Investors Pile into Arena, Stock Jumps 300% in Three Months

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Shares of Arena Pharmaceuticals have been on fire ever since an advisory panel voted 18-4 in favor of its anti-obesity drug Locarserin getting approved.

Over the past three months, Arena is up more than 326 percent. It now comes down to decision day: June 27th, which is when the FDA will have to provide its final decision on Arena’s fat buster.

Demand for an obesity drug is at an all-time high. According to the CDC, more than one-third of U.S. adults and approximately 17 percent of children are obese, with the southwest states showing the highest prevalence of overweight individuals.

When looking at the public ownership of shares of Arena Pharmaceuticals, around 72 percent of shares are owned by the retail investor – an unusually high number for any stock.

Managing Director of TJM Institutional Services and CNBC contributor, Jim Iuorio, said traders are conditioned to view high retail participation as a signal that the market is reaching a high. “High retail participation is many times considered a negative price indicator,” said Iuorio.

Arena Pharmaceuticals is a hot topic online – specifically onStockTwits – an online platform used by the investment community to talk stocks.

“Incredibly, more than 50 percent of the messages/tweets in the entire Health Care sector have been circulated around $ARNA, a biotech that has a market cap value just under two billion dollars,” said Philip Pearlman, executive director of StockTwits.

Clearly a lot of buzz around this biotech name that hopes to bring thefirst anti-obesity drug to market in more than ten years.