Chaz Bono Gives Weight Loss Drugs Celebrity Appeal — Arena Pharmaceuticals Inc. (NASDAQ:ARNA) and VIVUS Inc. (NASDAQ:VVUS)

http://marketplayground.com/2013/07/19/chaz-bono-gives-weight-loss-drugs-celebrity-appeal-arena-pharmaceuticals-inc-nasdaqarna-and-vivus-inc-nasdaqvvus/

Cramer's Mad Dash: Arena Pharma's Weighty Play

Wow, Cramer's bullish on Arena Pharmaceuticals.  Gotta check the Mayan calendar.

http://video.cnbc.com/gallery/?video=3000176847

Arena Pharmaceuticals, Belviq (Lorcaserin), Obesity, and BORG

Arena Pharmaceuticals weight management pill Belviq (Lorcaserin) will have its commercial launch tomorrow.  It was a long, hard road to FDA approval and DEA scheduling.  I am one of the proud creators and members of the BORG activist investor group, now 47 strong.  There were many strong contributors, but Dr. Daniel Lopez deserves the most credit.  He challenged the manufactured safety risks--and proved they were false.

The naked short hedge funds, captured media, and factions of the FDA won the battle, but we won the war.  Millions of obese, overweight, and diabetics will live better lives due to Belviq.  I'm certain many lives will be saved.  Thank you Arena, BORG, the FDA for coming around, and the many clinicians who are treating their patients.

Obesity and its associated diseases cost this country hundreds of billion of dollars.  The availability of Belviq will be a major step toward alleviating pandemic obesity.

Here is an article in the Wall Street Journal on the beginnings of BORG:

http://online.wsj.com/article/SB10001424052702304023804575566731686435318.html

By ALICIA MUNDY And JENNIFER CORBETT DOOREN

WASHINGTON—Federal regulators are set to decide the fate of a new obesity drug as soon as Friday, and with it the future of a small biotechnology company whose investors are conducting an unusually aggressive lobbying campaign to get the pill approved.

The drug, lorcaserin, made by Arena Pharmaceuticals Inc. ARNA -0.23% of San Diego, was rejected in a 9-to-5 vote by a Food and Drug Administration advisory committee in mid-September.

That prompted outrage among Arena shareholders who have spent thousands of hours on their own scientific analyses, contacted Congress, set up an online petition and flooded the FDA with comments saying the agency didn't give the diet pill a fair hearing.

It is one of a few recent cases in which individual investors in a company—not just the company itself—made their presence felt in advance of a make-or-break decision.

Arena shareholders, about 40 of whom are in an investor group nicknamed Borg, say they're raising important questions about possible bias and ignorance among the FDA panel members.

"What has mobilized so many people, within our group and beyond, are the comments and behavior of some FDA officials and what we believe to be incorrect scientific conclusions," said Douglas Park, an Arena shareholder in San Diego who used to work for the company.

Some doctors and FDA officials fear the nascent trend poses dangers to the drug-approval system.
"It's a good thing everybody is allowed to have their say, but the FDA has to do its job," said heart-disease expert Sanjay Kaul, who served as an FDA adviser and voted against lorcaserin. "This is about patients, not about money."

The FDA is due to decide on lorcaserin by Friday, although it could seek a delay. The agency usually follows the advice of its outside panelists but isn't required to do so.

Investors are showing new assertiveness because of financial uncertainty in the biotechnology business and anger at a perceived lack of predictability in FDA decisions, said former FDA Deputy Commissioner Scott Gottlieb, now a partner in a health-care investment firm.

An Arena spokesman said the company isn't involved in investor lobbying and hasn't encouraged it.

Many investors saw Arena's pill, which affects a part of the brain involved in appetite control, as safer than rival drugs. They were surprised when the FDA staff and the agency's outside advisers gave it a thumbs-down in September. FDA reviewers said lorcaserin was only modestly effective in trimming pounds and had some safety issues.

The company's stock fell 73% in the week of the vote. Arena shares declined 6.4% to $1.46 in 4 p.m. trading Thursday on the Nasdaq Stock Market.

"I got punched in the belly real bad by the FDA," said Peter Becker, a retired Army colonel in Texas. The former administrative law judge said he had bought a "very, very large position in Arena" after he spent many hours studying the safety of lorcaserin versus other diet drugs.

The backlash began quickly. One investor accosted an FDA panel member with harsh words in a hallway minutes after the Sept. 16 vote, according to people who were there. It was first reported by The HealthCare Channel digital video site.

The Borg group says the FDA understated lorcaserin's efficacy in weight loss and exaggerated safety issues.

Another investor wrote to Dr. Kaul, the panelist, politely suggesting that, "to hear the scuttlebutt going around," the panelists incorrectly assumed a risk to humans after some rats on lorcaserin developed tumors.

"Given the issues at stake here and the money invested by both ARNA [Arena] and its Stock Holders," the investor wrote, Dr. Kaul had a "responsibility to let the FDA know" that he would have voted "yes" if he fully understood the tumor issue. Dr. Kaul, based at Cedars-Sinai Medical Center in Los Angeles, says the rat issue didn't figure significantly in his vote.

