Arena Reduces Staff by 25% in Wake of Delayed Obesity Therapy Approval

Firm notes new requirements for lorcaserin NDA resubmission.

Reeling from the delay in getting its anti-obesity drug lorcaserin approved last year, Arena Pharmaceuticals is reducing its U.S. workforce by approximately 25%, or 66 employees. The company expects a one-time restructuring charge of $3.8 million and to decrease annual cash expenditures by approximately $13.5 million.

FDA sent Arena and U.S. partner Eisai a complete response letter (CRL) in October 2010 asking for additional clinical and nonclinical information. A subsequent meeting with the agency identified additional requirements including a clinical study.

While the company’s stock price achieved a 2010 high of $7.95 in July, by October it was trading below $2. It opened trading today at $1.75, dropping 12.5% from yesterday’s close.

Arena will use its resources to work on clearing up FDA’s concerns over the lorcaserin NDA, with resubmission now expected by the end of this year. Other areas of focus over the next 12 months will be on completing the ongoing Phase Ia trial for APD811, an agonist of the prostacyclin receptor intended for the treatment of pulmonary arterial hypertension, and advancing APD334, an agonist of the S1P1 receptor intended for the treatment of multiple sclerosis, toward clinical development.

Arena also plans to explore exclusive partnering opportunities for its oral GPR119 agonists, including APD597, and next-generation compounds and nonexclusive partnering opportunities for its portfolio of patents and patent applications related to the discovery and development of GPR119 receptor agonists.

“The company expects to end fourth quarter 2010 with $150 million in cash and $60 million in debt, of which $20 million is due in July 2011,” according to Steve Y. Yoo and Joshua Schimmer, M.D., biotechnology analysts at Leerink Swann. “After the restructuring we expect Arena will have sufficient cash until mid-2012.”

Arena and Eisai reported receipt of FDA’s CRL regarding the lorcaserin NDA on October 23, 2010. The companies completed an end-of-review meeting with the agency on December 22, 2010, which resulted in additional requirements.

“We believe the new requests add to the regulatory uncertainty and will most likely push out resubmission of the NDA beyond the company’s guidance of end of 2011,” say Yoo and Dr. Schimmer. “Of the companies with late-stage obesity drugs, we believe that Arena could be the last to market with a modestly efficacious drug.”

Other contenders are Orexigen with Contrave and Vivus Pharmaceuticals’ Qnexa. Orexigen was the only company to win over FDA’s Metabolic Drugs Advisory Committee, which voted 13 to 7 for its approval. The NDA has a PDUFA action date of January 31. Vivus, however, did not receive a positive recommendation from the agency’s advisory panel, and in October the FDA sent the firm a CRL for Qnexa.

Arena and Eisai’s CRL mostly noted the three nonclinical issues. The first relates to the diagnostic uncertainty in the classification of mammary masses in female rats. As part of addressing this issue, Arena has convened five independent pathologists to re-adjudicate the female rat mammary tumor diagnoses from the rat carcinogenicity study. The FDA has reviewed and agreed to Arena’s protocol, and this work is ongoing.

The second issue relates to demonstrating a mechanism for mammary adenocarcinoma in female rats that is reasonably irrelevant to human risk. Arena is planning experiments to further test the theory that lorcaserin causes mammary tumors in rats by increasing prolactin. The FDA has recommended a dosing duration of no less than three months to establish a causal relationship between lorcaserin, prolactin elevation, and mammary tumor development in rats.

Subsequent to the end-of-review meeting, the FDA requested that Arena consider performing a separate 12-month study in female rats that would test whether transient prolactin elevation mediated by short-term exposure to lorcaserin can result in mammary tumors in rats.

The third issue in the CRL relates to the unidentified mode of action and unclear safety margin for lorcaserin-emergent brain astrocytoma in male rats. Because the mechanism for induction of astrocytomas in rats is unknown, Arena will focus on providing additional information designed to demonstrate that an adequate safety margin exists for humans. Arena plans to conduct nonclinical experiments including receptor pharmacology studies and a small clinical study to measure lorcaserin concentrations in human cerebrospinal fluid to provide additional data that may be informative for predicting human brain levels at therapeutic doses of lorcaserin.

At the FDA’s recommendation subsequent to the end-of-review meeting, Arena will expand the receptor studies to more fully characterize lorcaserin’s activity at the 5-HT2B receptor to further assess the risk of valvulopathy.

In addition, the FDA expressed concern over the abuse potential of lorcaserin and the available data related to abuse potential. It recommended that Arena modify and repeat two nonclinical studies to provide additional safety information for labeling and scheduling decisions. Arena is preparing to initiate these studies pending a meeting that is scheduled to take place with the Controlled Substances Staff in February.

The FDA has requested that Arena submit protocols prior to initiating certain studies and expects to provide Arena with its comments and recommendations within approximately one month of each protocol submission.

“Our ongoing discussions with the FDA reflect our commitment to addressing the issues raised in the CRL to the agency’s satisfaction,” Jack Lief, president and CEO. “We now have a greater understanding of the FDA’s position as we move forward with our plans to resubmit the lorcaserin NDA.”

Lorcaserin is a new chemical entity that is believed to act as a selective serotonin 2C receptor agonist. The serotonin 2C receptor is expressed in the brain, including the hypothalamus, an area believed to be involved in the control of appetite and metabolism. Arena has patents that cover lorcaserin in the U.S. and other jurisdictions that in most cases are capable of continuing into 2023.