Why Arena’s Diet Pill Approval Could Be the Time to Take Your Profits

This seems like good news for obese Americans, and a rare sign of success in the pharmaceutical industry: the Food and Drug Administration just approved a new diet pill, Belviq, the first such pill in 13 years. Some analysts predict it’ll be a blockbuster that brings in $1 billion annually, reports the New York Times.

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But if you own stock in the company behind this, Arena Pharmaceuticals (ARNA), you might consider taking profits. Belviq was initially turned down by the FDA in 2010, after high doses of the drugs caused tumors in rats. Public Citizen, a consumer group, calls the FDA’s current decision “reckless” and predicts the drug will be pulled from the market, just like Abbot Laboratories' (ABT) Meridia, which was found to have raised the risks of heart attacks and strokes in some patients. And the only other diet drug approved for long-term use is the rarely-used Xenical, from Roche. People who use it lose weight, but not enough to matter. And of course we all remember the Fen Phen debacle.

Hope spring eternal on diet pills, but reality has been disturbing.

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