The Food and Drug Administration, knowing that millions of Americans would be tempted to take weight-loss pills, had set an unusually high bar for approvals because of safety problems and even deaths seen with past medicines. The most notorious, known as the "fen-phen" diet-drug combo, was pulled from the market in 1997.

But with some two-thirds of Americans considered overweight or obese - and the related costs to public health and the economy skyrocketing - the FDA has been under mounting pressure to approve a new weight-loss treatment.

"It appears that the agency's view has officially shifted towards 'not treating obesity is a risk in and of itself, so we're willing to put drugs in the market in order to help people lose weight, even if there's risk associated'," Cowen and Co analyst Simos Simeonidis said in a research note.

Belviq, known chemically as lorcaserin, was one of three experimental weight-loss treatments seeking FDA approval after initial rejections by the agency. Vivus Inc and Orexigen Therapeutics Inc are still hoping to bring their medicines to market.

Wall Street sees a successful new diet drug raking in billions of dollars.

Belviq is designed to block appetite signals in the brain to help people feel full after eating smaller amounts of food. In large clinical trials, patients on average lost about 5 percent of body weight. The drug's FDA-approved label says Belviq use should be stopped if a patient has not reached 5 percent weight loss after 12 weeks of daily use.

The Arena drug is approved for use in adults with a body mass index (BMI) of 30 or greater, which is considered obese, or adults with a BMI of 27 or greater -- overweight -- who have at least one weight-related health condition, such as high blood pressure, type 2 diabetes, or high cholesterol. BMI is a measure of body fat relative to a person's height and weight.

Arena will have to conduct six follow-up studies, including a long-term study of whether Belviq increases the risk of heart attack or stroke, the FDA said.

Other studies will involve obesity in children, the company said.

Arena shares, which were worth little over $1 each last October, have attracted huge investor interest in recent months. They jumped as much as 52 percent after the FDA approval on Wednesday to a new high of $13.50 and were the most actively traded shares on the Nasdaq. They closed up 28.7 percent at $11.39.

Arena was also the single most actively traded stock option on Wednesday, putting it ahead of Apple Inc, according to options analytics firm Trade Alert.

Shares of Vivus closed up 7.4 percent at $28.33, while Orexigen, which is conducting a long-term heart safety study of its pill Contrave to win approval, ended 20.3 percent higher at $4.92.

PART OF A FULL ARSENAL

Public health officials have advocated for an array of measures to fight obesity. They include everything from greater access to treatment for obese patients to community efforts to promote physical activity and new regulations to tax or limit the sale of unhealthy foods.

A recent study estimated that obesity accounts for $190 billion in annual U.S. medical costs.

"Obesity threatens the overall well-being of patients and is a major public health concern," Janet Woodcock, director of the FDA's Center for Drug Evaluation and Research, said in a statement on the Arena decision.

The approval bodes well for Vivus's Qnexa as that drug helped patients on average lose at least 10 percent of their body weight after a year of treatment in clinical trials. The FDA is due to decide on Qnexa next month.

Arena Chief Executive Jack Lief called the approval "an extraordinary milestone." It also comes with a payment of $20 million from Japanese drugmaker Eisai Co Ltd, which will sell the drug in the United States.

Arena will manufacture and sell its drug to Eisai, which will determine the commercial price of Belviq. Eisai is expected to start selling Belviq once the U.S. Drug Enforcement Administration (DEA) determines a final scheduling designation based on the potential for abuse, Arena said.

With the DEA designation and launch, Arena is due another $65 million in milestone payments, it said.

Arena still holds the rights to Belviq in Europe and Asia and said it is lining up partners for those regions as it attempts to gain additional approvals for the drug.

The FDA first rejected lorcaserin in October 2010, citing potential cancer risks. Arena resubmitted its application with more data to show that previous findings of tumors in rats did not apply to people, which seemed to allay some FDA concerns.

After the withdrawal of "fen-phen" in 1997, another diet pill, Meridia, was pulled from the U.S. market in 2010 after being linked to heart problems. That left Roche Holding AG's Xenical as the only prescription obesity drug approved for long-term use. But few view it as an effective choice, given its side effects and limited impact on weight.

Other promising weight-loss drugs, such as Sanofi's Acomplia, failed to gain U.S. approval due to safety concerns.

(Additional reporting by Doris Frankel in Chicago; Editing by Michele Gershberg, Leslie Gevirtz and Jan Paschal)

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