Vivus (NASDAQ:VVUS): Why FDA Approval Is Not the Prescription

http://www.citronresearch.com/index.php/2012/07/19/vivus-why-fda-approval-is-not

FDA approves new diet drug, Belviq

http://www.cbsnews.com/video/watch/?id=7413180n&tag=strip

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/

FDA declines to approve Orexigen diet drug

http://finance.yahoo.com/news/FDA-declines-to-approve-apf-1752455254.html?x=0&.v=11

ALXA and FDA inspection

This press release is potentially bullish for ALXA and AZ-004 FDA approval. Again, PDUFA date is October 11, 2010.

http://finance.yahoo.com/news/Alexza-Pharmaceuticals-to-prnews-2569073814.html?x=0&.v=1

"The PDUFA goal date for our AZ-004 (Staccato loxapine) NDA is October 11, 2010. During the past several months, the FDA has conducted and completed NDA-based inspections of our manufacturing facility, and several clinical and non-clinical sites, which appear to be part of the normal course of the ongoing NDA review," said Thomas B. King, Alexza President and CEO. "As we approach the PDUFA goal date, we expect continued interaction and contact with the FDA regarding our NDA submission. We are not planning on making any specific comments on the details of these interactions unless we feel we have material information that will impact our PDUFA date."

See disclaimers in the side bar.

Disclosure: long shares of ALXA.

Beware the analyst with an agenda

http://aschoff.blogspot.com/2007/04/jonathan-aschoff-from-brean-murray-hes.html

Provenge is a drug to help prostate cancer patients in the late stage of disease. Dendreaon[sp] the company that makes Provenge is a bio tech company who recently received a positive recommendation from the FDA advisory committe[sp] that Provenge is safe and the the drug work[sp] to prolong survival.
Aschoff's firm had a sell or 'short' recomendation[sp] on this stock - target price of 1.50.
After the recommendation of the FDA approval pannel[sp] the stock flew up to 18 dollars. Aschoff has been on what seems to be a personal war path against Provenge ever since.
Friedman Billings analyst Jonathan Aschoff says he was just trying to get the real story when he impersonated a doctor in early March.

Here's another article.
http://www.marketrap.com/article/view_article/91112/jim-chanos-jonathan-aschoff-and-more-on-the-dendreon-saga

When the FDA’s advisory panel voted in favor of Provenge, most Wall Street research analysts were predicting a bright future for Dendreon. But as naked short sellers piled on with ever increasing gusto, hedge fund managers continued to whisper in reporters’ ears. And two Wall Street analysts did more than whisper – they shouted, day after day, that Dendreon’s treatment for prostate cancer was doomed.

One of these analysts is named Jonathan Aschoff, and he works for a financial research outfit called Brean Murray Carret & Co. The day after the advisory panel vote, in an interview with Reuters, Aschoff made the long-shot prediction that the FDA would not approve Provenge, but would instead ask Dendreon to supply additional data showing that the treatment was safe and effective–a process that could take years. Soon after, Aschoff told other media outlets that the FDA would set a “dangerous double standard” by approving Provenge because the treatment “did not meet its primary goal in two Phase III trials.”
During the first days of April 2007, Aschoff was everywhere, continuously repeating this notion that the FDA would set a “dangerous double standard” by approving Provenge. On April 9, Aschoff reiterated his “sell” rating for Dendreon, setting a target for the stock at a mere $1.50, which implied that the stock would lose more than 90 percent of its value by the end of the year. Reuters, Associated Press, CNBC and other media dutifully reported Aschoff’s comments as though they shed light on the merits of Dendreon’s prostate cancer treatment.

Aschoff’s performance raises a few basic questions. The first is, how did a Wall Street analyst know that it would be “dangerous” to approve a medical treatment? It is an odd day, indeed, when the media turns to Wall Street for wisdom on matters of science and health.
The second question is, why was Aschoff so confident that the FDA would not approve Provenge? Given that the FDA had followed its advisory panels’ decisions in 97% of cases, and in 100% of cases involving drugs for dying patients, Aschoff’s prediction seemed rather far out. What did he know that the rest of the world did not know?

One more question: Which hedge funds were paying Aschoff’s bills?

