Arena Pharma Could Be on the Verge of Collapse

May.18.09 | About: Arena Pharmaceuticals, (ARNA)

Editors' Note: This article has been disputed and the author has responded to the dispute. We asked the disputant to submit an article outlining their position. Here's the disputant's response.

I wrote in March about locaserin, Arena Pharmaceutical's (NASDAQ:ARNA) serotonin ligand for obesity. Their clinical data had come out, and things (at least to me) didn't look good. They didn't quite make the minimum threshold for efficacy, and the FDA isn't in a mood to take a flyer on things that don't quite work.

Well, according to Ruthanne Roussel at Obesity Investor, the company looks like it could be running out of cash. So far, at any rate, no partner is appearing. Obesity has always been a tough area to work in, and this economic environment isn't making it any easier for the smaller companies to survive. Arena's done some interesting work over the years, and I'd hate to see them collapse. But it sure looks like a possible outcome at this point...

Update: note that not everyone agrees with my take here. On the other hand, others are even more harsh. . . we'll see what comes out in the end. And as always, since I've said nothing about having a position in Arena's stock, that means that I have none.