Lawsuits start to pile up in wake of Arena setback

Close on the heels of an FDA panel's vote against Arena Pharmaceuticals' weight-loss drug lorcaserin, the lawsuits are beginning to pile up. A number of panelists voiced their concern about tumors found in rats involved in a preclinical study of lorcaserin. And now attorneys are using that unexpected safety issue to slam the developer for failing to be upfront with investors about all the data that it had on the therapy.

So far the firm Federman & Sherwood as well as Robbins Geller Rudman & Dowd have announced class action lawsuits, hoping to recruit disaffected shareholders who watched their once valuable holdings collapse as Arena's stock price slid beneath the $2 mark. The Shareholders Foundation has also touted an investor suit against Arena.

Arena CEO Jack Lief was quick to defend the company on the rat data. Lief told investors and analysts after the vote that the biotech had reviewed the cancer data with the FDA and still believes that it has a weight loss therapy that can win an approval. The cancer data, he added, wasn't relevant to humans. Some analysts weren't kind about the nasty surprise.

"The fact that the FDA is questioning the efficacy and heart safety of Lorqess was not surprising, but the fact that malignancies of multiple types were seen in rats treated with high doses of the drug was quite surprising to us," wrote Jon LeCroy of Hapoalim Securities right after the FDA panel vote last week.

This isn't the first time cancer in rats has caused trouble for a developer. Horizant, a drug for restless leg syndrome, was drubbed by the agency on the same issue earlier this year. Regulators and experts are often particularly leery of any risk associated with therapies designed to treat a condition like weight, where people have other alternatives--such as diet and exercise. Arena's shares were trading at $1.74 this morning.

- here's the Robbins Gellar release
- see the Federman Sherwood release