Arena Lays Out Path Forward For Lorcaserin

Arena Pharmaceuticals and Japanese partner Eisai plan to resubmit an NDA for the controversial obesity drug lorcaserin by the end of 2011.

Arena Pharmaceuticals Inc and Japanese partner Eisai Inc still hope that their obesity drug lorcaserin will get approved by FDA, despite most analysts and investors writing off an approval as a long-shot.

Arena Chief Executive Jack Lief hosted a conference call with analysts on Dec. 22 to discuss the end-of-review meeting that the San Diego-based biotech recently held with FDA to talk about the obesity drug's "path forward."

Lief told reporters that the company expects to re-submit lorcaserin's New Drug Application by the end of 2011 or sooner, and laid out the steps the company will have to take to get to that point.

Arena submitted the original NDA for lorcaserin, also known as Lorqess, during the holiday season of 2009. FDA issued a "complete response" in October after a September 16 Advisory Committee voted against recommending approval of the drug due to concerns that tumors in rats could be a signal for cancer risk in humans, and what it termed the drug's "marginal" efficacy (Also see "FDA Issues Complete Response Letter for Arena's Lorcaserin" - Pink Sheet, 24 Oct, 2010.).

Taking Steps Toward Approval

Arena has to demonstrate whether lorcaserin elevates prolactin levels, which FDA has said it will accept as a mechanism of rat tumor formation. In terms of human risk, the biotech already has data that it believes suggests prolactin wasn't elevated during clinical trials. Yet, the protocol for the studies evaluating prolactin in rats has yet to be completed and the agency has yet to agree to them. Arena has sanctioned five independent pathologists to review the relevant tissues from the rat carcinogenicity study, which it previously conducted, and to re-adjudicate the diagnosis for female rat mammary tumors in a blinded fashion, as per FDA requests.

"As we continue discussions with the FDA to refine elements of our plan, we may identify ways to shorten this timeline. The majority of our activities relate to the three non-clinical issues outlined in the CRL," said Lief during the call.

Arena said FDA wants it to establish a safety margin for brain astrocytoma in higher doses of lorcaserin. The company explained that it has planned several non-clinical studies, as well as a week-long clinical study involving 10 voluntary patients.

The biotech will also provide FDA with the results of BLOOM-DM, a study of lorcaserin in patients with type 2 diabetes. Results of BLOOM-DM, which included about 600 patients randomized to a twice-daily dose of lorcaserin or placebo for 52 weeks, showed that those taking the 10 mg dose had placebo-adjusted weight loss of 3% -- falling short of FDA's requirements for efficacy and, even missing the already low bar set in the previous Phase III studies, BLOOM and BLOSSOM (Also see "Further Phase III Data May Not Help Approvability Of Arena’s Lorcaserin" - Pink Sheet, 1 Nov, 2010.).

The company expects to release data to the public at a variety of medical meetings during the coming year or as it becomes available.

Analysts and Investors Are Skeptical

Arena's stock price has dropped from a 52-week high of $8 to linger below $2 since the negative decision from the advisory committee, a clear sign that investors have lost faith in management's promises of approval.

Even analysts have stopped drinking the Kool-Aid, with all 20 analysts who cover the company avoiding a 'Buy' recommend on the stock.

JPMorgan analyst Cory Kasimov wrote in a recent note on Arena that he "remains skeptical and would continue to avoid Arena shares." He called the steps that Arena is taking toward approval a "reasonable plan," but added that "it remains an open question whether or not it will be able to fully satisfy agency trepidations, especially in light of the drug's modest benefit."

Meanwhile, Oppenheimer analyst Bret Holley calls the company's timeline "aggressive" and also voices concerns about whether the agency will be satisfied by the planned efforts. "It remains unclear that the FDA will accept Arena's prolactin hypothesis, unless new preclinical data establish an unambiguous association, which prior studies did not."

BMO Capital Markets analyst Jason Zhang adds, "We think while there is a path forward, the outlook for lorcaserin in the coming 12 months remains gloomy given the burden of proof and competitors' moves."

Zhang is referring to competitors Orexigen Therapeutics and Vivus Inc., both of which could get approvals for their respective obesity drugs, Contrave (naltrexone SR/bupropion SR) and Qnexa (phentermine/topiramate), before the close of 2011. An advisory committee recently recommended approval of Contrave, the first positive recommendation for an obesity treatment in more than 10 years (Also see "Positive Panel Recommendation For Contrave Could Change Obesity Drug Game" - Pink Sheet, 13 Dec, 2010.). The PDUFA date for Contrave is Jan. 31, 2011.

-Lisa LaMotta ([email protected])