The chairman of the advisory committee, Abraham Thomas of Henry Ford Hospital in Detroit, voted for the drug, but he said the shareholders are overstating what it can do.

"I could have gone either way. It's just not a very effective medication," said Dr. Thomas, who previously ran the obesity clinic at Brigham and Women's Hospital in Boston.

An FDA spokeswoman said the agency was careful in choosing panelists and reviewing drug safety and efficacy data. The FDA's meeting process was fair, she said.

One of the few precedents for the lorcaserin activism came in the fight over the prostate-cancer drug Provenge, which was rejected by the FDA in 2007. Following additional research and pressure from investors in Provenge maker Dendreon Corp., DNDN +0.64% the FDA approved Provenge in April of this year.

Several Arena shareholders said they had also invested in Dendreon, whose stock soared after the FDA approval.
 
Write to Alicia Mundy at alicia.mundy@wsj.com and Jennifer Corbett Dooren at jennifer.corbett-dooren@dowjones.com

Eisai's Coats on 2013 Sales of Arena's Obesity Drug

http://bloom.bg/15yNAkb

Arena Pharmaceuticals Provides Update on Upcoming US Launch of BELVIQ® (lorcaserin HCl) for Chronic Weight Management

Better late than never, DEA.

http://finance.yahoo.com/news/arena-pharmaceuticals-provides-upcoming-us-193000856.html

San Diego's Biotech Boom

http://video.cnbc.com/gallery/?play=1&video=3000160449

Major Revenue Losses From Patent Expirations Forces Big Pharma Companies to Look to the Biotech Industry for Replacements

Recent analyst upgrades and articles like this have provided a boost for Arena Pharmaceutical shares.

http://finance.yahoo.com/news/major-revenue-losses-patent-expirations-132000024.html

See disclaimers in the side bar.  This is not an endorsement for any company, or investment in any company.

Disclosure:  the author and family members are long shares of ARNA.  The author has no position in VVUS.

3 Analyst Upgrades for Arena Pharmaceuticals So Far in 2013

Company Research Firm Rating Previous Rating Saturday, 12 Jan 2013 ARNA ARENA PHARMACEUTICALS INC Columbine Capital Services, Inc. AS OF Jan 12, 2013 Favorable Neutral Friday, 11 Jan 2013 ARNA ARENA PHARMACEUTICALS INC Ativo Research AS OF Jan 11, 2013 Unfavorable Most Unfavorable Thursday, 03 Jan 2013 ARNA ARENA PHARMACEUTICALS INC Thomson Reuters/Verus AS OF Jan 03, 2013 Buy Hold

Important Insights for Arena Pharmaceuticals

http://klljinvestments.blogspot.com/2012/11/important-insights-for-arena.html

Vivus’s Weight-Loss Pill Covered by Insurers 30% of the Time

http://www.bloomberg.com/news/2012-10-01/vivus-s-weight-loss-pill-covered-by-insurers-30-of-the-time.html?cmpid=yhoo

Arena: What Analysts Are Missing

http://seekingalpha.com/article/701311-arena-what-analysts-are-missing?source=yahoo

See disclaimers in the side bar.

Disclosure:  long shares of ARNA.

Arena Pharma Shares Surge; FDA Approves Weight-Loss Drug

http://blogs.wsj.com/marketbeat/2012/06/27/arena-pharma-shares-surge-fda-approves-weight-loss-drug/

Form 8-K for ARENA PHARMACEUTICALS INC

http://biz.yahoo.com/e/120510/arna8-k.html

Entry into a Material Definitive Agreement
On May 9, 2012, our wholly owned subsidiary, Arena Pharmaceuticals GmbH, or Arena GmbH, and Eisai Inc., or Eisai, entered into an Amended and Restated Marketing and Supply Agreement, or the Amended Agreement, which amends the Marketing and Supply Agreement, or Original Agreement, the parties entered into in July 2010. The Original Agreement provided Eisai exclusive rights to commercialize lorcaserin in the United States and its territories and possessions, subject to the approval by the U.S. Food and Drug Administration, or FDA, of our New Drug Application, or NDA, for lorcaserin. The Amended Agreement expands the territories such that Eisai now also has exclusive rights to commercialize lorcaserin in most of North and South America (including Canada, Mexico and Brazil), or Additional Territories, subject to applicable regulatory approval.