Note: shares of DNDN recently peaked above $58 after FDA approval, and have settled in at $36 as of today.

See disclaimers in the side bar.

Disclosure: no current position in DNDN, last exit was at $58. A family member still owns shares of DNDN.

ARNA shares gain on VVUS' Qnexa rejection

http://www.businessweek.com/ap/financialnews/D9H09AV80.htm

As usual, some analysts really don't get it.

Separately, Barclay Capital analyst Dr. Jim Birchenough maintained a more conservative "Equal Weight" rating on Arena, saying the FDA seems to have a high hurdle for new obesity drugs and lorcaserin could face its own issues with regulators. Those issues could include adequacy of weight loss and heart valve risks.

According to the recently released New England Journal of Medicine article on Lorcaserin:

http://content.nejm.org/cgi/content/short/363/3/245

Serial echocardiography was used to identify patients in whom valvulopathy (as defined by the Food and Drug Administration) developed.

Among 2472 patients evaluated at 1 year and 1127 evaluated at 2 years, the rate of cardiac valvulopathy was not increased with the use of lorcaserin.

Pregnancy, VVUS and ARNA

This post came from an ARNA message board.

First of all there will never be any human pregnancy prospective studies done. All proven teratogens are known from retrospective studies or case control studies or studies done on animals. This is true of any drug brought to market.

To prove that an agent is a teratogen one might show:


•It is more often associated with individuals having a specific defect than with appropriately matched controls.
•A specific malformation or group of malformations is consistently associated with exposure to the teratogen.
•Biologic plausibility; the agent was present at the time in organogenesis when the anomaly would have to occur. As an example, it is unlikely that exposure to drug X in the third trimester would cause a cleft palate because the palate closes in the first trimester.
•The anomaly was less common before the presumptive teratogen was introduced. Phocomelia (missing upper parts of arms or legs), as an example, was almost nonexistent before the introduction of thalidomide.
•Experimental animals will develop the anomaly if given the presumed teratogen at the appropriate stage of organogenesis.

The BIG difference is that VVUS had a known teratogen!!!.
Using your logic no drug would ever be approved for lack of pregnancy studies.

Daniel
UCLA MD

Advisory committee votes 10 - 6 No on Qnexa

As I expected, the independent advisory committee voted 10 - 6 (one panel member later changed his vote) against Qnexa being recommended for FDA approval. Shares in VVUS were halted this morning, but when trading resumes, the shares will plummet.

Shares of ARNA, a competitor to VVUS in the anti-obesity sector, gapped up 34% to a high of $5.72 in anticipation of the vote. After the Qnexa outcome, ARNA shares dropped in sympathy below $4, down approximately 10% for the day. However, upon further inspection, lack of sufficient safety data doomed Qnexa, but ARNA's Lorcaserin has a strong safety profile. Hence, I believe shares of ARNA will rebound leading up to its September 16 advisory committee review.

Edit: as I posted this, ARNA shares are recovering close to their previous close above $4 in after-hours trading. All that volatility, and ARNA ended up its round trip near yesterday's close. What a wild day of trading!

Wall Street was bullish on Qnexa's efficacy, but once again, safety ruled.

See disclaimers on the side bar.

Disclosure: no position in VVUS (and glad). Long ARNA shares.

More excerpts from FDA briefing document on Qnexa

"When assessed as a group, the incidence of cognitive-related adverse events was 1.7%, 2.0%, 5.6%, and 7.8% in the placebo, low-dose, mid-dose, and high-dose PHEN/TPM groups, respectively. The most common adverse event related to cognitive dysfunction was disturbance in attention."

"Approximately 30% of individuals treated with high-dose PHEN/TPM experienced a
serum bicarbonate <21 mEq/L compared to 5.9% of individuals treated with placebo."

"A higher proportion of PHEN/TPM-treated individuals experienced a categorical
increase in heart rate compared to placebo treated individuals (>20 bpm: 19.6% high-dose PHEN/TPM versus 11.9% placebo)."

