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Memo to biopharma executives: when talking to shareholders, take care to tell the whole truth and nothing but the truth.

That’s the message delivered this week to Arena Pharmaceuticals after a federal appeals court ruled on Wednesday that shareholders can proceed with a lawsuit alleging the company deliberately withheld crucial information about a potential problem with a widely anticipated diet drug.


At issue was a series of statements Arena executives made in 2009 about the progress they were making in winning US Food and Drug Administration approval for the Belviq diet pill. At the time, the drug was one of three forthcoming such medicines — which were being developed by different companies — that were closely tracked by physicians and investors, given the dearth of treatments for the overweight.

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  • Arena greenhorns forgot first principles:
    1) FDA ALWAYS has the gun.
    2) Therefore don’t provide them the ammunition. If it was significant enough the agency would have raised it on their own, but nobody is smart enough to know when that would have occurred.

    By raising the issue of the rat tumors, the company probably thought they were doing due diligence, but the minute they raised the issue it became material information subject to shareholder disclosure.

    The FDA doesn’t hand out gold stars; hollow point bullets is more up their alley.

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