Ten red flags in the FDA's risk-benefit analysis of Pfizer's EUA application to inject American children 5 to 11 with its mRNA product

https://tobyrogers.substack.com/p/ten-red-flags-in-the-fdas-risk-benefit

Arena Pharmaceuticals, Belviq (Lorcaserin), Obesity, and BORG

Arena Pharmaceuticals weight management pill Belviq (Lorcaserin) will have its commercial launch tomorrow.  It was a long, hard road to FDA approval and DEA scheduling.  I am one of the proud creators and members of the BORG activist investor group, now 47 strong.  There were many strong contributors, but Dr. Daniel Lopez deserves the most credit.  He challenged the manufactured safety risks--and proved they were false.

The naked short hedge funds, captured media, and factions of the FDA won the battle, but we won the war.  Millions of obese, overweight, and diabetics will live better lives due to Belviq.  I'm certain many lives will be saved.  Thank you Arena, BORG, the FDA for coming around, and the many clinicians who are treating their patients.

Obesity and its associated diseases cost this country hundreds of billion of dollars.  The availability of Belviq will be a major step toward alleviating pandemic obesity.

Here is an article in the Wall Street Journal on the beginnings of BORG:

http://online.wsj.com/article/SB10001424052702304023804575566731686435318.html

By ALICIA MUNDY And JENNIFER CORBETT DOOREN

WASHINGTON—Federal regulators are set to decide the fate of a new obesity drug as soon as Friday, and with it the future of a small biotechnology company whose investors are conducting an unusually aggressive lobbying campaign to get the pill approved.

The drug, lorcaserin, made by Arena Pharmaceuticals Inc. ARNA -0.23% of San Diego, was rejected in a 9-to-5 vote by a Food and Drug Administration advisory committee in mid-September.

That prompted outrage among Arena shareholders who have spent thousands of hours on their own scientific analyses, contacted Congress, set up an online petition and flooded the FDA with comments saying the agency didn't give the diet pill a fair hearing.

It is one of a few recent cases in which individual investors in a company—not just the company itself—made their presence felt in advance of a make-or-break decision.

Arena shareholders, about 40 of whom are in an investor group nicknamed Borg, say they're raising important questions about possible bias and ignorance among the FDA panel members.

"What has mobilized so many people, within our group and beyond, are the comments and behavior of some FDA officials and what we believe to be incorrect scientific conclusions," said Douglas Park, an Arena shareholder in San Diego who used to work for the company.

Some doctors and FDA officials fear the nascent trend poses dangers to the drug-approval system.
"It's a good thing everybody is allowed to have their say, but the FDA has to do its job," said heart-disease expert Sanjay Kaul, who served as an FDA adviser and voted against lorcaserin. "This is about patients, not about money."

The FDA is due to decide on lorcaserin by Friday, although it could seek a delay. The agency usually follows the advice of its outside panelists but isn't required to do so.

Investors are showing new assertiveness because of financial uncertainty in the biotechnology business and anger at a perceived lack of predictability in FDA decisions, said former FDA Deputy Commissioner Scott Gottlieb, now a partner in a health-care investment firm.

An Arena spokesman said the company isn't involved in investor lobbying and hasn't encouraged it.

Many investors saw Arena's pill, which affects a part of the brain involved in appetite control, as safer than rival drugs. They were surprised when the FDA staff and the agency's outside advisers gave it a thumbs-down in September. FDA reviewers said lorcaserin was only modestly effective in trimming pounds and had some safety issues.

The company's stock fell 73% in the week of the vote. Arena shares declined 6.4% to $1.46 in 4 p.m. trading Thursday on the Nasdaq Stock Market.

"I got punched in the belly real bad by the FDA," said Peter Becker, a retired Army colonel in Texas. The former administrative law judge said he had bought a "very, very large position in Arena" after he spent many hours studying the safety of lorcaserin versus other diet drugs.

The backlash began quickly. One investor accosted an FDA panel member with harsh words in a hallway minutes after the Sept. 16 vote, according to people who were there. It was first reported by The HealthCare Channel digital video site.

The Borg group says the FDA understated lorcaserin's efficacy in weight loss and exaggerated safety issues.

Another investor wrote to Dr. Kaul, the panelist, politely suggesting that, "to hear the scuttlebutt going around," the panelists incorrectly assumed a risk to humans after some rats on lorcaserin developed tumors.