"Six individuals in the placebo group (atypical angina, coronary artery disease, left main coronary disease) and five individuals in the PHEN/TPM group experienced a non-fatal serious adverse event related to cardiac ischemia defined within this subclass. An additional placebo-treated individual died of cardiorespiratory arrest. Coronary artery disease was the most common adverse event within the placebo group and myocardial infarction was the most common adverse event within the PHEN/TPM-treated group."

"The incidence of depression-related adverse events in the PHEN/TPM clinical trials was 3.4% in the placebo group, 5.0% in the low-dose PHEN/TPM group, 3.8% in the mid-dose PHEN/TPM group, and 7.7% in the high-dose PHEN/TPM group."

These adverse side effects are problematic for Qnexa, in my opinion. We should find out more in today's independent advisory committee review, and the October 28 PDUFA event.

VVUS shares increase on Qnexa efficacy, despite safety concerns

Shares of Arena Pharmaceuticals and Orexigen also rise in sympathy with Vivus. Briefing documents for Qnexa's upcoming review by an independent advisory committee this Thursday (July 15) revealed Qnexa's efficacy for weight loss, but also expressed concerns regarding adverse side effects. The FDA has assigned a PDUFA date of October 28, 2010, for review of Qnexa's NDA.

http://finance.yahoo.com/news/Vivus-weight-loss-drug-faces-apf-1308428575.html?x=0&.v=2

See disclaimers on the side bar.

Disclosure: long ARNA shares.

More risk factors in VVUS' 10-Q on Qnexa

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7238278-301188-514052&type=sect&dcn=0001104659-10-026546

In addition, the placebo rate in larger studies may be higher than
expected.

Although we believe Qnexa affects the two major causes of overeating, excessive hunger and the inability to feel satisfied, we may not be correct in our assessment of the
impact the combination of these two ingredients may have on weight loss or their mechanism of action.

In general, significant adverse events and side effects observed in pre-clinical, clinical and post-marketing studies are included in the full prescribing information or label for each drug. The label for TOPAMAX contains reports of side effects, warnings and precautions including metabolic acidosis, acute myopia and secondary angle closure glaucoma, decreased sweating and hyperthermia, cognitive-related dysfunction, psychiatric and behavioral disturbances including one completed suicide in a patient during a bipolar trial, somnolence and fatigue, sudden unexplained death in epileptics, kidney stones, paresthesia and various drug interactions. The label for ADIPEX, a popular branded form of phentermine, contains warnings and precautions including recommendation against coadministration of phentermine with other drugs for weight loss. Adverse side effects include, among other things, pulmonary hypertension, valvular heart disease, drug abuse and dependence, overstimulation, restlessness, dizziness, insomnia, euphoria, dysphoria, tremor, headache, dryness of the mouth, diarrhea, constipation, impotence and changes in libido.

In addition, if the FDA does not approve the full-dose of Qnexa, there is no assurance that they would approve the mid-dose or any other dose of Qnexa.

If we are required to complete a long-term cardiovascular safety outcomes study for Qnexa, the ultimate approval may be delayed for several years and the overall cost of the program will significantly increase.

In June 2007, an FDA advisory panel recommended against approval of rimonabant, an oral obesity treatment targeting the CB1 receptor system being developed by another company. Rimonabant was a centrally acting drug that reduces patients’ desire to eat. The advisory panel expressed concerns about the impact of the drug on depressed patients and also expressed concerns about patients having thoughts about suicide. In addition, concerns about rimonabant’s mechanism of action and interference with the CB1 receptor pathway were also voiced. The company withdrew its NDA for rimonabant shortly after the advisory panel meeting. Although the active ingredients in Qnexa have been previously
approved by FDA at higher doses for other indications, it is a centrally acting drug that may increase the risk of psychiatric side effects such as depression and/or suicidal ideation.

Does VVUS even understand Qnexa's mechanism of action?

Reading all the risk factors for Qnexa in their 10-Q is like watching a horror movie. VVUS has no marketing partner, and no manufacturing facilities. No way it gets approved in October, in my opinion.

See disclaimers in the side bar.

Disclosure: no position in VVUS.

