F.D.A. Declines to Approve Diet Drug

http://www.nytimes.com/2011/02/02/business/02drug.html?_r=1&hp

“It seems like the F.D.A. is heeding the lessons from the past,” said Dr. Sanjay Kaul, a cardiologist at Cedars-Sinai Medical Center in Los Angeles, who applauded the agency’s rejection of Contrave.

“The F.D.A. is trying to send a message to the pharmaceutical industry that repackaging old drugs is not the way to go,” said Dr. Kaul, who was a member of the advisory committee minority that voted against Contrave in December. “You’ve got to come up with some new innovative ways of addressing this objective.”

If true, why did Dr. Kaul want to approve Qnexa, Vivus' obesity drug, which combines phentermine and topiramate, while rejecting Arena's Lorcaserin, which is an innovative single agent?  Phentermine has been linked to adverse cardiovascular side effects, while extensive valvulopathy clinical trials revealed no statistically significant increased risk with Lorcaserin?

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.

Cowen is bullish on Arena Pharmaceuticals

Phil Nadeau, biotech analyst for Cowen & Co., is bullish on ARNA. He sees what I've been saying for over a year: a deeply undervalued company with a short-term catalyst in potential FDA approval for Lorcaserin (anti-obesity drug) and long-term viability (deep drug pipeline, valuable intellectual property, and experienced management team).

Unlike some of his peers, Nadeau has a scientific background with a Ph.D. in neurobiology from Harvard University and an B.S./M.S. in electrical engineering and computer science from MIT. Hence, I give his opinion more weight than a captured journalism hack with a degree in political science, whose only function in life is to bash solid biotech companies with promising therapeutics. Adam, are you listening?

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

The deal was seen as favorable to Arena by Phil Nadeau, an analyst for Cowen & Co. in New York, because “they preserve for Arena a good amount of lorcaserin’s expected profits, without requiring Arena to shoulder any of the marketing costs.” Nadeau expects the company to outperform the Nadsdaq by 15 percent to 20 percent over the next 12 months, he said in a note today to investors.

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)

Good news for ARNA shareholders

http://finance.yahoo.com/news/Arena-Pharmaceuticals-prnews-489018725.html?x=0&.v=1

The US FDA formally accepted the New Drug Application (NDA) from Arena Pharmaceuticals (ticker symbol "ARNA") for their anti-obesity drug Lorcaserin. Although this is good news for ARNA shareholders, the shorts will take this normally bullish development as an opportunity tank the price per share down in order to profit on the decline, as well as enable long institutional investors to accumulate more shares at a lower entry point. That's the Wall Street playbook.

Disclosure: long ARNA shares.

Anti-obesity treatments gaining traction

Thanks to my good friend Dick for finding this timely article on weight-management drugs:

http://www.signonsandiego.com/news/2010/jan/31/dash-for-diet-drug/

At least 3 candidates are seeking regulatory approval from the FDA within the next year. The obesity market is huge (no pun intended). Two-thirds of Americans are overweight, and one-third are obese (BMI of 30% or more). Include Europe and emerging countries whose standard of living is rising, and the potential market for weight-management treatments is staggering.

The products hitting the sweet spot of safety first, tolerability, and efficacy will be blockbusters.

Disclosure: long ARNA shares.