UPDATED: Arena shares sink after biotech withdraws marketing app for obesity drug in Europe

Arena Pharmaceuticals ($ARNA) pulled the plug on its application for approval of the obesity drug Belviq with European regulators, another blow to the commercial and regulatory effort behind the treatment. The San Diego-based biotech revealed the decision to withdraw the app in its first-quarter financial report late Thursday afternoon.

The news spooked some investors, as shares of Arena fell by more than 9% to $7.63 as of 11:06 a.m. ET on Friday.

Arena has pulled the app after a review of Belviq in late January from the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP). Data show cancers that formed in rats on the drug and signals of heart-value damage and psychiatric problems, Reuters reported. The FDA also voiced safety concerns before issuing a landmark approval of the drug in June 2012, making the treatment the first FDA-sanctioned weight drug in more than a decade.

Both Arena and Vivus ($VVUS) won coveted U.S. approvals for their weight meds last year as the nation grappled with an ongoing obesity epidemic that affects about a third of the population. Yet neither drug has become a commercial success. Arena has been held up from a U.S. launch of Belviq while awaiting a scheduling designation from the DEA, and unlike decisions from the FDA, the drug enforcement agency has no timeline for its ruling. Leerink Swann analysts, which have an outperform rating on Arena's stock, said in a note this morning that they expect the DEA scheduling and commercial launch of Belviq in the U.S. to both occur in the second half of 2013.

The commercial prospects of the drug, known generically as lorcaserin, are even less clear in Europe, however. In a conference call, the company cited the objections from European regulators in its decision to withdraw the application for marketing approval in the EU, yet the company has not yet given a clear roadmap of how it plans to pursue an approval.

Arena's $2.4 million in revenue for the first quarter included a $500,000 payment from its Belviq partner, Eisai, for filing an application for approval of the drug in Mexico.

- here's the company's release
- see Reuters' article