Lorcaserin Receives Positive Vote From FDA Advisory Committee

http://finance.yahoo.com/news/lorcaserin-receives-positive-vote-fda-210200560.html

Lorcaserin and the FDA's Complete Response Letter

http://finance.yahoo.com/news/FDA-Issues-Complete-Response-prnews-3589036116.html?x=0&.v=1

Here is a positive assessment of the CRL by Dr. Daniel Lopez:

Here are my initial thoughts in the middle of the night

I think it is positive on several points:

1. Nonclinical issues
- Accounting issue - easily resolved - to make up for the discrepancy between week 96 and final NDA incidence of fibroadenomas and adenocarcinomas
- "demonstrate that the apparent increase in aggressiveness of adenocarcinoma in rats administered lorcaserin is reasonably irrelevant to human risk assessment" - I think that this has already been proven - the key words - apparent and reasonably irrelevant - this can be taken from my letter directly and has been done - Arena just has to provide it.
- "provide additional data/information regarding the distribution of lorcaserin to the CNS in animals and human subjects that would clarify or provide a better estimate of astrocytoma exposure margins" should not be a problem

2. Clinical issues
NO NEW STUDIES - will accept BLOOM -DM results. Study already completed, results within a few weeks to 2 months. If the numbers are good then we have a Slam-dunk

Finally "The FDA also stated in the letter that in the event evidence cannot be provided to alleviate concern regarding clinical relevance of the tumor findings in rats, additional clinical studies may be required to obtain a more robust assessment of lorcaserin's benefit-risk profile" Again cancer expert Dr. Gary Williams will be pivotal here. What this sounds like to me is that they have conceded that their conclusions regarding the rat studies were unjustifed and erroneous. They sound like they just want an explanation of why the findings are not relevant to human risk. I believe we have shown that conclusively and they have all the information we have discussed and was sent to them by myself and others.
They have presented a CRL that is in effect a 6 month review or less, maybe 3 months - it will depend how long it will take the pathologists to go over all the slides

And finally a labelling requirement - Schedule IV

From the DEA website:

Schedule IV
• The drug or other substance has a low potential for abuse relative to the drugs or other substances in Schedule III.
• The drug or other substance has a currently accepted medical use in treatment in the United States.
• Abuse of the drug or other substance may lead to limited physical dependence or psychological dependence relative to the drugs or other substances in Schedule III.
• Examples of drugs included in schedule IV are Darvon®, Talwin®, Equanil®, Valium®, and Xanax®.

This is not a problem - it just requires the physician to have a DEA license with Schedule IV prescribing privileges - which almost all physicians have.

However they provided the following path to remove this label: The CRL provided the opportunity to complete preclinical studies that may lead to a different recommendation - again this refers back to the nonclinical issues.

Overall, in my opinion, a very soft and manageable CRL. It's late at night and I am just quickly jotting down a synopsis - after some rest hope to process this more - however I think the jist of it will be the same.

Daniel
UCLA MD

Arena plunges, blames FDA panel over obesity drug

http://www.reuters.com/article/idUSTRE68G2CF20100917

JPMorgan adds to position despite downgrade

On August 2, 2010, JPMorgan Chase analyst Kory Casimov downgraded Arena Pharmaceuticals to "Neutral" from "Overweight", reaffirming a $6 price target. Shares declined as a result of the downgrade.

ttp://finance.yahoo.com/news/Arena-shares-fall-on-JPMorgan-apf-3217542724.html?x=0&.v=1

This downgrade occurred two weeks after JPMorgan had upgraded Arena on July 16, 2010, after competitor Vivus's anti-obesity drug Qnexa was rejected by an advisory committee.

Why the sudden flip flop from upgrade to downgrade, after positive news? Shares of ARNA had soared from below $3 to a peak of $8 a month later, after several positive developments. So perhaps ARNA was trading at frothy levels. But with pivotal events of Lorcaserin's own advisory committee review on September 16, 2010 and a PDUFA date of October 22, 2010, shares of ARNA could rise even more on positive outcomes.

But a closer look at ownership holdings triggers more questions than answers on JPMorgan's motivation for the upgrade and subsequent downgrade.

Records show that as of August 12, 2010, JPMorgan had a new long position for ARNA shares:

2010-08-12 2010-06-30 13F-HR J P Morgan Chase And Co -2.35% Institution 43,082 New Holding 43,082

Which brings up the question: Why would JPMorgan downgrade ARNA--only to build a new long position in ARNA shares? Could their downgrade allow their clients to cover their short positions at a lower price? Or perhaps could they enable long clients to buy in at a lower price--after missing the big run up? A cynic would deduce the downgrade simultaneously provided an escape hatch for trapped shorts, and a lower entry point for long clients who missed the boat.

Best-case, it's a conflict of interest to issue a downgrade and then build a long position. Worst-case, this could be blatant manipulation of a stock.

And Wall Street wonders why retail investors are retreating from markets. Perhaps they're tired of being fleeced by investment firms more interested in their own proprietary trading desk than their fiduciary duties to their retail clients.

Lorcaserin and diabetes mellitus

http://seekingalpha.com/instablog/523862-kllj-investments/86782-the-importance-of-arena-s-bloom-dm-study

Arena’s BLOOM-DM (Behavioral modification and Lorcaserin for Overweight and Obesity Management in Diabetes Mellitus) study for patients suffering from diabetes is now complete and the results are expected in late 2010. This study was a one-year, randomized, double-blind and placebo controlled Phase III trial on 604 patients with Diabetes Mellitus Type II who were overweight or obese and taking oral diabetes medications. These results will be filed as a Supplemental NDA (sNDA) after LORQESS (Lorcaserin) is approved. This study is of paramount importance for LORQESS to have an indication specific for the treatment or prevention of diabetes. Arena must clinically prove that taking LORQESS will improve HbA1c and Fasting Glucose to receive an indication for diabetes. If this proves to be the case, which was shown in BLOOM and BLOSSOM, then LORQESS could be covered by most Payers for the treatment of diabetes or the prevention of diabetes.

