Obesity Investor by Ruthanne Williams Roussel

VVUS Submits Its NDA Also Right On Time

VVUS announced this morning that it had submitted its NDA to the FDA for approval of Qnexa for weight loss.  This is bang on schedule (they had promised to do this before the end of 2009) and sets the clock going on their "PDUFA date," the date by which the FDA is supposed to respond to them with a decision for or against approval, for 10 months out, or late September 2010.  (However, the FDA has been missing as many as 40% of its PDUFA dates in recent years, so let's not get too excited yet.)

ARNA submitted its NDA for lorcaserin for obesity a week ago.  OREX originally was looking at a similar time frame, but for some months has said that it plans to submit its NDA for Contrave for obesity only in the first half of 2010. 

VVUS announced this morning that it had submitted its NDA to the FDA for approval of Qnexa for weight loss.  This is bang on schedule (they had promised to do this before the end of 2009) and sets the clock going on their "PDUFA date," the date by which the FDA is supposed to respond to them with a decision for or against approval, for 10 months out, or late September 2010.  (However, the FDA has been missing as many as 40% of its PDUFA dates in recent years, so let's not get too excited yet.)

ARNA submitted its NDA for lorcaserin for obesity a week ago.  OREX originally was looking at a similar time frame, but for some months has said that it plans to submit its NDA for Contrave for obesity only in the first half of 2010. 

ARNA Submits Its NDA, Right On Time

ARNA announced this morning that it had submitted its NDA to the FDA for approval of lorcaserin for weight loss.  This is on schedule (they had promised to do this before the end of the year) and sets the clock going on their "PDUFA date," the date by which the FDA is supposed to respond to them with a decision for or against approval, for 10 months out, or late September 2010.  (However, the FDA has been missing as many as 40% of its PDUFA dates in recent years, so let's not get too excited yet.)

We expect VVUS to submit its NDA for Qnexa for obesity very shortly, also before the end of 2009.  OREX originally was looking at a similar time frame, but for some months has said that it plans to submit its NDA for Contrave for obesity only in the first half of 2010. 

"Pretty quiet round here tonight, sheriff..."

"Yeah, too quiet."

A quiet couple of weeks in the obesity space as (presumably) Vivus (VVUS) and Arena (ARNA) are busy as bees preparing those NDA submissions for the end of the year.

While I agree that it's good news that lorcaserin has low abuse potential, I don't think this is much of a game-changer because as far as I know not many people were concerned that it would be abused.  More of a game-confirmer.  Also yes, there is plenty of interest in what happens when lorcaserin is combined with phentermine, and no, we won't have solid science around that for another couple of years.

On another topic:  I didn't cross-post the below article I wrote earlier today for Seeking Alpha here because I do try to keep this blog on topic, and this link isn't -- but if you'd like to read my take on someone who has had a little bit more eventful last few weeks and what it might mean for Nike (NKE):

http://seekingalpha.com/article/178917-nike-not-just-nike-golf-may-have-tiger-exposure?source=yahoo

OREX Insider Buy Bodes Well For All Shareholders

Domain Partners, OREX's founding VC, has upped its stake in OREX through a series of recent share purchases on the open market, according to a series of Forms 4 filed with the SEC on November 24.  The purchases total just over 400,000 shares at $6.93 per share for a market value of nearly $2.8 million dollars, or about 0.7% of OREX's market cap of $400 million.

OREX's Chairman, Eckard Weber, M.D., is a partner in Domain Partners, and Brian Dovey, another Domain partner, also sits on OREX's board.  Domain may well have good reason to believe that the $6.50-$7 per share range around which the stock has traded for the last month is a good buy-in point.

Like a lot of people, I regard insider buys as stronger indicators (bullish ones) than insider sells are (bearish ones).  This is because insiders often have a high proportion of their net worth tied up in a company, and even if they don't, may still have all kinds of reasons to sell (a divorce, an aging parent's care or plain old diversification).  By contrast, there is usually only one reason to buy.

On past occasions, some investors have found Domain's Form 4 filings a little confusing, but they don't have to be. 

Because Domain owns over 10% of OREX directly, it is required to file a Form 4 each time a Domain entity makes a purchase (or, theoretically, a sale, as long as ownership is still over the 10% threshold).  These are the most important forms to look at.  At the same time, Domain also files a Form 4 on behalf of each of six of its partners as an indirect owner, with respect to the same transaction.  This is all as required.

