Arena faces FDA panel today

Arena Pharmaceuticals faces an expert FDA panel today for its weight-loss drug Lorqess (lorcaserin). And not everyone is anticipating good news for the company.

Earlier this week, FDA staffers expressed concern about the drug. Preclinical data in rats show the drug was linked to "valvular heart disease, neuro-psychiatric and cognitive-related adverse events, and preclinical tumor development." The FDA notes, however, than an increased cancer risk wasn't apparent in the 7,000 subjects who participated in Arena's clinical trials.

The FDA had expressed concern about study results showing that rats on very high doses of the drug had higher rates of cancer. But according to Adam Feuerstein, who is blogging the panel discussions live, the company is hitting back against the rat cancer concern right from the start of its presentation. Dr. Gary Williams, who spoke on behalf of the company, said lorcaserin does not pose a cancer risk to humans at recommended dose. And, in fact, the tumors observed in lorcaserin rat studies are not applicable to humans, Feuerstein quotes Williams as saying.

Still, the FDA's review has spooked investors, and Arena's shares have dipped, TheStreet notes. The stock closed Wednesday at $3.74, down 45 percent over the past two days. And Barclays PLC equities research analysts downgraded shares of drugmaker from an equal-weight rating to an underweight rating in a research note to investors on Tuesday, with a price target of $3.00, American Banking and Market News notes.

And analysts are saying that it could be close vote, but ultimately against Arena. "We suspect that the vote will likely be a close one going against approval of lorcaserin prior to additional trials to rule out the risk of cancer," BMO Capital Markets analyst Jason Zhang says in a research note, as quoted by Reuters.

"In our opinion, the efficacy profile of lorcaserin is modest. In addition, it is burdened with at least three important safety concerns," write Adam Cutler and Manisha Narasimhan of Canaccord Genuity, an investment banking and institutional brokerage firm with its U.S. operations headquartered in Boston. "Given this unfavorable mix of safety and efficacy, we will not be surprised if the panel reviews lorcaserin unfavorably."

Consensus forecast data from Thomson Reuters shows analysts expect Arena's drug could reach peak annual sales of $822 million, according to Reuters.  

- read TheStreet's take
- check out American Banking's coverage
- here's more from Reuters