“Data from the 2007 National Diabetes Fact Sheet (the most recent year for which data is available)

Total: 23.6 million children and adults in the United States—7.8% of the population—have diabetes.

Diagnosed: 17.9 million people

Undiagnosed: 5.7 million people

Pre-diabetes: 57 million people

New Cases: 1.6 million new cases of diabetes are diagnosed in people aged 20 years and older each year.

Cost of Diabetes

$174 billion: Total costs of diagnosed diabetes in the United States in 2007

· $116 billion for direct medical costs

· $58 billion for indirect costs (disability, work loss, premature mortality)

See disclaimers in the side bar.

Disclosure: long ARNA shares.

Arena Pharmaceuticals partners with Eisai on Lorcaserin sales

Arena Pharmaceuticals and Eisai signed a partnership agreement to commercialize anti-obesity drug Lorcaserin upon FDA approval. CEO Jack Lief had targeted the first half of 2010 for a partnership agreement, and it looks like he made this self-imposed deadline. An independent advisory committee will review Lorcaserin's New Drug Application (NDA) on September 16, 2010 and Lorcaserin's Prescription Drug User Fee Act (PDUFA) date is October 22, 2010.

ARNA receives a $50 million upfront payment, and another $90 million upon FDA approval. Other terms of the partnership agreement for US sales are contained in the following article.

http://www.businessweek.com/news/2010-07-01/eisai-will-sell-arena-s-weight-loss-drug-in-the-u-s-if-cleared.html

The agreement includes up to $1.41 billion in milestone payments, plus up to 36.5% of US sales. Given there are 101.23 million shares outstanding, with an additional 28 million warrants, shares of ARNA are severely undervalued in the event of FDA approval, in my opinion. This marketing agreement does not include sales to Europe and Asia, and rest of world (ROW) markets. ARNA is also in the unique position for an investigational drug company in that it has its own manufacturing facilities (in tax-friendly Switzerland) and retains all ownership rights for Lorcaserin. This validates Lorcaserin's lead status as a potential first-line therapeutic treatment for obesity, as Vivus' Qnexa and Orexigen's Contrave are also up for regulatory approval.

Here is my previous detailed analysis of the anti-obesity sector for investigational drugs:

http://gregnguyen.blogspot.com/2010/04/is-magic-weight-loss-pill-just-around.html

See disclaimers on the side bar.

Disclosure: long ARNA shares, sold January put options on ARNA (bullish positions)

Is a Magic Weight-Loss Pill Just Around the Corner?

According to the Centers for Disease Control and Prevention (CDC):

"American society has become 'obesogenic,' characterized by environments that promote increased food intake, nonhealthful foods, and physical inactivity. Policy and environmental change initiatives that make healthy choices in nutrition and physical activity available, affordable, and easy will likely prove most effective in combating obesity."

The obesity entry in Wikipedia states the following:

"Obesity is a medical condition in which excess body fat has accumulated to the extent that it may have an adverse effect on health, leading to reduced life expectancy. Body mass index (BMI), which compares weight and height, is used to define a person as overweight (pre-obese) when their BMI is between 25 kg/m2 and 30 kg/m2 and obese when it is greater than 30 kg/m2.

Obesity is associated with many diseases, particularly heart disease, type 2 diabetes, breathing difficulties during sleep, certain types of cancer, and osteoarthritis. Obesity is most commonly caused by a combination of excessive dietary calories, lack of physical activity, and genetic susceptibility, though a limited number of cases are due solely to genetics, medical reasons or psychiatric illness.

Obesity is a leading preventable cause of death worldwide, with increasing prevalence in adults and children, and authorities view it as one of the most serious public health problems of the 21st century."

With that backdrop, it is clear that treating obesity is a high priority among healthcare officials. Treating obesity will reduce the occurrence of many other diseases. One out of every third American is obese, while up to two out of three Americans are overweight. That's almost 100 million obese Americans, and almost 200 million overweight Americans. With healthcare reform and reducing healthcare costs national priorities, treatment and prevention of obesity has wide implications economically as well.

There are at least three investigational drug companies attempting to treat obesity therapeutically.

Vivus

Vivus (symbol "VVUS"), a Mountain View, CA-based biopharmaceutical company, released impressive top-line results for weight loss among clinically obese patients. According to their September 9, 2009 press release:

"Patients taking Qnexa, on average, reduced their weight by up to 14.7 percent in one trial, while the drug also prompted improvement in blood pressure and diabetes risk factors. A second study showed weight loss of about 13.2 percent. In both studies, patients taking placebo lost less than 3 percent of their weight."

