Another diet drug appears headed for a crash after failing to win the support of a U.S. Food and Drug Administration advisory panel. The panel of outside experts recommended rejection of Arena Pharmaceuticals's (ARNA) obesity treatment lorcaserin, saying the minimal efficacy doesn't justify the risks.
The decision is in keeping with the cautionary stance that FDA advisers have taken on other weight-loss drugs in recent months. On Wednesday, the panel delivered a split vote on whether to withdraw Abbott's (ABT) already marketed diet pill, Meridia, and in July, the panel voted against rival Vivus's (VVUS) obesity drug, Qnexa.
"These panels are setting a very high bar for obesity drugs," says Adam Feurstein of TheStreet.com, who liveblogged the meeting.
The FDA doesn't have to follow its advisory panels' recommendations, but it usually does. The final ruling for Iorcaserin is scheduled for Oct. 22.
Panel: Risks Outweigh Benefits
The advisers' 9-5 vote, after a day-long meeting, echoed the sentiments expressed in the prepared analysis by the FDA reviewers. The outside experts were concerned about the possibility of cancerous breast tumors, even though they were found only in rats given high doses of the drug and not in humans. Basically, they thought the potential risks of the pill, when used by obese and overweight patients long-term, outweigh the potential benefits.
The company, not surprisingly, disagrees. "We believe that lorcaserin has a positive benefit-risk profile and represents a potential advance in the treatment of obesity," Arena CEO Jack Lief said in a statement. "We will work with the FDA as the agency completes its review of the lorcaserin new drug application."
The negative recommendation is no doubt a major setback for the small biotech company, which has no approved drugs. Trading on Arena shares was halted on Nasdaq during the meeting, but the stock had plummeted some 46% since Monday -- following the FDA reviewers' analysis -- and immediately dropped an additional 40% in after-hours trades Thursday to around $2.20 per share, down from Wednesday's close of $3.74 per share. This is one diet Arena could have done without.
Socially Responsible Investing
Invest in companies with a conscience.View Course »