"Given the issues at stake here and the money invested by both ARNA [Arena] and its Stock Holders," the investor wrote, Dr. Kaul had a "responsibility to let the FDA know" that he would have voted "yes" if he fully understood the tumor issue. Dr. Kaul, based at Cedars-Sinai Medical Center in Los Angeles, says the rat issue didn't figure significantly in his vote.

The chairman of the advisory committee, Abraham Thomas of Henry Ford Hospital in Detroit, voted for the drug, but he said the shareholders are overstating what it can do.

"I could have gone either way. It's just not a very effective medication," said Dr. Thomas, who previously ran the obesity clinic at Brigham and Women's Hospital in Boston.

An FDA spokeswoman said the agency was careful in choosing panelists and reviewing drug safety and efficacy data. The FDA's meeting process was fair, she said.

One of the few precedents for the lorcaserin activism came in the fight over the prostate-cancer drug Provenge, which was rejected by the FDA in 2007. Following additional research and pressure from investors in Provenge maker Dendreon Corp., DNDN +0.64% the FDA approved Provenge in April of this year.

Several Arena shareholders said they had also invested in Dendreon, whose stock soared after the FDA approval.
 
Write to Alicia Mundy at alicia.mundy@wsj.com and Jennifer Corbett Dooren at jennifer.corbett-dooren@dowjones.com

Eisai's Coats on 2013 Sales of Arena's Obesity Drug

http://bloom.bg/15yNAkb

Arena Pharmaceuticals Provides Update on Upcoming US Launch of BELVIQ® (lorcaserin HCl) for Chronic Weight Management

Better late than never, DEA.

http://finance.yahoo.com/news/arena-pharmaceuticals-provides-upcoming-us-193000856.html

Mystery objectors delay weight loss drug

http://www.ft.com/intl/cms/s/0/ef3ca4ae-aa65-11e2-9a38-00144feabdc0.html#axzz2RDD5TuHr

The launch of a new weight loss drug is being held up by the US Drug Enforcement Authority, after a surge in anonymous objections that some investors fear is manipulating the process.

Belviq, developed by Arena, the US biotech company, was authorised as safe and effective by the Food and Drug Administration last June, but has yet to be ratified by the DEA under a process designed to ensure controlled use of medicines that come with a risk of abuse.

The FDA recommended that Belviq, known generically as Lorcaserin, be classified as a “schedule IV” drug, a low-risk category, which gives regulators some supervisory powers to oversee prescriptions.

But an unusually high number of 69 comments have been filed on Belviq, creating a greater workload for DEA officials in making an assessment.

The stalling has allowed Qsymia, a weight-loss drug made by Vivus, a rival US biotech, to gain a lead over Belviq, even though the drug was approved after Belviq by the FDA. While most of the 47 positive remarks on the DEA website are identified by the name of the author, 19 of 22 negative ones are anonymous, sparking debate over whether individuals with a vested interest in delaying Belviq have been posting criticisms.

FDA OKs first new prescription diet drug in a decade

http://www.usatoday.com/news/health/story/2012-06-27/new-prescription-diet-drug/55862276/1

Lorcaserin Receives Positive Vote From FDA Advisory Committee

http://finance.yahoo.com/news/lorcaserin-receives-positive-vote-fda-210200560.html

Race To Undo The Cure

This is an expose on miscreants within the media, the FDA, the medical community, and hedge funds.

http://caretolive.com/2011-02-21/race-to-undo-the-cure/

F.D.A. Declines to Approve Diet Drug

http://www.nytimes.com/2011/02/02/business/02drug.html?_r=1&hp

“It seems like the F.D.A. is heeding the lessons from the past,” said Dr. Sanjay Kaul, a cardiologist at Cedars-Sinai Medical Center in Los Angeles, who applauded the agency’s rejection of Contrave.

“The F.D.A. is trying to send a message to the pharmaceutical industry that repackaging old drugs is not the way to go,” said Dr. Kaul, who was a member of the advisory committee minority that voted against Contrave in December. “You’ve got to come up with some new innovative ways of addressing this objective.”

If true, why did Dr. Kaul want to approve Qnexa, Vivus' obesity drug, which combines phentermine and topiramate, while rejecting Arena's Lorcaserin, which is an innovative single agent?  Phentermine has been linked to adverse cardiovascular side effects, while extensive valvulopathy clinical trials revealed no statistically significant increased risk with Lorcaserin?