So all you need to do, even if you're being very thorough, is look at the Domain Partners entities Forms 4, confirm that they have a "D" for "Direct" in the right-hand column (Column 6, "Ownership Form"), add up the number of shares purchased, and then skim the Forms 4 for all the partners, confirming that they refer to the same transactions and have an "I" for "Indirect" in Column 6 on the right.

And now for something completely different, sort of.  On Monday, November 23, OREX also announced four senior hirings seemingly geared to position Contrave for its global launch.  Dawn Viveash, most recently Vice President of Regulatory Affairs and Safety at Amylin Pharmaceuticals (AMLN), joins OREX as Head of Global Regulatory Affairs; Suzanne McDonald, a veteran of Japan's Takeda Pharmaceuticals, joins as Head of Managed Markets and Government Affairs; Preston Klassen, former Therapeutic Area Head for Nephtrology and executive medical director at Amgen, joins as Head of the Global Contrave Program; and Whedy Wang joins OREX from Gilead Sciences as Head of Global Biomedical Information.

VVUS's avanafil: Could be terrific but this sort of thing ain't my bag, baby

A disclaimer to note that VVUS's erectile dysfunction drug avanafil, a fast-acting (they say 20 minutes) PDE5 inhibitor (same class as Viagra and Cialis, but acts faster and may be safe to use with heart medicine nitrates) is moving along and Phase III results were announced this morning.  They appear to be positive and can be found at the company web site www.vivus.com.

I won't be following avanafil as closely as the obesity drugs, although it certainly is a very promising candidate.  I don't consider myself the most objective observer.  I understand that from a scientific point of view, we can track "successful" episodes of sexual intercourse where vaginal penetration was "achieved."  Just like I understand that when you're playing golf with men and one of them yells "Fore!" you don't pipe up with, "Oh, don't worry, it didn't go anywhere near them, you're just over by those trees on the right."  But I would not very much like to find out that I was on the receiving end, as it were, of this clinical trial.  (One would be tempted to try to help:  "Hey, you got it in there!  Good going, honey!")  And if I were to sit down with ten girlfriends for drinks, I might get ten different answers as to what should constitute "success" here.  That's not to knock the importance of men's sexual satisfaction, just to say I respect it enough to say it's WAY beyond the scope of this blog.

ARNA Market Research: Docs Excited About Lorcaserin

ARNA held its 3Q09 conference call this morning, and there were no shockers. 

 

We’ll return later to the numbers, but for now, I was struck by a market research study ARNA conducted that management says shows docs would be “excited” to prescribe lorcaserin and would prescribe it.  Of these prescriptions, 25% would be switching from old weight loss drugs and 75% writing new scripts.  This study apparently assumed full reimbursement of all options, but offered as choices only lorcaserin and drugs already approved now (i.e., no Contrave, Empatic or Qnexa options).

 

ARNA’s study focused on 50 80 of the couple of thousand doctors who now prescribe most of the weight loss meds in the U.S.  The Holy Grail though will be to get it out into the general primary care market. 

 

When we multiply the current U.S. market for prescription weight loss drugs, which is some $450 million, by four, we get just under $2 billion.  The estimates of a $10 billion or more market that have been tossed around (heck, including by me) assume that the drugs are efficacious and trouble-free enough to expand the market beyond specialized weight-loss clinics and programs and into the primary care, family practice and general practice settings.

 

Disclosure:  Long ARNA, OREX and VVUS

Obesity Society Buzz Still Great For Partnership Chances

Usually I don't dwell much on Amylin (AMLN) because with at least 15 sell-side analysts covering it and all kinds of press, I don't see that the investing community is clamoring for another opinion.  However, today a few good little obesity calls do seem to be getting lost in the hullabaloo.

Obesity Partnership For AMLN with Takeda

AMLN announced last night that it has partnered with Japan's Takeda to develop two Phase II injectable weight-loss candidates, some data regarding which it presented at last weekend's Obesity Society Annual Meeting.  The deal includes two synthetic hormones (AMLN's modus operandi, and arguably its raison d'etre) -- a pramlintide-metreleptin combination and davalintide. 