VVUS's Qnexa advisory committee

Qnexa has an advisory committee review July 15, but the FDA's documents will be available July 13. I have many reservations on Qnexa's approvability, including censorship of titration drop out data, the high discontinuation rates, adverse side effect profile, among others. But this one could also be discomforting to VVUS investors:

VVUS's latest 10-Q :
"The number of patients on the low-dose in OB-302 or the mid-dose in the OB-303 study may not be sufficient for approval."

With drugs facing increasing scrutiny regarding safety from the FDA, Qnexa faces some head winds in the regulatory process, in my opinion. We'll find out soon enough later this week.

See disclaimers on the side bar.

Disclosure: no position in VVUS.

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.

ARNA announces BLOSSOM results

In one of the wildest trading sessions in recent memory, shares of Arena Pharmaceuticals (symbol "ARNA") surged 40% in after-hours trading last night, after they issued a press release they would announce top-line results for Lorcaserin, their weight loss drug. Obviously, investors were anticipating that results would be positive. At midnight, when ARNA did publish BLOSSOM results, their second of two pivotal, Phase III clinical trials, the headline mentioned that positive results were achieved for efficacy and safety. The pre-close and after-hours buying of calls and shares appeared justified, as rumors of leaks were pervasive among trading desks.

However, once the data was released, the market's reaction in pre-market morning trading was negative, once again underwhelmed by Lorcaserin not meeting the 5% average placebo-adjusted weight loss. To make matters worse, unlike BLOOM, the categorical 5% weight loss did not exceed double the placebo categorical 5% weight loss either. Thus, shares dropped all the way to $3.80 from last night's $6.76 close.

Upon further analysis and cooler heads, shares have walked up back to the high $5's, meaning after all that whipsawing (which enabled shorts and market makers to profit immensely), shares of ARNA are above water from last night's by almost $1 per share.

Why have the shares rebounded, if the efficacy numbers are "bad"? First of all, BLOSSOM confirmed BLOOM's efficacy AND safety and tolerability. This is significant, as the weight loss sector is littered with marginally effective and intolerable drugs (phentermine has many adverse side effects) to the downright dangerous and lethal (Wyeth's fen-phen was withdrawn due to cardiac valvulopathy). Lorcaserin, on the other hand, has a clean safety profile very similar to a placebo.

BLOSSOM's 20 mg dose confirmed BLOSSOM's efficacy numbers, even if the placebo control group in BLOSSOM had better efficacy than the place group in BLOOM. But more importantly, the FDA guidance for weight loss efficacy needs further scrutiny. It is a minor but important point--one that even ARNA CEO Jack Lief missed in previous presentations, but one I captured several months ago.

ARNA's presentation and conference call today did catch incorporate it, because it is an essential point. According to the guidance established in 2007:

c. Efficacy benchmarks

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

Notice 35% of the Lorcaserin-active group has to lose at least 5% body weight. That group has to also be APPROXIMATELY double the placebo-treated group. It doesn't have to EXCEED the doubling of the placebo control group. It did EXCEED in BLOOM, but both BLOOM and BLOSSOM meet this "approximately double" co-primary end point. Additionally, when pooled together, BLOOM and BLOSSOM results exceed it.

I've covered other aspects on why Lorcaserin has a high probability of getting FDA approved, so I won't go into them here. But it is also worth noting that while the average placebo-adjusted weight loss end point of 5% was not met in BLOSSOM either, the either/or component of the co-primary end points (the other being categorical weight loss discussed above) is a good indicator that Lorcaserin is FDA approvable.

And with a clean safety and tolerability profile, it remains the best candidate to achieve FDA approval first, and perhaps reach the broadest target market of obese and overweight patients. The finish line is closer for ARNA, and the market is starting to warm up to it.

Disclosure: long ARNA shares.

Accumulation phase for ARNA over?

Shares of Arena Pharmaceuticals surged today, after consolidating below $4.50 for several weeks, as the shorts and market makers ran the stops. Nervous Nellies are out of the trade--only the strong hands remain, including large institutional holdings by Deerfield Capital, Federated Investors, and Wellington Management, all reknown for being savvy, long-term value holders. Recent investments by Barclays and Winslow Management boost an already strong roster of institutional ownership. Couple that with recent insider purchases by six of eight members of the Board of Directors, and it was just a matter of time before shares of ARNA spiked up in anticipation of announcement of Blossom results, the second of two pivotal Phase III clinical trials for Lorcaserin, the weight management drug with blockbuster potential.