MannKind Updates Status of New Drug Application for AFREZZA(R)

http://www.news.mannkindcorp.com/phoenix.zhtml?c=147953&p=irol-newsArticle&ID=1510884&highlight=

MannKind Corporation (Nasdaq: MNKD) today announced that it was informed on December 27, 2010 by the U.S. Food & Drug Administration (FDA) that the agency will not be able to complete the review of the New Drug Application (NDA) for AFREZZA^(R) (insulin human [rDNA origin]) Inhalation Powder by the action date of December 29, 2010. The FDA stated that it will require approximately four additional weeks to complete its review of the NDA.

See disclaimers in the left side bar.

Disclosure:  no position in MNKD.

FDA criminal investigations chief resigns

http://www.cnbc.com/id/40341826

The head of the Food and Drug Administration's criminal investigation unit is stepping down, months after the latest round of criticism directed at his department by congressional investigators.


Earlier this year the Government Accountability Office said that the FDA must exercise more oversight over Vermillion's unit, which has operated largely independent of agency leadership, despite growing into a $41 million operation with 230 staffers over the last decade. In 2008, House and Senate Republicans questioned the priorities of the criminal investigations unit, specifically its focus on drug abuse cases instead of broader misconduct by large companies.

"I hope that with new leadership, this office will contribute more to the FDA's overall mission of protecting public safety," said Sen. Charles Grassley, R-Iowa, in a statement Tuesday evening. Grassley requested the GAO investigation of FDA's criminal investigation unit.

In September, Grassley brought to light additional complaints against Vermillion in a letter to the GAO.

Grassley said that an anonymous FDA whistleblower contacted his office complaining that the GAO's findings were "less than stellar" and did not include a number of questionable practices by Vermillion.

The whistleblower alleged that Vermillion directed that reports "be changed to sanitize them of derogatory information" about former colleagues from the Secret Service now working at the FDA.

Lorcaserin CRL interpretation

This is one MD's interpretation of Lorcaserin's Complete Response Letter from the FDA.

What do the CRL requirements for Lorcaserin mean in practice?



1. Non-clinical issues

a. “Detailed accounting of all microscopic pathology slides prepared from FEMALE rats that contributed to the mammary tumor incidence data in each update to the FDA and the final study report”

i. Requirement: account for all slides done on those tissue – exactly what it says – an accounting issue.

ii. In total, 65+65+75 = 205 FEMALE rats were given lorcaserin along with 65 untreated control FEMALE rats - see Table 6 in the section: “Genotoxicity and Carcinogenicity Assessment For Lorcaserin” (Mammary Tumors).

iii. This task should not take more than 4 months, leading to a revised report (if needed)

b. Independent pathologists/group of pathologists to re-adjudicate all mammary and lung (unclear why lung) tissues from all FEMALE rats (205)

i. I understand this to mean that since a discrepancy was found between the week-96 tumor incidences at all doses – the reason for the accounting check – these pathologists are to re-read the histological slides and give a final decision on what the true incidences are, so as to settle the discrepancy.

1. This procedure should not take more than 4 months

2. The response does not require a new study, according to advice we have received from a non-clinical safety assessment toxicologist.

ii. During the Arena Conference Call on October 25, 2010, the reason for the discrepancy was provided: The preliminary slides were reviewed on a periodic basis by one pathologist and sent to the FDA prior to the final submission. However, at the end of the study, three independent pathologists performed a peer review of the data and submitted their results, the ones that were included in the final NDA.

iii. The discrepancy between the assessments made by the different pathologists was mentioned by in the section: “Genotoxicity and Carcinogenicity Assessment For Lorcaserin” (5th paragraph; Mammary Tumors), where Dr. Alavi (FDA’s nonclinical pharmacology/toxicity presenter) makes the following statement:

“In subsequent updates and in the final study report, the incidence of adenocarcinoma in the MD and HD females was lower than that reported at week 96 (Table 7a). The incidence of adenocarcinoma increased in the controls and stayed consistent in the low dose group over the same period. The incidence of fibroadenoma increased in all dose groups from week 96 to the final study report, though the numbers notably varied in the mid- and high dose groups (Table 7b). It appears that some of the decrease in the number of adenocarcinoma after week 96 was accompanied by an increase in fibroadenoma, potentially a consequence of the sponsor/CRO reclassifying the observed tumor types.”