It certainly sounds like a good deal for AMLN.  AMLN is to receive $75 million upfront from Takeda, and says future milestone payments (development, commercialization and sales)  potentially total over $1 billion.  Development costs associated with obtaining US approvals will be split 80% Takeda - 20% AMLN, and Takeda will shoulder 100% of development costs outside the US as well as all commercialization costs.

The products have promise.  In Phase II results announced in July, patients in the pramlintide-metreleptin (please, Takeda, help us out and come up with a commercial name for this combo soon) high dose group lost an average of 11% of body weight.  Monotherapy groups lost about 5%.  (A Phase II trial for davalintide is currently underway and those results are not yet available.)

Based on all this, AMLN shares took off in early trading, and are up almost 15% at noon.  

AMLN Won't Eat VVUS's Lunch, Or OREX's, Or ARNA's

Certainly, there should be some first mover advantage to locking up the first major obesity marketing partnership.  But let's not send the competitors with late-stage Phase III oral compounds for obesity -- VVUS, ARNA and OREX -- to the back of the lunch line.  They all have two big advantages on their side:

1)  VVUS, ARNA and OREX have Phase III products, with less risk and less time to market than a Phase II product, even a really extra-super-wonderful Phase II product.  Even the plainest vanilla Phase III obesity trial involves a full year of dosing.

2)  VVUS, ARNA and OREX are asking patients to take once-daily pills, while AMLN's products are injections.  AMLN has argued that since many diabetics take injections anyway, this won't be such a big hump to get over.  I'm not convinced.  Besides, nowhere near all overweight people are diabetic.

In fact, the AMLN news is arguably good for all the obesity stocks.  It shows there is serious interest among major drug companies in marketing obesity drugs.  The kind of money we have been talking about evidently is possible.

Disclosure:  Long VVUS, ARNA and OREX.  No positions in other stocks mentioned

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For those who are interested, here's the study details on the July Phase II pramlintide-metreleptin study, from AMLN's press release.  Broadly, the "conditions of contest" as far as patient BMI, behavior modification etc. are comparable to most other Phase II obesity studies.  This study confirmed the results of AMLN's earlier Phase II pramlintide-metreleptin study:

Study Details

This Phase 2, 28-week, double-blind, placebo-controlled multi-center study randomized 608 obese or overweight patients with a BMI ranging from 27-45 kg/m2. Patients were well-distributed across this BMI range, with approximately 40% of patients at a starting BMI less than 35 kg/m2. Following a one-week placebo lead-in period, study subjects were randomized in a balanced fashion to receive twice-daily therapy with one of the following eight treatment regimens: 1) placebo/placebo; 2) pramlintide 360 mcg/placebo; 3) metreleptin 5 mg/placebo; 4) pramlintide 180 mcg/metreleptin 2.5 mg; 5) pramlintide 180 mcg/metreleptin 5 mg; 6) pramlintide 360 mcg/metreleptin 1.25 mg; 7) pramlintide 360 mcg/metreleptin 2.5 mg; or 8) pramlintide 360 mcg/metreleptin 5 mg. 

Lifestyle intervention was included throughout study (dietary, exercise and behavioral). Body composition was assessed using DEXA scanning at enrollment and again at study termination. Across all treatment arms, approximately 60% (n=360) of patients were deemed evaluable (subjects who completed at least 24 weeks of treatment on study medication and had no major protocol deviations).

As part of an ongoing extension protocol, study participants may continue on therapy for a total of 52 weeks. Data from this study will be submitted for presentation at a future medical meeting and for publication in a peer-reviewed journal.

Fears Of Qnexa Giving Everyone CRS Are Way Overblown

CRS stands for "can't remember stuff," assuming you're in polite company.

There has been some excitement over the last few days which has created, I believe, a buying opportunity in VVUS.  While the excitement is being widely attributed to a note from Ian Sanderson at Cowen & Co, who believes VVUS is understating or underemphasizing the percentage of Qnexa patients dropping out of the Phase III trials due to cognitive adverse effects, we may also have some static caused by Jim Cramer having said on his show that he thought VVUS had run its course for the time being.

Never underestimate the power of Cramer to make people run around with their hair on fire, even though, of course, there are a million rational arguments why no one should act like that, and even though he said a couple of months ago that he had only just heard of main rival Orexigen (OREX).

