Ahead of the Bell: Arena Pharma stock tumbles

Posted on Sep 27, 2010 in Uncategorized

By The Associated Press

 

Shares of Arena Pharmaceuticals Inc. tumbled in premarket trading Friday, a day after a Food and Drug Administration panel rejected its weight loss pill lorcaserin.

An FDA panel of experts voted 9-5 against the drug on Thursday, saying some unresolved safety questions outweighed its benefits.

Panelists raised concerns about tumors seen in rats in early-stage testing. Other concerns included higher rates of depression and memory loss among patients taking the company’s pill compared with dummy pills.

The FDA will make its own decision on the drug by Oct. 22.

Arena said it would continue to work with the FDA during the review, and company scientists said the tumor risk seen in animal studies did not apply to human studies, where there was no increase in cancer rates.

Arena, which is based in San Diego, currently has no drugs on the U.S. market. Analysts had favored lorcaserin compared to other prescription weight loss drugs under development because of its perceived safety.

But Jefferies & Co. analyst Thomas Wei said in a research note Arena’s study data may not be sufficient to address concerns.

“(Arena) is exposed to regulatory and market uptake risks for lorcaserin,” Wei wrote. The analyst rates the stock “Underperform.”

The company’s share price sank 45 percent, or $1.67, to $2.08 in trading Friday before the market opened.