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The San Diego-based company cited costs associated with its weight-loss drug, lorcaserin, as the primary reason for the layoffs, which will be completed by June 22.
“Given the challenging economic environment, we believe it is necessary to reduce our cash usage and provide Arena with additional financial flexibility to support our expected filing of a New Drug Application, or NDA, for lorcaserin,” the company stated in the filing.
This is by far the largest layoff in Arena’s history, according to a company spokesperson. A Wall Street darling just a couple years ago, Arena’s stock has fallen hard since it announced Phase 3 trial results on lorcaserin on March 30. The results showed that lorcaserin was safe and even lowered cholesterol and blood pressure. However, it met only one of the two weight-loss benchmarks established by the U.S. Food and Drug Administration.
Almost half of the patients taking lorcaserin lost at least 5 percent of their body weight, compared with 20 percent of patients taking a placebo. That cleared one of the FDA hurdles. But it fell short of the FDA’s second mandate that people taking the drug lose, on average, 5 percent more weight than people on the placebo. The results showed that the average weight loss was 3.6 percent more for those on the drug.
Arena stock dropped 28 percent the day the trial results were announced, and since has dropped another 28 percent as of today’s market close. My most recent story details Arena’s troubles since the trial results, and this story from February delves into how 2009 is a make-it-or-break-it year for Arena.