When we are talking about "cognitive adverse effects" with Qnexa, we are mostly talking about the known effects of topiramate.  The 92-mg topiramate in full dose Qnexa is well below the 200-400 mg typically prescribed for epilepsy, although 50-200 mg doses have been tested for migraine.  In any event, we are talking about forgetfulness, memory lapses, and that sort of thing. 

In the end, the company has one bone to pick with the Cowen analysis and we have a second.  VVUS put out a press release this evening detailing the information presented on Saturday that prompted all this hullabaloo, and reminding everyone that the data is not additive because some patients who discontinued reported more than one event.  In other words, Cowen was not quite right to add all the discontinuation percentages up.

Does this really matter though?  Let's see.  I looked at the discontinuations, as presented Saturday and today by VVUS, from the EQUIP and CONQUER pivotal Phase III trials, in percentages, and combined that with the numbers of patients in each arm from the September reported ITT results.  (These almost tie, but not quite, to the total number of patients in each study released with today's numbers, so if you notice that those numbers don't quite tie, please don't write me about it!  It is close enough.)

A quick example would be the Conquer Qnexa full dose arm, which had 951 patients, so is easy to eyeball percentages.  Discontinuations were 0.7% + 0.5% + 0.3% + 0.3% + 0.2% + 0.1% = 2.1% or about 21 patients if all these events are discrete.  However, it would take only 3 patients discontinuing and reporting 2 events each to bring the total number of discontinuations down to 18, a change of 14%.  So yes, this does seem like a justified concern on VVUS's part.

A related, but different, issue is that not all cognitive events are equal.  Aphasia, for instance, is inability to access a word, rather than a memory problem.  It's not unlike the experience most people who speak a second language well have had from time to time, when a perfectly familiar and commonplace word suddenly escapes you and you are reduced to some such circumlocution as "the receptacle for used paper" when you meant "trash can."  Does it really make sense to add that in with amnesia, confusion and short-term memory loss?  I don't think so really.

By the way, VVUS didn't just make up any old categories for these effects to suit itself.  It used accepted standards from MedDRA, the Medical Dictionary for Regulatory Activities.  These are agreed-upon medical terms that distinguish separate adverse events from one another and lump similar ones together. 

Disclosure:  Long VVUS

Waiting to see Cowen analysis before commenting on it

As many know, Ian Sanderson of Cowen and Co. reportedly has a note out analyzing VVUS's Saturday data.  He believes they had higher dropouts due to topiramate-typical cognitive effects (cognitive deficit -- that's the memory lapse thing -- and similar) than they claimed. 

I'm expecting to receive a copy of the study shortly so I can comment on it more intelligently.  When it comes to topiramate-inspired dopiness, I know a lot about that from study and from personal experience, if I can only remember it that is.

Obesity Society Buzz Great For Share Prices, Partnership Chances

Things are picking up steam!  Two quick points to bear in mind as you plow through the stream of info (I particularly like today's reporting by CNBC's Mike Huckman):

(1)  The FDA makes its decisions based on the more stringent "intent to treat" data, which includes every patient in the trial who got at least one dose, as this more closely replicates real-life situations, where people sometimes stop taking the drug after a few doses for a variety of reasons, not all related to the drug itself.  What OREX released about Contrave over the weekend was "completer," also known as "per-protocol" or "on-treatment" data, which excludes patients who did not complete the entire trial or, theoretically, did not comply with some other rule. 

OREX can argue that this is more "clinically meaningful," in that it does give you and docs a good idea what can happen if the patient takes the right dose of Contrave and stays on it, but it won't help Contrave get approved and you also have to be careful not to compare it to ITT numbers from other drugs.

If anyone was following Transdel (TDLT.OB) earlier this month, that would be an example of a company that tried to use good completer data to distract attention from poor ITT data.  I don't think OREX is trying to do that -- Contrave's ITT data is fine -- but if this whole discussion is setting off little alarm bells in your mind, you may be thinking of some past example like TDLT.

(2)  After the various raises, VVUS should be in the strongest cash position of the three companies and can negotiate towards a marketing partnership from a position of strength. 

I certainly don't believe any of them want to build out their own sales organization.  As discussed in my last post, fully developing this market really means reaching beyond weight loss specialists to over 300,000 primary care and general/family physicians.

Usual caveat: the market is plenty big enough for more than one weight-loss drug, just as it supports plenty of statins and erectile dysfunction drugs.

Disclosure:  Long VVUS, ARNA and OREX