1. The question that begs an answer here is: Why did Dr. Alavi not know that the slides had been reviewed by a single pathologist during the study and then by three independent pathologists at the end of the study?

2. It is well known that inter-observer variation can occur in assessments of this nature. This should have been taken into account, rather than implying that the sponsor/CRO had acted improperly in respect of the discrepancy in the final numbers



c. Demonstrate that the apparent increase in aggressiveness of adenocarcinoma in rats administered lorcaserin is REASONABLY (not conclusively) irrelevant to human risk assessment.

i. Here they are asking: With regard to the re-adjudicated results, a statistical analysis must again be carried out on the incidence of fibroadenomas and adenocarcinomas

ii. This is not a new study, but a re-assessment of the existing one. Unless the accounting yields a new surprise, then a further study will not be necessary.

iii. The results will most likely be the same. If they are the same, then Arena needs to demonstrate that the adenocarcinomas seen at the very high and toxic Lorcaserin doses, and the statistically significant increases in fibroadenomas, do not portend a risk to humans. The following information is relevant here:

The incidence of malignant adenocarcinoma tumors identified in the 10 mg/kg/day female group was no different to the normally-occurring incidence of these tumors identified in the untreated control group. Furthermore, in the 30 mg/kg/day female group, a dose 24-fold greater than the anticipated human therapeutic dose, the incidence of malignant mammary tumors was no greater than the normally-occurring malignant mammary tumor incidence reported in the untreated control female rats. Only at 100 mg/kg/day was there a statistically significant increase in adenocarcinoma incidence, but this lorcaserin dose is 82-fold that intended for human use. (Note that if Arena decides to fall into the FDA ‘mechanism of action (MOA) involves prolactin’ “trap”, they will fail and spend an eternity attempting to find the answer. They should not attempt to open Pandora’s box. There are numerous drugs on the market today for which the MOA for pathology is not understood).

Although the fibroadenoma incidence in the rats was found to be statistically significant at all doses, and the practice of combining benign tumors with malignant tumors is commonly done when the cell types are the same, this does not pose a human risk for the following reasons:

1. Fibroadenoma and adenocarcinoma arise from cell types with different histogenesis. Adenocarcinomas are classified under the epithelial histotype, fibroadenomas under the epithelial-stromal histotype (Russo, Gusterson, et al. 1990 and Russo, Russo, et al. 1989).

2. Benign mammary fibroadenomas can only be transformed to malignant mammary carcinosarcoma and never to mammary adenocarcinoma (Russo, Gusterson, et al. 1990 and Russo, Russo, et al. 1989). These are distinctly different tumors.

3. The rat model of tumorigensis closely mimics human breast tumor development.

4. Fibroadenomas rarely progress to adenocarcinoma in the rat.

5. Fatalities from benign fibroadenomas do not translate as a risk to humans.

6. Fibroadenomas rarely progress to adenocarcinoma in the human female and are relatively common (London, et al. 1992).



d. Provide ADDITIONAL DATA/INFORMATION regarding the distribution of lorcaserin to the CNS in animals and human subjects that would clarify or provide a better estimate of astrocytoma exposure margins.

i. Since brain partitioning – brain-to-plasma (BPD) ratio - was not determined in humans, the FDA is concerned that estimates of safety margins based on extrapolation from monkey brain-to-plasma ratios are not reliable. This assumption was made by Dr. Alavi as outlined below:

ii. The problem here is as follows:

1. The brain-to-plasma ratio for lorcaserin is not known in humans since it is a novel new drug that has not yet been studied in this way. But we do know:

a. The brain-to-plasma ratio for lorcaserin for mice is 25 times higher in the brain vs. plasma (of note, there were no brain tumors in mice including the high dose group).

b. The brain-to-plasma ratio for lorcaserin for rats is 29 times higher in the brain vs. plasma.

c. The brain-to-plasma ratio for lorcaserin for monkeys is 10 times higher in the brain vs. plasma.

