Shares of Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) have exploded over the past few months on heavy speculation that the FDA will finally approve its obesity drug Lorcaserin. The Food and Drug Administration is expected to make its decision by June 27 and shares of the diet pill maker are seeing explosive gains!
Back in 2010 the FDA rejected the drug citing a study that linked Lorcaserin to tumors in rats. This study has long since been discredited and is no longer an issue.
Obesity has become a major healthcare disaster worldwide and it's even worse in the USA where two thirds of adults are overweight and one third is clinically obese. The market for weight loss drugs in the US alone is around $268 billion a year so it is easy to understand the massive potential for a drug like Lorcaserin. While current weight loss pills can reduce weight by an average of 5% a year, Lorcaserin is doubly effective and averaged 10% in trials.
It's fairly obvious the investment community believes the FDA will approve Lorcaserin and I too support that theory. All the evidence that I have looked at suggest that the drug will easily be approved by a wide majority in the vote.
ARNA is definitely one to watch this week and next and I would not be surprised to see shares continue to rise significantly.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.