ARNA CEO Jack Lief has indicated that Blossom top-line results will be announced by "the end of September". Short-term traders may want to accumulate tradeable shares in anticipation of the run-up as we approach said announcement, and sell before the news in a low-risk trade. Long-term investors like myself, however, have been slowly accumulating core holdings with an exit strategy post-pivotal events, including Blossom results in September, New Drug Application submission in December, and potential PDUFA in October, 2010. Because Lorcaserin's potential is enormous (some analysts forecast a $10 billion market annually), I will retain a long-term core holding.

This ameliorates the possibility of an announcement of a marketing partnership with a big pharmaceutical company, which would also cause the shares of ARNA to spike up. Traders in and out of ARNA may miss the train. A partnership seems likely, based on previous clinical trial data on Lorcaserin. Safety and efficacy point towards FDA approvability, as Lorcaserin selectively stimulates the 5-HT2C seratonin receptor, a G protein coupled receptor (GPCR) located in the hypothalamus. Stimulation of this GPCR is associated with feeding behavior and satiety.

Most importantly, Lorcaserin's specificity to the 5-HT2C receptor means it doesn't stimulate the other subtypes, 5-HT2A and 5-HT2B. These other subtypes are linked to cardiac valvulopathy, which caused the massive recall of phen-fen, for which Wyeth has paid out $21 billion in a class action lawsuit. Hence, Lorcaserin is both efficacious AND safe.

The weight management sector is wide open, littered with previous failures by big pharmaceutical companies, and a few marginally effective treatments with adverse side effects, some potentially serious. With the safest treatment in the market, and first-mover status relative to their two competitors: OREX's Contrave and VVUS' Qnexa--both generic compounds with a large exclusion criteria and label warnings, ARNA's Lorcaserin has the biggest commercialization potential.

Disclosure: Long ARNA shares.

Tamiflu-resistant swine flu

The US has a huge stockpile of Tamiflu and Relenza as anti-virals. Anti-virals are treatments for patients who have contracted the various flus already--they are not vaccines and hence, are not used as prophylaxis in prevention of said influenza viruses.

http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5816a6.htm

Read the editorial note, not just the article. Down at the bottom, you will see this:

Compared with M2 blockers, NAIs previously exhibited lower frequency of antiviral resistance during therapeutic use (16,19). However, during the 2007--08 influenza season, emergence and transmission of oseltamivir-resistant A (H1N1) viruses, with a H274Y mutation in the neuraminidase protein, was simultaneously detected in several countries in the Northern Hemisphere (4,20--22) and spread globally (7,9,23). As of April 2009, similar trends have been observed in the 2008--09 influenza season, with many countries reporting up to 100% oseltamivir resistance in A (H1N1) viruses

.

In case you were wondering, oseltamivir = Roche's Tamiflu, currently the anti-viral of choice for the nation's stock pile. It no longer works for avian or swine flus! So if you're sick from the swine flu enough to get admitted into a hospital, they will probably administer Tamiflu orally, as it is a pill. I have seen government data that up to half of admitted swine flu patients in ICU end up dead. One other possible reason for resistance (besides prevalence of Tamiflu in our sewage and water system) is oral consumption decreases and delays absorption of the compound. One of the members in this email thread used to work at Roche, perhaps he can add some color to this assessment.

The 2nd drug of choice is GlaxoSmithKline's Relenza, or zanamivir. It has maintained efficacy for treating various strains of flu, and is in the form of powder. If a patient is seriously ill enough to be intubated, that option is ruled out because Relenza can only be inhaled.

Which only leaves us with BCRX's Peramivir intravenous application as the only option. The share price has gapped up recently, despite only completion of Phase II clinical trials in the US. It is already approved for E-IND use, which basically allows individual doctors to administer it for individual patients as an emergency. But due to its efficacy, investors are waiting for Emergency Use Authorization, which allows national stockpiling, despite lack of FDA approval. This will translate to millions of doses, not just a few thousand.

