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.

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drugs (phentermine has many adverse side effects) to the downright dangerous and lethal (Wyeth's fen-phen was withdrawn due to cardiac valvulopathy).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.

Lorcaserin clinical trial

Ed Susman, a medical doctor who participated as a patient in an obesity clinical trial, blogs about it on MedPage. He still doesn't know if he was part of the Lorcaserin group or the placebo control group--as it is a double-blinded study, but the extreme weight loss for the diabetic points toward the Lorcaserin active group.

Here's the video:

http://neurologicalcorrelates.com/wordpress/2009/02/20/weight-loss-trial-final-report-52-pounds-of-fat-melted-away/

Here's his personal account of it:

http://www.medpagetoday.com/PrimaryCare/Obesity/13506

The results of Bloom, the first of two pivotal Phase III clinical trials, were announced in March. Researchers were upbeat about Lorcaserin's FDA approvability, due to its safety and tolerability profile, as well as meeting one of the FDA weight loss efficacy guidances. Wall Street analysts were underwhelmed, causing the share price of Arena Pharmaceuticals to decline by 25% overnight. I later picked up some more shares when the price per share (pps) bottomed out around $2.50.

Results for Blossom, the second of two pivotal trials will be announced next month, and due to the statistical significance of Bloom's 3000+ patients, Blossom results for 4000+ patients should be similar to Bloom's.

Dr. Susman participated in the non-pivotal Bloom-DM Phase III clinical trial for diabetics. Anecdotally, diabetics find it more difficult to lose weight, so his weight loss of 52 points is especially significant.

Disclosure: Long ARNA shares.