Arena basks in spotlight as FDA OKs obesity drug lorcaserin

More than a year of second-guessing and harsh criticism for Arena Pharmaceuticals ($ARNA) concluded with a big victory for the drug developer, which earned an FDA approval for lorcaserin, the first new weight drug to hit the U.S. market in 13 long years.

Arena shares, which have risen steadily in recent months, only to take a hit at the end of last week, quickly shot up 33% on the news.

Arena's victory parade is likely to be sweet but short. Once the drug makes it to the market, where it will be sold as Belviq, Arena is going to face some tough expectations from Wall Street on the sales side. Sales of weight drugs in the past have been hampered by high-profile safety issues which have clouded the entire field. And only days ago a top panel of experts exhorted physicians to screen all their patients' weight status, with an eye to providing advice on diet and exercise, which is still considered the best and safest approach to managing weight.

Arena has a shot at a blockbuster market of obese people who meet the criteria for a prescription. But it's a long way from ending its research on the drug. Arena and its partner Eisai are on the hook for 6 post-marketing studies which will be needed to carefully check for any heart attack or stroke risk.

Shares of Vivus, which has a date with destiny and the FDA next month for its closely-watched weight drug Qnexa, also spiked on the news as investors considered the implications of the FDA's willingness to approve a weight drug. And Orexigen ($OREX) also saw its shares rise, up 22%, rounding out the field of developers which raced to the agency only to face a series of setbacks and delays. Orexigen's Contrave is back in a two-year safety study after the biotech reached an SPA agreement with the FDA back in February.

Not on the radar today, but equally impacted, are other developers with earlier stage products in development. The approval of lorcaserin caps a comeback of sorts for the obesity drug arena, after initial rejections for Arena, Vivus ($VVUS) and Orexigen seemed to spell doom for all. Everyone's value took a jump today.      

The FDA OK'd Belviq (pronounced Bel-Veek) "as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in adult patients with an initial body mass index of 30 kg/m2 or greater (obese), or 27 kg/m2 or greater (overweight) in the presence of at least one weight related comorbid condition (e.g., hypertension, dyslipidemia, type 2 diabetes)."

- here's the press release
- read the Reuters story