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scale1After meeting with FDA officials to review the recent rejection of its Lorqess diet pill, Arena Pharmaceuticals (NASDAQ:ARNA) now plans to refile its application by the end of 2011. This means, of course, its drug probably will not become available until 2012 and, by then, could well be the last of a new round of diet pills to arrive in pharmacies. Hardly a competitive advantage.

You may recall that an FDA advisory panel voted 9-to-5 last September not to recommend approval for Lorqess over concerns the drug may cause tumors in rats and efficacy was marginal. Meanwhile, Vivus (NASDAQ:VVUS) failed to win agency approval for its Qnexa pill over side effect issues (look here), although the same FDA panel more recently did endorse the Contrave drug from Orexigen Therapeutics (NASDAQ:OREX) (read this).

The three-way race is being closely watched since obesity is such a pressing health issue and also because the FDA has not approved a new diet pill in more than a decade. Safety issues, in fact, caused Pfizer’s (NYSE:PFE) Wyeth to yank two drugs in 1997 and a few months ago, the FDA forced Abbott Labs (NYSE:ABT) to pull its Meridia pill (back story).

But after meeting with the agency, Arena will now conduct some preclinical studies and one short clinical trial - very short, as in one week - in which 10 volunteers will be enrolled in order to collect blood and spinal fluid to identify the safety margin for development of brain astrocytomas in rats and humans. At issue is the mechanism causing tumors to develop, including in male rats given high doses.

In a conference call with analysts, Arena CEO Jack Lief - who was criticized earlier this year for failing to disclose rat tumor data sooner (see this) - told analysts “we are confident that we have a path forward” and said he was “encouraged” by the meeting with FDA officials. Naturally, he is hoping to salvage the $50 million deal signed earlier this year with Eisai (OTCPK:ESALY).

Nonetheless, the remarks were greeted with a bit of caution. As William Tanner, a biotech analyst at Lazard Capital Markets, noted, “somewhat unconventionally, the company held the call prior to receipt of the meeting transcript,” which is due in January. In other words, Arena briefed analysts who did not have the benefit of being able to refer to the transcript of the meeting between the drugmaker and FDA officials. This may have robbed them of some needed context, if nothing else. The transcript may not yield any further questions or doubts, but for the moment, the move appeared dubious.

That said, Arena may still be at a disadvantage.

In an investor note, Leerink Swann analyst Steve Yoo writes that he expects the FDA to soon approve Orexigen’s Contrave and that Vivus “will not be required to do large pre-approval studies and could resubmit” its application to the FDA in the first half of next year and win approval by the second half of 2011. And so, “Arena will likely be the third player to market with an efficacy that is not as compelling as the others but a safety profile that may provide a marketing advantage,” he suggests.

Tanner, however, appears more cautious, writing that “although there may be a glimmer of hope (or at least the absence of a death knell) for Lorqess, we do not foresee the stock appreciating significantly in value until there is evidence that the issues are being effectively addressed.”

Disclosure: None

Source: A Future for Arena's Diet Pill? Fat Chance