Arena Pharmaceuticals Inc plans to resubmit its application for its experimental weight-loss drug by the end of next year, it said on Wednesday after meeting with U.S. regulators.

Arena’s lorcaserin was rejected by the U.S. Food and Drug Administration in October and is generally thought by Wall Street as the least likely of three obesity drugs under FDA review to win approval in the near term.

The company said it would undertake several studies, which mostly do not involve humans, to confirm that cancer signs in preclinical rat data do not translate into risks for humans.

“The meeting discussions reinforce our position that we have a path forward to seek FDA approval of lorcaserin,” Arena Chief Executive Officer Jack Lief said in a statement.

Lief said the company may be able to submit its application sooner as it continues talks with the FDA. Arena and Japan’s Eisai Co Ltd are partners on lorcaserin.

Arena shares were off 19 cents, or 9.3 percent, at $1.85 in morning trading on Nasdaq. The shares had already spiked up some 24 percent earlier this week. Arena had said it was expecting a meeting with the FDA by year end, and investors may have been anticipating an update.

Asked on a conference call with analysts about the heavier-than-normal trading volume earlier in the week, Lief said he had “no idea why our stock traded as many shares as it did.”

The shares had traded at $8.00 in July, before an FDA advisory panel rejected lorcaserin.

Analysts have said that lorcaserin faces broader concerns than Orexigen Therapeutics Inc’s Contrave and Vivus Inc’s Qnexa, in particular the potential cancer signals found in preclinical rat data.

JMP Securities analyst Jason Butler said Arena’s filing timeline would put lorcaserin on track for approval by mid-2012 in a best-case scenario, but he was “slightly skeptical” of approval at this point.

“There may be a path forward here, but it is still by no means certain what will make the FDA comfortable,” Butler said.

Butler noted that the FDA has determined that lorcaserin’s ability to reduce weight is “at best modest” so “there’s a very limited amount of risk that you’re willing to take from a regulatory perspective there.”

Indeed, analysts seem skeptical of lorcaserin’s chances. Of 20 analysts who cover Arena, which has a market value of about $220 million, none has a “buy” rating on Arena shares, according to Starmine.

Orexigen’s Contrave won backing by an FDA advisory panel earlier this month, after rejections for Qnexa and lorcaserin. A decision on Contrave is due January 31.

Analysts also grew more bullish on Qnexa’s chances after the Contrave panel, because the panel’s vote suggested the FDA may not require new studies of Qnexa’s heart risks until after approval.

(Reporting by Lewis Krauskopf, editing by Gerald E. McCormick, Derek Caney, Dave Zimmerman)

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By Lewis Krauskopf

NEW YORK