2. Regarding the reliability of extrapolating monkey brain-to-plasma ratios to human subjects:



Dr. Alavi’s assumption is: "Brain partitioning in human subjects was not determined. Thus, estimating safety margins based on assumptions of partitioning in human subjects is not entirely reliable. Assuming that the monkey best models human partitioning, the estimated safety margin to a non-tumorigenic dose in rats may range from 11x to 17x, with tumors associated with brain exposures that are 40x to 59x higher than clinical exposure. More conservatively, safety margins based on plasma drug levels, which is known for rats and humans, yields a safety margin to the non-tumorigenic dose in rats of 5x, with brain tumors occurring at doses of lorcaserin 17-fold higher than the clinical dose” from the section in the FDA briefing document: from the section “Genotoxicity and Carcinogenicity Assessment For Lorcaserin” (Abstract).



iii. The solution: An extensive review on this very issue (Shen, Artru and Adkison 2004) contradicts Dr. Alavi's opinion that estimating safety margins based on assumptions of partitioning in human subjects is not entirely reliable. Referring to the monkey model, the authors state - “In the second part of our analysis, we examined the issue of whether CSF penetration studies in animals are predictive of human data. We obtained animal and human CSF data on 27 drugs, including 13 antiepileptics, 1 psychotropic drug, 5 anesthetics or analgesics, 5 antibiotics, 1 antiretroviral, and 2 anticancer drugs, and across six animal species, including rats, dogs, rabbits, cats, guinea pigs and monkeys. As can be seen in Fig. 9, there is a reasonably good correlation for the majority of drugs in this survey."

1. In the same article the authors conclude: "Despite the complexity of CSF physiology and pharmacokinetics, CSF penetration studies in animals remain a practical option for the assessment of CNS drug delivery in early preclinical drug development"

a. Monkey brain partition studies can, therefore, be used with reasonable assurance for estimating a drug's margin of safety in the human brain.

iv. The brain-to-plasma ratio for lorcaserin for rats is 29 times higher in the brain vs. plasma and the for monkeys it is 10 times higher in the brain vs. plasma

1. The interpretation:

a. This means that there is 29x more lorcaserin in the rat brain, so the dose given to rats at the LD, MD, and HD will be much higher in the CSF and therefore more toxic.

b. In practice, this means that at any given dose, the higher the brain exposure in rats, the higher will be the estimated brain exposure in humans - From the Tables 13 and 14 in the FDA briefing in the section: “Genotoxicity and Carcinogenicity Assessment For Lorcaserin (Brain Astrocytoma)”

i. Brain exposure in the rat at 30mg/kg (brain tumors present in the rat) = 405-591 mcgm/ml.

ii. Using the brain-to-plasma ration of 10x in the monkeys (multiple the brain exposure in rats by 10).

iii. Brain exposure in humans at the 30 mg/kg (brain tumors present in the rat) = 40x-59x multiple of the clinical dose (10mg bid (twice a day).

iv. Therefore, from the Table, we can see that the margin of safety is at 11x-17x multiple of the clinical dose, which would satisfy the concern brought up in the CRL.

v. The 17x dose is when the tumors first appeared (the 30 mg/kg dose). Hence the tumorigenic dose for humans, when discussing brain/plasma ratios, would then be 40-59x multiple of the clinic dose - far above the 25-fold limit dose in the FDA guidelines.

vi. So from the data on the male rats the risk of developing statistically nonsignificant astrocytomas in the human, assuming that this can be transferred to human risk, would only arise at 40-59 x multiple of the clinical dose. The margin of safety dose would be 17x multiple and perhaps anywhere up to 39x multiple, although the precise value would have to be determined at incremental increases in the dose of lorcaserin (which is not necessary).

vii. However because Dr. Alavi used plasma levels, he concluded that the nontumorigenic dose (level where there are no tumors) gave a margin of safety at only a 5x multiple of the clinical dose. Our analysis suggests that he erred in doing this.



v. Astrocytoma was only statistically significant in male rats in the high dose group, but none of these tumors was found in the female rats.

1. The solution:

a. Arena must supply all MBTD and brain-to-plasma ratio data to FDA in a simple, easy-to-read format.

b. Given adequate resources, this administrative task should not take long.



2. Clinical issues

a. Results on the BLOOM-DM trial. There is nothing more to say on this point.



