West Coast Editor

Shares of Arena Pharmaceuticals Inc. dipped only slightly on news that Phase II results caused Merck & Co. Inc. to drop MK-0354 for dyslipidemia, as investors kept their eyes on the promise of the later-stage, obesity drug lorcaserin.

Arena did not release data from the trial, but is "continuing with backup compounds for an atherosclerosis indication," David Walsey, director of corporate communications, told BioWorld Today. And MK-0354 will be pursued preclinically in a separate indication in which investigators saw hints of efficacy, though Walsey could not disclose more because rules of the Merck deal prohibit him.

Arena's stock (NASDAQ:ARNA) closed Tuesday at $11.93, down 32 cents.

The Phase IIa with the niacin receptor agonist MK-0354 began in May, triggering a $4 million milestone from Whitehouse Station, N.J.-based Merck under a research collaboration and license deal made four years ago. (See BioWorld Today, Oct. 18, 2002.)

Merck and Arena hoped MK-0354 would boost HDL cholesterol levels (since niacin does), and thus work against atherosclerosis. The firms still believe the targeted receptor is responsible for niacin's activity, Walsey said, but the data apparently disappointed Merck, which is paying Arena $5.7 million a year for research through next October 2007.

Jack Lief, president and CEO of the San Diego-based firm, said Monday at a New York conference sponsored by UBS Investment Bank that Arena so far has gained $45 million from the Merck deal, and more potential milestone payments lie ahead.

Lorcaserin, formerly ADP356, entered its Phase III program earlier this month. By stimulating the 5-HT2C serotonin receptor in the hypothalamus, the drug helps regulate satiety and influences metabolic rate. Arena has signed no partner for lorcaserin but probably will, if safety data from the Phase III trial prove clean in the middle of next year. (See BioWorld Today, Sept. 13, 2006.)

The drug is "completely different, completely unrelated [to] the old-fashioned compounds, the fenfluramine class of compounds that was completely non-selective" about serotonin receptors, Lief said.

Side effects in Phase II included headaches that lasted only a couple of hours. "Importantly, there was no difference in cardiovascular measurements," he said, and lorcaserin has completed all toxicity testing.

"There was no evidence [of toxicity] in monkeys, even after 12 months of dosing - very high doses, more than 50 times human exposure," Lief said. The Phase III program will include three large pivotal studies, testing 6,000 patients before it's over.

"We'll be evaluating all three studies as pivotal studies for our [new drug application filing], which we're expecting in 2009," he said.

ADP125, Arena's selective 5-HT2A receptor inverse agonist for insomnia, might also perk Wall Street's interest.

"The market is quite crowded, but the crowding occurs with all these compounds that are [GABA-A receptor] active," Lief noted. "The reason GABA works so well is that it suppresses the central nervous system. It's a very effective agent to induce sleep, however, there is next day impairment associated with that."

ADP125 is due to start Phase II late this year. Arena does not expect to have the hangover effect, impairment or abuse potential with its compound, which aims at a "very much under-treated market," Lief said.

A diabetes candidate known as APD668 - partnered with Ortho-McNeil Inc., a unit of New Brunswick, N.J.-based Johnson & Johnson - could start Phase II trials next year. APD668 targets an orphan G protein-coupled receptor (known as the glucose-dependent insulinotropic receptor) in the pancreas.

Arena got $22.5 million in initial payments from J&J in the deal, slated to run through the end of this year. "We hope to announce the extension of that collaboration at the appropriate time," Lief said.

Also in Arena's pipeline: APD791 for thrombosis, gearing up for Phase I trials. The compound is a small-molecule inhibitor of the 5-HT2A receptor that blocks the serotonin-amplified aggregation response and has shown anti-thrombotic activity in animal models, and allows, Lief said, for normal clotting without increasing the bleeding risk associated with the likes of aspirin and Plavix (clopidogrel, from Paris-based Sanofi-Aventis Group and Bristol-Myers Squibb Co., of New York).