Orexigen, Arena surge after FDA panel backs rival anti-obesity drug

Orexigen Therapeutics (OREX) and Arena Pharmaceticals (ARNA) - which have both developed anti-obesity drugs - are jumping after an anti-obesity drug developed by VIVUS (VVUS) was endorsed by most members of an FDA panel. After an FDA committee voted 20-2 to recommend that the agency approve VIVUS' Qnexa anti-obesity drug, Piper Jaffray wrote in a note to investors that the vote was positive for Arena Pharmaceuticals' (ARNA) stock. Piper predicts that the FDA will be satisfied by new data and analysis provided by Arena to address previous concerns about the company's anti-obesity drug, Lorcaserin. The firm reiterates its $2.50 price target and Outperform rating on Arena. Meanwhile, Leerink Swann remains extremely upbeat on Orexigen's prospects. In fact, the firm still views Orexigen as the best positioned anti-obesity drug maker. Leerink notes that Orexigen has already reached an agreement with FDA on the design of a study into the effects of Cotrave on the cardiovascular system. The firm believes that the company may be able to re-file for Contrave approval as early as 2012, and it views the company's risk/reward profile as "highly compelling." Leerink recommends buying the stock. In early afternoon trading, Arena gained 9c, or 4.70%, to $1.89, while Orexigen surged 54c, or 17% to $3.75. VIVUS rallied 87.77% to $19.81.