3. Labeling requirement.

a. Schedule IV: This is not a significant issue. Schedule IV does not necessarily preclude long-term use, although FDA may add restrictions to that effect.

b. They did leave the door open for removal of this label.

c. Arena must discuss with FDA any nonclinical studies conducted to address abuse concerns regarding the long-term use of lorcaserin.



In conclusion, no new studies need to be done except perhaps brain partitioning studies on humans. However, this may not be necessary if the information provided above is correct. If such studies were performed, they would not be long-term experiments and could be completed in a relatively short period, and they may not even need to be carried out under GLP conditions. However, I sense Arena already has all the data required to address this particular concern. Every other aspect of the CRL involves a REVIEW of existing information, nothing else. If everything is submitted in a timely manner, the estimated timeframe for the completion of these reviews should be less than 6 months.



REFERENCES CITED

London, S.J., Connolly J.L., S.J. Schnitt, and G.A. Colditz. "A Prospective Study of Benign Breast Disease and the Risk of Breast Cancer." JAMA 267 (1992): 941-4.

Russo, Jose, Barry A. Gusterson, Adrianne E. Rogers, Irma H. Russo, Seft R. Wellings, and Matthew J. Van Zwietien. "Biology of Disease: Comparative Study of Human and Rat Mammary Tumorigenesis." Laboratory Investigation, 1990: 267.

Russo, Jose, Irma H. Russo, Matthew J. van Zwieten, Adrianne E. Rogers, and Barry A. Gusterson. "Integument and Mammary Glands of Laboratory Animals." In Classification of Neoplastic and Non-neoplastic Lesions of the Rat Mammary Gland, edited by T.C. Uones, U. Mohr and R.D. Hunt, 275-304. Berlin:Springer-Verlag, 1989.

Shen, Danny D., Alan A. Artru, and Kimberly A. Adkison. "Principles and Applicability of CSF Sampling for the Assessment of CNS Drug Delivery and Pharmacodynamics." Advanced Drug Delivery Reviews, 2004: 1825-1857.



Daniel P. Lopez, M.D., F.A.C.O.G.

Diplomate American Board of Obstetrics and Gynecology

BORG Member

FDA's Complete Response Letters

http://www.youtube.com/watch?v=36MZRhbIlus&feature=player_embedded

ARNA investors fight back

http://www.signonsandiego.com/news/2010/oct/09/arena-investors-fight-back-against-fda/

Arena plunges, blames FDA panel over obesity drug

http://www.reuters.com/article/idUSTRE68G2CF20100917

September 15-16, 2010 Meeting of the Endocrinologic and Metabolic Drugs Advisory Committee

FDA and Sponsor briefing documents for Abbott's Meridia and Arena's Lorcaserin advisory committee reviews will be posted here.

http://www.fda.gov/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/EndocrinologicandMetabolicDrugsAdvisoryCommittee/ucm191113.htm

Lorcaserin and diabetes mellitus

http://seekingalpha.com/instablog/523862-kllj-investments/86782-the-importance-of-arena-s-bloom-dm-study

Arena’s BLOOM-DM (Behavioral modification and Lorcaserin for Overweight and Obesity Management in Diabetes Mellitus) study for patients suffering from diabetes is now complete and the results are expected in late 2010. This study was a one-year, randomized, double-blind and placebo controlled Phase III trial on 604 patients with Diabetes Mellitus Type II who were overweight or obese and taking oral diabetes medications. These results will be filed as a Supplemental NDA (sNDA) after LORQESS (Lorcaserin) is approved. This study is of paramount importance for LORQESS to have an indication specific for the treatment or prevention of diabetes. Arena must clinically prove that taking LORQESS will improve HbA1c and Fasting Glucose to receive an indication for diabetes. If this proves to be the case, which was shown in BLOOM and BLOSSOM, then LORQESS could be covered by most Payers for the treatment of diabetes or the prevention of diabetes.

“Data from the 2007 National Diabetes Fact Sheet (the most recent year for which data is available)

Total: 23.6 million children and adults in the United States—7.8% of the population—have diabetes.

Diagnosed: 17.9 million people

Undiagnosed: 5.7 million people

Pre-diabetes: 57 million people

New Cases: 1.6 million new cases of diabetes are diagnosed in people aged 20 years and older each year.

Cost of Diabetes

$174 billion: Total costs of diagnosed diabetes in the United States in 2007

· $116 billion for direct medical costs

· $58 billion for indirect costs (disability, work loss, premature mortality)

See disclaimers in the side bar.

