It proved to be second time lucky for Arena Pharmaceuticals, Inc. (ARNA - Free Report) and Japanese entity Eisai Inc. with the companies finally gaining US Food and Drug Administration (FDA) approval for their weight loss drug, Belviq (lorcaserin HCl).
The FDA cleared Belviq as an adjunct to a healthy diet (low on calories) and increased physical activity for chronic weight management in obese (Body Mass Index, or BMI, >30) or overweight (BMI >27) adults suffering from at least one weight-related co-morbid condition. The move marks the first FDA approval for a weight-loss drug in 13 years.
While clearing the drug, whose safety and efficacy while being coadministered with other weight loss products and the effect on cardiovascular morbidity and mortality are yet to be established, the FDA recommended Arena’s obesity drug to be classified by the US Drug Enforcement Administration (DEA) as a scheduled drug.
We note that there are five classes of drug schedules. While drugs with the greatest potential for abuse are placed in the first schedule, drugs with the least abuse potential are in the fifth schedule. Belviq has been requested to be put in the fourth schedule.
Eisai, who will market Belviq in the US, will decide on the drug’s launch only after the DEA gives its verdict on the matter. Belviq will target the highly lucrative obesity market following its launch.
Following the FDA approval, the partners will conduct post-marketing studies to evaluate the safety and efficacy of Belviq for weight management in the pediatric population. Post-marketing studies will also be conducted to evaluate the effect of long-term Belviq therapy in overweight and obese patients suffering from cardiovascular disease or who are exposed to cardiovascular risk factors. The companies intend to work with the FDA on the finalization of the post-marketing study designs.
Success tastes sweet for Arena
We note that success with Belviq did not come straightaway for Arena. The company did not taste success in its first attempt to gain FDA approval for Belviq. The US regulatory body issued a complete response letter (CRL) to the companies in October 2010 in response to the new drug application (NDA) submitted in December 2009 citing tumor-related safety concerns. The FDA also asked for additional data. The FDA accepted the re-submitted NDA and assigned a target date of June 27, 2012. The FDA approved the drug on that date following a positive recommendation by its advisory panel in May 2012.
We note that Belviq is under review in the EU. Approval in the EU would further boost the sales potential of the drug.
Neutral on Arena
Even though the FDA approval of Belviq is a huge boost for Arena, we prefer to remain on the sidelines with a neutral view on the stock until visibility is obtained on the drug’s DEA status. Our long-term Neutral recommendation is in line with the Zacks #3 Rank (Hold rating) carried by the company in the short run. Other companies that are working on gaining approval for their obesity candidates include Orexigen Therapeutics, Inc. and Vivus Inc. (VVUS - Free Report) . The FDA is expected to decide on Vivus’ obesity candidate Qnexa shortly (target date: July 17).