Arena Pharmaceuticals (ARNA) and Belviq

Arena has a potential blockbuster chronic weight management drug, Belviq. Last week, the Committee for Medicinal Products for Human Use, or CHMP, raised concerns about a potential Belviq approval in Europe and could be setting Arena up for the same fate as its competitor, VIVUS, Inc. (NASDAQ:VVUS) : a rejection.

The major concerns for the European panel revolved around tumors that developed in rats during trials, valvulopathy, and psychiatric events. Fool Keith Speights noted that the CHMP requested information on the tumors and valvulopathy in its Day 180 List of issues, but apparently the questions weren't answered to CHMP's satisfaction.

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VIVUS' Qsymia was ultimately rejected because of CHMP's concerns and Belviq may be staring down a similar rejection if it can't properly address the panels' concerns. However, Belviq's also shown a relatively good safety profile -- at least from its studies -- that would suggest an ultimate approval in Europe, or at least an approval in the EU prior to Qsymia.

The big question mark in this sector has to do with insurance coverage. Aetna Inc. (NYSE:AET)  is already on board with VIVUS and Arena, and these two will need more insurers to join to reduce the out-of-pocket costs that patients seem unwilling to pay.