Disclosure: long ARNA shares.

Arena Pharmaceuticals receives $60 million from Deerfield

Shares in ARNA will take a hit temporarily this morning from the dilution. But longer-term, this financing will be beneficial for the following reasons:

1) it reduces the debt load by $30 million
2) it delays one payment for 2 years
3) it adds $30 million of cash to ARNA's coffers
4) it strengthens Deerfield's equity position, which is bullish as Deerfield has insider knowledge into Lorcaserin's New Drug Application (NDA). Deerfield is all in.

http://www.prnewswire.com/news-releases/arena-pharmaceuticals-to-receive-60-million-from-deerfield-management-100100874.html

See disclaimers in the side bar.

Disclosure: long ARNA shares, short January put options.

ARNA Q2 earnings report

http://finance.yahoo.com/news/Arena-Pharmaceuticals-prnews-3737388002.html?x=0&.v=1

Arena Pharmaceuticals, Inc. (Nasdaq:ARNA - News) today reported financial results for the second quarter ended June 30, 2010, and recent developments, including the successful Pre-Approval Inspection, or PAI, of the company's Swiss drug product manufacturing facility by the US Food and Drug Administration, or FDA.

"We have recently achieved a number of important milestones, including the establishment of an agreement with Eisai for the commercialization of lorcaserin in the US, the successful completion of the FDA's pre-approval inspection of our Swiss manufacturing facility and the publication of our BLOOM trial results in the New England Journal of Medicine," stated Jack Lief, Arena's President and Chief Executive Officer. "We are continuing to execute on our plans for lorcaserin as we prepare for the September FDA advisory committee meeting and potential regulatory approval."

See disclaimers in the side bar.

Disclosure: long ARNA sharews.

Jim Cramer likes ARNA as a speculative play

http://www.cnbc.com/id/15840232?play=1&video=1547554002

Normally, Jim Cramer's endorsement is the kiss of death, since I tend to be a contrarian. He has shunned ARNA before, so I was comfortable being long ARNA. Now that shares of ARNA have almost doubled since the July 1 announcement of the marketing partnership agreement with Eisai, Cramer is jumping on the bandwagon. In all fairness, I don't always disagree with Cramer's assessments; his recommendations are just badly timed, and viewers (largely retail investors) end up buying and selling at the exact inopportune times. His viewing audience on CNBC will perhaps drive shares up some more for the time being, as he has a large following. But be careful, because Cramer's rosy predictions have been known to set up retail investors for a disappointment, as short hedge funds could manipulate shares down after the run up. The smart (and sometimes crooked) money ends up slaughtering the dumb money.

However, with this knowledge, longs might be able to wait and buy the dip. The danger is if the horse has left the barn, and shares run up further on anticipation of positive outcomes at the Advisory Committee review September 16, and of course PDUFA review on October 22. It also provides shorts an opportunity, but I don't recommend retail investors short any stock, because the potential losses are limitless, and unless you're in the know, you will lose money even if you are correct on the direction of the price, but wrong on the timing. Wall Street will whipsaw you out of your position, leaving you with losses, despite being "right."

Overall, shares are ARNA are heavily manipulated, with a huge short interest of up to 27% of the float recently. Expect high volatility. Due to recent bullish news, there is heavy buying pressure, but naked shorts will manipulate the stock in order to cover their shorts and escape intact. If the outcomes are positive, shorts without an escape hatch will get torched.

I've been long ARNA for over a year, with an average entry point above $3, way below the current price per share of $5.26. I can afford to spectate while the share price gyrates, confident in Lorcaserin's FDA approval and commercial launch--that's why I'm long. My initial buy of $5 last year was untimely, but due to my bullish conviction for ARNA, I accumulated more shares on the way down to its lows. In other words, I doubled down, a risky proposition, but potentially highly rewarding. I won't deny there were some nervous moments, but in hindsight, my conviction enabled me to accumulate more shares at lower prices. I was able to overcome fear and doubt, and the price suppression ended up being a gift--everybody loves a sale. Sometimes courage and conviction are rewarded.

I'm long, locked and loaded. I'm not interested in trading in and out of this stock. For those that are, good luck to you.

See disclaimers in the side bar.

Disclosure: long shares of ARNA, short January ARNA put options.