Saturday, December 25, 2010

Why Not to Become Excited About Diet Pills.

Investors become excited when a biotech or pharmaceutical company completes Phase III trials and are being reviewed by the FDa.  This results in increasing stock prices.  This is likely due to the many investors who become interested in the stock.  I like to believe that this is somewhat of an artificial increase in stock price.  After a couple of days to a week, the price begins to fall.  This is precisely what we see with Arena's stock price.

I would like to concern this post regarding whether it is worth investing with Arena Pharmaceuticals and what recent developments mean for the short term and long term future of the stock.  I introduce some pharmaceutical and medical terminology and will try my best to explain them; however, if the meaning is still unclear, please post a comment and I will clarify the issue.  

The Food and Drug Adminstration (FDA) held a End-of-Review meeting with Arena Pharmaceuticals (ARNA) recently concerning the New Drug Application of lorcaserin, a diet pill.  The FDA has not aproved the agent earlier this year over concerns of safety and efficacy.  To date, there is only one FDA approved  diet pill on the market, orlistat, which is available OTC (Alli) and by prescription (Xenical).  Sibutramine was another diet pill approved by the FDA, but due to heart problems, sibutramine was removed from the US market.  Effects on the heart will always remain a concern with diet pills and any company selling diet pills will be required to perform post-marketing surveillance and pay close attention to heart problems. 

There are other agents currently be studied in clinical trials: Bupropion/naltrexone (Contrave, still in Phase III, but well on its way to approval), phentermine/topiramate (Qnexa), and rimonabant.  Due to the way these agents work, do not expect them to be met with open arms by the medical community.  Physicians prefer diet and exercise rather than prescribing a diet pill.  Earlier this month, the FDA approved expanding the eligibility scope of implementing Allergan's Lap-Band for weight loss.  These are just some of the barriers facing lorcaserin from becoming a blockbuster drug.  

Lorcaserin is the first therapeutics agent that is classified as a selective serotonin 2C receptor agonists, which means that it activates the receptor. According to Arena's website, "The serotonin 2C receptor is expressed in the brain, including the hypothalamus, an area involved in the control of appetite and metabolism."  They fail to mention that the receptor is also involved with regulating mood, anxiety, and reproductive function. Although it is exciting that lorcaserin is the first in class, there are two primary concerns.  
  1. Little is known about the adverse or unwarranted effects of the stimulating the serotonin 2C receptors.  There are other agents with effects on the the same receptor.  The majority of these drugs are anti-psychotics (aripiprazole (Abilify)).  Also, anti-depressants such as fluoxetine (Prozac) are known to inhibit or turn off the serotonin 2C receptor.  Since turning off the receptor treats depression, this raises depression as a concern in therapy involving lorcaserin.  
  2. Copy cat agents on well on their way.  Medicinal chemistry seeks to either mimic biological molecules or agents that are already on the market.  Small chemical changes are made to optimize the properties of the drug.  For example, the chemists may want the drug to be eliminated from the body more slowly so the patient can take less drug and achieve the same results.  Another typical issue is to improve the efficacy the drug and reduce side effects.    
In conclusion, there is little hope of the FDA approving lorcaserin for weight loss and management.  If the agent is approved by the FDA, then ARNA is a good short term buy and then sell.  Lorcaserin is Arena's most advanced drug candidate.  ARNA has four other drug candidates (including one with Ortho-McNeil Janssen).  All of them are in Phase I and it is too early to project whether any of them will be a success.  ARNA states that its main interest is designing drugs for G-protein coupled receptors (GPCRs), which are a very common type of receptor.  It should be kept in mind that these receptors are rather complex and difficult to only elicit the desired response because different receptors interact with each other.  Given the current product pipeline and lack of diversification (different ways the drugs work) of these products (think about this like diversifying your stock portfolio), for long term investors, I would recommend not buying or if you own ARNA to sell the stock.       

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