Clearly, Qnexa exceeded its primary end points for weight loss, and have applied for Federal Drug Administration (FDA) approval. Shares of VVUS surged as a result. But questions of tolerability and safety remain. Qnexa is a combination of two generic compounds: phentermine and topiramate ("Topamax"). Both are FDA-approved compounds: phentermine is an appetite suppressant of the amphetamine class, while Topamax is used to prevent seizures and migraine headaches.

However, both compounds carry adverse side effects--some serious, and accompanying warning labels. Topamax side effects include: numbness and tingling, fatigue, taste change, nausea, diarrhea, and difficulties with cognitive function, including loss of memory and concentration.

Phentermine common side effects include: bad taste in mouth, changes in sex drive, constipation, diarrhea, insomnia, dizziness, dry mouth, exaggerated sense of well being, headache, impotence, nervousness, overstimulation, restlessness, sleeplessness, upset stomach. Serious adverse side effects include: severe allergic reactions (rash, hives, itching, difficulty breathing, tightness in the chest, swelling of the mouth, face, lips, or tongue), bizarre behavior, chest pain, fainting, fast heartbeat, pounding in the chest, shortness of breath, swelling of the legs and feet, tremor.

For these reasons, the exclusion criteria for patients was vast, and hence, limited the number of patients able to participate in Qnexa clinical trials. Patients with the following conditions could not participate in Qnexa clinical trials, according to clinicaltrials.gov:

"Exclusion Criteria:

Stroke/MI/unstable cardiovascular disease within 6 months
Clinically significant renal, hepatic or psychiatric disease
Unstable thyroid disease or replacement therapy
Nephrolithiasis
Obesity of known genetic or endocrine origin
Participation in a formal weight loss program or lifestyle intervention
History of glaucoma or intraocular pressure
Pregnancy or breastfeeding
Alcohol abuse
Smoking cessation within previous 3 months or plans to quit smoking during study
Eating disorders
Cholelithiasis within past 6 months
Excluded medications
Type 2 diabetes
Previous bariatric surgery
History of bipolar disorder or psychosis"

In other words, Qnexa was efficacious in inducing weight loss in patients, but due to the safety and tolerability profiles of phentermine and topiramate, the market potential may be limited should Qnexa achieve FDA approval.

VVUS submitted their New Drug Application (NDA) for Qnexa on December 28, 2009, and the FDA accepted the NDA on March 1, 2010. The Endocrinologic and Metabolic Drugs Advisory Committee (AC) will review the Qnexa NDA on July 15, 2010 to provide independent expert advice to the FDA on safety and efficacy. A full FDA review is targeted for October 28, 2010.


Orexigen Therapeutics

Another investigational drug company seeking FDA approval for a weight loss drug is Orexigen Therapeutics (symbol "OREX"), based in San Diego, CA. OREX also announced pivotal Phase III top-line results for Contrave, a combination of generic compounds bupropion and naltrexone. Bupropion is an anti-depressant and anti-smoking drug, while naltrexone is used to treat alcoholism and opiate addiction.

In their July 20, 2009 press release:

"In the two trials with non-diabetes patients, Orexigen said 48 percent and 56.3 percent of patients, respectively, reported weight loss of at least 5 percent. That compared to 16.4 percent and 17.1 percent for the placebo patients. That more than met FDA testing guidelines that require at least a third of patients must lose at least five percent of their body weight. At least twice as many patients must reach the 5 percent goal compared with those who take a placebo.

In those trials, the Contrave patients had mean weight loss of 8.1 percent and 8.2 percent, or 17.6 pounds and 17.5 pounds. In the diabetes trial, 44.5 percent of patients lost at least 5 percent of their weight after 56 weeks, compared to 18.9 percent of patients who took a placebo. Contrave patients reduced their blood sugar by 0.6 percent, compared to 0.1 percent for the placebo group."

Once again, efficacy for weight loss among Contrave-active patients was enough to be FDA-approvable, but questions of adverse side effects arise as well. Common bupropion side effects include: agitation, constipation, headaches, nausea, vomiting, dizziness, increased sweating, tremors, blurred vision, rapid heart beat, confusion, hostility, arrhythmias, hearing changes, menstrual problems, hypertension, palpitations, indigestion, arthritis, anxiety, decreased libido, impotence, taste changes, and fainting.

Naltrexone common side effects include: anxiety, chills, constipation, delayed ejaculation, diarrhea, dizziness, drowsiness, headache, increased thirst, irritability, joint and muscle pain, low energy, nausea, nervousness, sleeplessness, stomach pain/cramps, and vomiting. Serious adverse side effects include: severe allergic reactions (rash; hives; itching; difficulty breathing; tightness in the chest; swelling of the mouth, face, lips, or tongue); abdominal or stomach pain; cramping; dark urine; depression; suicidal thoughts or behaviors; unusual tiredness or weakness; vomiting; white bowel movements; yellowing of the skin or eyes.

