A federal appeals court has reinstated a putative class action lawsuit filed against a pharmaceuticals company over its alleged failure to reveal negative study information about a weight loss drug.

Carl Schwartz had filed suit against San Diego-based Arena Pharmaceuticals Inc. and its officers in connection with public statements they had made in connection with lorcaserin, according to Wednesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Todd Schueneman et al. and Carl Schwartz v. Arena Pharmaceuticals et al.

“At various times, defendants all made positive public statements about lorcaserin’s safety and the likelihood of (U.S. Food and Drug Administration) approval,” said the ruling.

On certain occasions, they had also said the drug was not carcinogenic and referred to supporting “animal studies,” said the ruling. But when an FDA advisory panel published a briefing document that disclosed for the first time that Arena had been in a “highly unusual” back and forth with the results of a study that indicated rats receiving the drug war getting cancer, the company’s stock dropped “significantly,” said the ruling.

Mr. Schwartz, an Arena shareholder, then filed suit, charging the company with violating the Securities and Exchange Act of 1934 and Rule 10b-5, which relates to making false statements. Meanwhile, after further study, the FDA ultimately approved the product, which is now on the market, said the ruling.

The U.S. District Court in Pasadena, California, dismissed the case, holding Arena and the FDA had been engaged in a “good-faith scientific dispute regarding the cause of the rat cancer.”

A three -judge appellate court panel unanimously overturned the ruling. Arena “affirmatively represented” that all the animal studies that had been completed supported its case for approval, said the ruling. 

“it might have represented that Arena was working through some requests for the FDA and was confident the data would vindicate lorcaserin,” said the ruling. 

“But what it could not do was express confidence by claiming that all of the data was running in lorcaserin’s favor. It was not,” said the ruling, which remanded the case for further proceedings.