repeat two non-clinical studies. The company expects to meet with FDA staff next month on those issues and subsequently begin the studies.
Write to Thomas Gryta at email@example.com