Many investors feel this action is not just pending, but imminent. Vaccine manufacturers are scrambling to meet exploding demand--and they will still fall short, as best-case scenarios call for delivery in October. Unfortunately, school starts in August/Septemer, so we will unquestionably see a soaring number of cases this fall--rendering vaccines useless. Fortunately, most cases will be mild, and won't require hospitalization. But due to the high infectious rates, and sheer numbers of cases, hospitalization and death rates will be higher than seasonal flu cases by orders or magnitude.

http://news.yahoo.com/s/ap/20090724/ap_on_he_me/us_med_swine_flu

http://www.cbsnews.com/stories/2009/07/21/earlyshow/health/main5177452.shtml

Government health officials aren't in business to create unnecessary hype--quite the contrary--they aim to act quickly and decisively while attempting to not cause undue panic. They usually fail in both. However, they are on the hook to prepare for a worst-case scenario, and they will look awfully foolish if they don't take emergency measures as part of their contingency plans. In Japan and the rest of Asia, where sensitivity and awareness to infectious disease is high due to close living quarters, their FDA equivalent health agency has already completed Phase III trials, and results for Peramivir were positive. Approval in Japan will precede US FDA approval, and they will surely order millions of doses of Peramivir.

While FDA approval for Peramivir is further down the road, they will have to act soon in order to secure enough Peramivir inventory to prepare for a worst-case scenario. Because the public will not appreciate it if they find out their own US government is forced to stand in line--behind other countries because they didn't act quickly enough to protect their citizens.

I bought BCRX in the 2's and 3's in May and June, and it's currently bumping up against $10. I'm praying for a pullback to accumulate more shares, but I'm afraid the world is waking up to the severity and depth of the swine flu. It may keep increasing, as the big boys on Wall St. become more cozy with the investment thesis. However, with market makers, you never know, and they can force one more bear raid to help the shorts cover, and to help their friends at Goldman Sachs buy in at lower prices. Wall St. analysts usually don't get it right, so when they guess wrong, they have friends who come to their rescue to drive share prices down. Instead of complaining about it, we can use it to our advantage, buying at lower prices when the opportunity presents itself. But it can easily gap up into the teens upon arrival of the EUA. Let's hope all the fear-mongering ends up being a false alarm. On the other hand, I'm not betting on it. Good luck to all longs,

Disclaimer: This is not a recommendation. Do your own due diligence.

Disclosure: Long BCRX shares.

SPPI Class 1 Response is a good sign

Spectrum Pharmaceuticals (SPPI) received a Class 1 response from the FDA today on their resubmission of data on Zevalin, SPPI's clinical non-Hodgkin's Lymphoma (NHL) drug. A Class 2 response could have meant a delay of up to 6 months for further FDA review. Instead, SPPI disclosed September 7 as the FDA decision date for approval. On July 2, the FDA requested additional data via a Complete Response Letter on SPPI's application for Zevalin's expanded use as first-line treatment for NHL. Currently, Zevalin is only approved for refractory, relapsed NHL. Zevalin is already approved in Europe for expanded labeling, so FDA approval is expected by many.

http://www.reuters.com/article/marketsNews/idINBNG17208020090720?rpc=44

SPPI also has another late-stage clinical drug coming up for FDA approval. Fusilev is already approved for osteocarcinoma, but is up for approval for treating colorectol cancer on October 8.

Two "misses"

BDSI's cancer pain drug Onsolis did gain FDA approval as expected, but the prices have declined since its approval, which is unexpected. I'm sitting on a slight loss on the shares, so will probably hold until their next pivotal event in September/October--or until the market realizes the commercialization potential of Onsolis, its unique breakthough drug delivery technology, and solid pipeline up for FDA approval.

I also contemplated taking a stab at Human Genome Sciences (HGSI) last week, waiting for today's announcement for its Lupus drug, Benylsta. Results were positive, and shares rocketed overnight over 200%, despite the market's prior skepticism. Even though we missed on it, I don't feel that bad, because I didn't perform enough due diligence to be comfortable enough to pull the trigger. The main beneficiary is the biotech sector, as these big winners will attract more retail and institutional investors. Clinical stage biotech stocks require capital to fund their development work, so the positive news gives them more options for financing.