Arena Pharmaceuticals Inc's obesity drug produced mixed results in a second late-stage trial, sending the company's shares on a roller coaster in furious trading on Friday.

As happened in an earlier trial, the study of Arena's lorcaserin fell short of a U.S. Food and Drug Administration
guideline calling for a 5 percentage point improvement in weight loss between the test drug and a placebo.

But Arena said the 4,000-patient trial satisfied the FDA's alternate requirement by showing 47.2 percent of subjects on the oral drug lost 5 percent or more of their weight, compared with 25 percent of placebo patients achieving that goal.

Although the weight-loss data might not seem impressive at first glance, Summer Street Research analyst Carol Werther said it was very positive.

Werther noted the top 25 percent of patients who responded to lorcaserin achieved extremely good weight loss -- shedding more than 35 pounds.

Rival experimental products such as Vivus Inc's Qnexa combine two drugs, Werther said. Patients taking Qnexa
lost an average of 37 pounds, or 14.7 percent of their body weight, in two late-stage trials unveiled earlier this month.

Lorcaserin is a single-agent, so it's been at risk for not looking as good as competitors that are dual-acting, but some
patients responded very well, said Werther. She stuck by her prior forecast of $1 billion in annual lorcaserin sales.

The wild ride for Arena shares began after the company said late on Thursday it would unveil the data on Friday morning.

Shares soared as much as 38 percent to $6.77 in after-hours trading on Thursday, but then changed direction when Arena released the results overnight and analysts were initially underwhelmed with the weight-loss data.

But spirits rose after investors digested comments made by company executives during a conference call on Friday, where additional efficacy data was discussed.

Shares of Arena were trading at $5.55 in afternoon trading on Friday, up 13 percent from the Nasdaq close of $4.91 on Thursday. About 77 million shares had exchanged hands at mid day, nearly all of Arena's outstanding shares.

The year-long trial found that obese patients taking lorcaserin twice a day, on average, lost 5.9 percent of their
body weight, compared with 2.8 percent for patients taking a placebo -- a difference of 3.1 percentage points.

Arena plans to seek U.S. approval in December.

We met the second of those two alternate efficacy end points, Arena Chief Executive Jack Lief said. Lorcaserin
allows patients to lose weight early in treatment and to stay on that treatment.

Arena said the incidence of side effects, like upper respiratory infection and headache, was similar between the
lorcaserin and placebo groups. Lorcaserin also was not associated with psychiatric side effects, such as depression
and suicidal thoughts, or with heart valve problems.

That is key since lorcaserin works in a way similar to fenfluramine, which was part of the fen-phen diet cocktail
before it was withdrawn in 1997 after being linked to heart valve damage.

Arena's drug is designed to block appetite signals in the brain, but by being much more selective in the receptors it
affects than fenfluramine, which also binds to a separate cell receptor in the heart.

With about two-thirds of Americans classified as obese or overweight, a viable weight-loss drug is expected to have
blockbuster sales.

Vivus and Orexigen Therapeutics Inc are also close to filing for regulatory approval of their new obesity drugs. Vivus shares were up 10 percent on Friday.

Money managers Federated Investors and Wellington Management Company rank among the top shareholders in Arena, according to Reuters data.

Not all investors were betting on Arena's success. Short interest representing bearish bets in Arena amounted to about 15 percent of its shares outstanding as of Aug. 31.

Arena, which is seeking a partner to sell the drug, plans to present detailed lorcaserin trial data in October at a meeting of the Obesity Society in Washington.

(Additional reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Dave Zimmerman, editing by Matthew Lewis)