According to clinicaltrials.gov, exclusion criteria for Contrave include:

"Exclusion Criteria:

Obesity of known endocrine origin (e.g., untreated hypothyroidism, Cushing's syndrome)
Serious medical condition or medical condition that limits participation in the prescribed exercise program:
(e.g. unstable cardiovascular disease including congestive heart failure, angina pectoris, and myocardial infarction; stroke; claudication; acute limb ischemia; acute renal or hepatic disorder; renal, hepatic or respiratory insufficiency)

Active malignancy or history of malignancy (other than non-melanoma skin cancer or surgically cured cervical cancer) within 5 years of enrollment
Serious psychiatric condition (e.g., any history of bipolar disorder, psychosis, suicidal attempt or post-partum depression; a history of major depression, suicidal ideation or antidepressant use within 1 year)
Type I or Type II diabetes mellitus requiring pharmacotherapy
Excluded concomitant medications: anorectic agents; weight loss agents; dietary supplements to promote muscle building, enhance mood, or reduce appetite; adrenergic blockers; beta blockers; anti-psychotic agents; clonidine; theophylline; cimetidine; oral corticosteroids; anti-depressant; topiramate; Depo-Provera®, smoking cessation agents; frequent, known use of opioid or opioid-like analgesics
History of surgical intervention for obesity
History of seizure disorder or predisposition to seizures (e.g., history of cerebrovascular accident, significant head trauma, brain surgery, skull fracture, subdural hematoma, or febrile seizures)
History of bulimia or anorexia nervosa
History of drug or alcohol abuse within 5 years
History of treatment with bupropion, or naltrexone within 12 months
History of hypersensitivity to bupropion, or naltrexone
Use of drugs, herbs, or dietary supplements known to significantly affect body weight within one month of baseline
Use of investigational drug, device or procedure within 90 days
Participation in any previous clinical trial conducted by Orexigen Therapeutics
Any condition which in the opinion of the investigator makes the subject unsuitable for inclusion in this study"

Due to the high number of exclusion criteria, my assessment is that Contrave will address the extremely obese with few other indications, which will also limit the available market for the drug. This assumes Contrave will attain FDA approval.

OREX announced their submission of their NDA for Contrave on April 1, 2010. A Prescription Drug User Fee Act (PDUFA) date is expected in the first quarter of 2011.

Arena Pharmaceuticals

The third candidate for weight management is Lorcaserin hydrochloride, a novel single agent developed by Arena Pharmaceuticals (symbol "ARNA"), based in San Diego, CA. Lorcaserin is the only agent developed specifically for weight loss, among Contrave and Qnexa. In other words, it is not a combination of generic compounds which were developed for other indications. Hence, advantages include strong patent protection until at least 2023, reduced risk of contraindications from not combining compounds, and reduced adverse side effect profile.

A brief glimpse into the checkered history of the weight loss sector is instructive. Fen-phen, a compound of fenfluramine and phentermine, was a blockbuster anti-obesity drug in 1997. However, due to fatal pulmonary hypertension and cardiac valvulopathy problems, fen-phen was quickly withdrawn. Over $21 billion of class action lawsuit payments have been paid by Wyeth as a result. Since that time, the FDA has been deservedly very conservative in approving weight management drugs. Many anti-obesity drug candidates have failed, including compounds by big pharmaceutical giants by Merck, Sanofi-Aventis, and Pfizer. The two existing approved drugs, Orlistat and Sibutramine, are marginally effective, and carry significant adverse side effects--including liver damage, which limits their market penetration and duration of usage. Thus, an estimated $10 billion market for weight management is largely unmet.

In addition to efficacy (i.e. statistically significant weight loss), safety is even more important to the FDA, given the fen-phen disaster. First-year medical students understand "Primum non nocere," Latin for "First, do no harm." VVUS, OREX, and ARNA hope to capitalize on past failures from other pharmaceutical companies. The worldwide market (Europe is second in size behind the US) can support more than one treatment, but safety and efficacy will determine FDA approval and commercialization success.

Lorcaserin is unique because of its specificity to the G-protein coupled receptor (GPCR) 5-HT2C, located in the hypothalamus. Fenfluramine caused valvular lesions because it also was an agonist for the 5-HT2B subtype, which impacts cardiac valves. Hence, fen-phen caused irreversible valvular regurgitation.

Lorcaserin, on the other hand, only activates the seratonin 5-HT2C receptor, which controls satiety. Cardiac valves are unaffected. Echocardiograms during clinical trials showed no valvular irregularities in the Lorcaserin-active group above the placebo-control group. Weight loss from Lorcaserin was quick and more likely to encourage patients to continue compliance. Adverse side effects like headaches, dizziness, and nausea were transient and mild. In fact, more patients on placebo dropped out than patients from the Lorcaserin group.

Here is the list of exclusion criteria for BLOOM, one of the pivotal Phase III trials, according to clinicaltrials.gov:

"Exclusion Criteria:

Diabetes
Pregnancy
History of heart valve disease
Serious or unstable current or past medical conditions"

Two other Phase III clinical trials included diabetics and patients with heart valve diseases (see BLOOM-DM and BLOSSOM below), so Lorcaserin appears to be safe for many obese patients.

