Reuters: Global Markets: Arena shares slump 14 percent before ruling on diet drug

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Arena shares slump 14 percent before ruling on diet drug Jun 22nd 2012, 17:16 Fri Jun 22, 2012 1:16pm EDT (Reuters) - Shares of Arena Pharmaceuticals Inc (ARNA.O) fell about 14 percent on Friday, ahead of a key meeting in which U.S. regulators are expected to rule on whether to approve its experimental weight-loss drug. In afternoon trading, the stock was down $1.63, or 14 percent at $10.03. Earlier, it fell to as low as $7.80, a drop of more than 33 percent from Thursday's close. The U.S. Food and Drug Administration is expected to rule on whether to approve the company's drug lorcaserin by June 27. Investors have been optimistic about the prospects for the drug, and - even with Friday's declines - the stock has appreciated more than 430 percent this year. There was no news on Friday to explain the decline. "Biotech stocks often display erratic trade patterns heading into critical FDA decisions," said TD Ameritrade chief derivatives strategist J.J. Kinahan. "Many of the traders are speculating that this could be profit taking as this was a $2 stock two months ago." "On the options front, we are seeing speculators using the sell-off as an opportunity to take bullish positions by buying weekly June calls expiring next week and July calls expiring on July 20," Kinahan said. (Reporting by Toni Clarke, additional reporting by Doris Frankel in Chicago; Editing by Bernadette Baum) Link this Share this Digg this Email Reprints

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