Arena Pharmaceuticals, Inc. (ARNA)

Currently in the prescription weight loss market patients have 2 options: Xenical or Meridia. Xenical blocks fat absorption in the gut by blocking an enzyme that breaks long chain fatty acids into smaller pieces (thus blocking the ability of the gut to absorb fat). The downside is the more fat in your diet you block, the more fat comes out in your stool. This can sometimes have dramatic and embarassing results that the pharmaceutical industry calls "anal leakage". The practical end of this is that you have greasy, foul smelling stools that will stain anything they come in to contact with. Nice picture, I know.

Meridia works by blocking the reuptake of the neurotransmitters norepinephrine and serotonin; much like the antidepressants Effexor and Cymbalta. What this means is that you effectively have more norepinephrine and serotonin at the synaptic terminals, stimulating the target neurons. The downside of this is that increasing norepinephrine can have the untoward side effect of increased anxiety, agitation, and tremulousness. It also will raise your blood pressure. Because of the risk of elevated blood pressure, Meridia is contraindicated in patients with high blood pressure. Well, guess what. Obese people tend to have high blood pressure. It's just one of the problems that occur when you are overweight. So you lose a large chunk of your target population right off the bat. And because of the side effect profile you have a significant portion of patients that just do not continue to take the medication.

This leaves a wide open market for an effective weight loss medication. Arena's lead drug is lorcaserin, a selective 5HT2C receptor agonist. What this means in English is that it almost exclusively stimulates one subtype of serotonin receptor; that subtype that is located in the satiety center in the brain. This is significant because norfenfluramine, the wildly popular weight loss drug that was taken off the market for causing damage to cardiac valves stimulated both 5HT2C and 5HT2B receptors. It is believed (and supported by the successful safety data Arena has compiled after an independent safety analysis specifically looking at the effect on cardiac valves) that it is the 5HT2B receptor stimulation that resulted in the cardiac valve damage. The 5HT2C receptor, on the other hand, increases satiety thus causing you to eat less because you feel full.

At the 20mg dose of lorcaserin, 31% of patients lost 5% or more of their total body weight (or approx. 8 lbs average) after 85 days without diet or exercise as compared to less than 1 lb average weight loss in those patients taking the placebo. In the phase 3 trial which is still underway, there is over 3000 patients enrolled and they will be looking at weight loss results when combined with a program of healthy diet and exercise. I think we will see even more dramatic results.

This medication has the potential for blockbuster sales if everything pans out as it is expected to. I own shares in real-life and am looking to expand my position.