On March 30, 2009, ARNA announced top-line results for BLOOM, the first of two pivotal Phase III trials, for categorical and average mean weight loss above placebo:

"Primary Endpoint Analysis

The hierarchically ordered endpoints were the proportion of patients achieving 5% or greater weight loss after 12 months, the difference in mean weight loss compared to placebo after 12 months, and the proportion of patients achieving 10% or greater weight loss after 12 months. Compared to placebo, using an intent-to-treat last observation carried forward (ITT-LOCF) analysis, treatment with lorcaserin was associated with highly statistically significant (p<0.0001) categorical and average weight loss from baseline after 12 months:

-- 47.5% of lorcaserin patients lost greater than or equal to 5% of their
body weight from baseline compared to 20.3% in the placebo group. This
result satisfies the efficacy benchmark in the most recent FDA draft
guidance.

-- Average weight loss of 5.8% of body weight, or 12.7 pounds, was achieved
in the lorcaserin group, compared to 2.2% of body weight, or 4.7 pounds,
in the placebo group. Statistical separation from placebo was observed

by Week 2, the first post-baseline measurement.

-- 22.6% of lorcaserin patients lost greater than or equal to 10% of their
body weight from baseline, compared to 7.7% in the placebo group."

Many Wall Street analysts misinterpreted the data, believing the weight loss was insufficient for FDA approval. They did not understand that FDA guidances for weight loss required only one of the first two primary end points to be met.

The FDA website lists the following efficacy benchmarks for weight loss, published in 2007:

"In general, a product can be considered effective for weight management if after 1 year of treatment either of the following occurs:

• The difference in mean weight loss between the active-product and placebo-treated groups is at least 5 percent and the difference is statistically significant
• The proportion of subjects who lose greater than or equal to 5 percent of baseline body weight in the active-product group is at least 35 percent, is approximately double the proportion in the placebo-treated group, and the difference between groups is statistically significant"

Clearly, Lorcaserin met the 2nd primary efficacy end point, based on ITT-LOCF analysis, which the FDA uses in order to reduce clinical trial bias. By exceeding FDA weight loss guidances and satisfying general safety assessments, Lorcaserin appears to be FDA-approvable.

In the clinical practictioner world, prescribing doctors also evaluate per protocol efficacy, which only includes compliant patients--those who complete the clinical trials. On June 6, 2009, ARNA announced per protocol efficacy for Lorcaserin in BLOOM trials:

"In addition to supporting the previously announced results on all three co-primary endpoints on an intent-to-treat, last observation carried forward (ITT-LOCF) basis, the data presented today demonstrated strong efficacy in patients who completed one year of treatment according to the trial's protocol. In the per protocol population, nearly two-thirds (66.4%) of lorcaserin patients lost at least 5% of their weight compared to 32.1% of patients on placebo (p < 0.0001), and over one-third (36.2%) of lorcaserin patients lost at least 10% of their weight compared to 13.6% for placebo (p less than 0.0001). The average weight loss in this population was 17.9 pounds in the lorcaserin group, compared to 7.4 pounds in the placebo group. Patients randomized to remain on lorcaserin for Year 2 maintained a significantly greater amount of weight loss compared to the lorcaserin patients who switched to placebo at Week 52 in both the ITT-LOCF and per protocol populations."

This data was even more encouraging, as it suggests that patients who stay on Lorcaserin not only lose weight, they keep it off. Even though the FDA only looks at ITT-LOCF in the approval process, per protocol efficacy is what prescribing doctors will also assess, which ultimately determines commercialization success.

In addition, secondary benefits were also realized by Lorcaserin-active patients:

"Secondary Endpoint Analysis

New data demonstrate that treatment with lorcaserin over one year was associated with highly significant improvements compared to placebo in multiple secondary endpoints associated with cardiovascular risk, including:

-- Blood Pressure: systolic blood pressure, diastolic blood pressure and
heart rate

-- Lipids: total cholesterol, LDL cholesterol and triglycerides

-- Glycemic Parameters: fasting glucose, fasting insulin and insulin
resistance

-- Inflammatory Markers of Cardiovascular Risk: high-sensitivity CRP and
fibrinogen

Quality of Life, as assessed by the Impact of Weight Questionnaire - Lite, also improved to a significantly greater extent in the lorcaserin group than the placebo group at Week 52."

ARNA also announced top-line results for BLOSSOM, the second of two pivotal phase III clinical trials on September 18, 2009 with the following results.

"Our BLOSSOM trial confirmed the BLOOM results and completed the lorcaserin pivotal Phase 3 clinical trial program of 7,190 patients evaluated for up to two years.

In BLOSSOM, lorcaserin met all primary efficacy and safety endpoints, and lorcaserin patients achieved highly statistically significant categorical and absolute weight loss. Treatment with lorcaserin also resulted in statistically significant improvements as compared to placebo in multiple secondary endpoints associated with cardiovascular risk. Lorcaserin was very well tolerated, did not result in increased risk of depression or suicidal ideation and was not associated with the development of cardiac valvular insufficiency.

Efficacy

Patients treated with 10 mg of lorcaserin dosed twice daily who completed the one-year trial according to the trial’s protocol demonstrated the benefits of long-term treatment with lorcaserin:

* 63.2% of lorcaserin patients lost at least 5% of their body weight, compared to 34.9% for placebo.
* 35.1% of lorcaserin patients lost at least 10% of their body weight, compared to 16.1% for placebo.
* Lorcaserin patients achieved an average weight loss of 7.9%, or 17.0 pounds, compared to 3.9%, or 8.7 pounds, for placebo.
* The quartile of lorcaserin patients with the greatest weight loss lost an average of 35.1 pounds, or 16.3% of their body weight.

Measurements of efficacy using an intent-to-treat last observation carried forward, or ITT-LOCF, analysis showed that lorcaserin met all primary endpoints. Patients treated with 10 mg of lorcaserin dosed twice daily achieved highly statistically significant categorical and average weight loss after one year:

* 47.2% of lorcaserin patients lost at least 5% of their body weight, compared to 25.0% for placebo. As with BLOOM, this result satisfies one of two alternate efficacy benchmarks in the most recent FDA draft guidance, which provides that a weight-management product can be considered effective if after one year of treatment the proportion of subjects who lose greater than or equal to 5% of baseline body weight in the active-product group is at least 35%, is approximately double the proportion in the placebo-treated group, and the difference between groups is statistically significant.
* Lorcaserin patients achieved an average weight loss of 5.9%, or 12.7 pounds, compared to 2.8%, or 6.3 pounds, for placebo.

Safety and Tolerability Profile

Treatment with lorcaserin was very well tolerated, resulting in few adverse events with greater frequency than the placebo group. The most frequent adverse events and their rates for lorcaserin twice daily and placebo patients, respectively, were as follows: headache (15.6% vs. 9.2%), upper respiratory tract infection (12.7% vs. 12.6%), nasopharyngitis (12.5% vs. 12.0%), nausea (9.1% vs. 5.3%) and dizziness (8.7% vs. 3.9%). Adverse events of depression, anxiety and suicidal ideation were infrequent and were reported at a similar rate in each treatment group.

Echocardiographic evaluations showed no association between lorcaserin and the development of heart valve insufficiency. Rates of new FDA-defined valvulopathy in BLOSSOM at Week 52 were as follows: lorcaserin 10 mg twice daily (2.0%), 10 mg once daily (1.4%) and placebo (2.0%).

Secondary Endpoints

Treatment with lorcaserin over one year was associated with statistically significant improvements or favorable trends compared to placebo in multiple secondary endpoints, including blood pressure and lipids."

Clearly, BLOSSOM results confirmed BLOOM trials. One difference is that BLOSSOM included patients with pre-existing valvulopathy, while the BLOOM clinical trial did not.

BLOOM-DM, another Phase III clinical trial, includes diabetics. Blinded data suggests weight loss among diabetics reduces or eliminates medications for other indications. This will be attractive to healthcare providers and insurers seeking reduced healthcare costs. BLOOM-DM (Diabetes Mellitus) is not a pivotal trial, but data will be submitted as a supplement to Lorcaserin's NDA.

ARNA is well-financed after a series of equity offerings and warrant issuances. They have enough cash to last until the expected Prescription Drug User Fee Act (PDUFA) event late next year. They also own their own manufacturing facilities in Switzerland. Hence, while they seek a marketing partner, they have contingency plans in place to market Lorcaserin independently. Senior management and the Board of Directors have vast experience in the FDA approval process, and the ability to attract financing in difficult credit markets. Recent insider buying by six of eight Directors indicate bullishness. There is heavy institutional ownership, indicating long-term shareholder value. There is high insider ownership, and high short interest, approximately 20% of the float at last count. Shares have been manipulated down, a common occurrence for microcap biotech companies. The smart money has accumulated shares at lower prices. Should shares continue to rise above the moving averages, shorts will cover, potentially causing a short squeeze.

ARNA submitted an NDA for Lorcaserin on December 22, 2009, and was accepted by the FDA on February 24, 2010. An Advisory Committee review is expected in September, with the PDUFA date assigned for October 22, 2010.

Conclusion: Due to ARNA's Lorcaserin positive safety and tolerability profile, the novel single agent has a high probability of FDA approval for weight management. Lorcaserin's efficacy meets FDA draft guidances for statistically significant weight loss. By meeting primary end points for weight loss efficacy and safety, and also demonstrating improvements in multiple secondary end points associated with cardiovascular and diabetes risks, Lorcaserin is a potential game-changing, block-buster drug which addresses a $10 billion weight management market.

Disclaimer: These are my opinions and not recommendations. This article contains forward-looking statements that involve risk and market uncertainties. Actual results and events may materially differ from the article's expectations. Please do your own due diligence.

Disclosure: I am long ARNA shares.