Vivus: A Bet on Well-Funded, Late-Stage Pipeline

Vivus Inc. (VVUS) is a small-cap specialty pharma stock included in the ETF Innovators Preventive Medicine Index which is one of a trio of companies developing late-stage prescription weight loss drugs.

Orexigen Therapeutics (OREX) will report additional Phase 3 results for Contrave around mid-year and hopes to file a NDA by year-end. Arena Pharma (ARNA) is expected to report Phase 3 results for lorcaserin by the end of this month. Vivus expects to post Phase 3 results around mid-year for Qnexa with a NDA filing planned before year-end.

Nearly two-thirds or 65% of U.S. population is classified as obese or overweight with a three-fold increase in adolescent obesity rates over the past three decades. Obesity is the second leading cause of preventable deaths behind smoking and weight loss is proven to decrease mortality while also improving blood sugar control in diabetics. Over one-third (35%) of people in the U.S. have a lifetime of developing Type 2 diabetes and the trend is clearly increasing as a result of obesity rates, especially in the younger population.

Qnexa is a once-daily, combination drug (phentermine 15 mg immediate-release + topiramate 92 mg controlled-release) in Phase 3 clinical development for weight loss in obese patients and improving blood sugar control in diabetics. Phentermine is the most widely prescribed prescription weight loss drug which is available in generic forms and has a database of 1.8 million patient years of usage.

Topiramate is better known as Topamax (patent expires this month), which has 5.8 million patient years of use and was originally developed as a seizure drug and is also used for the prevention of migraine headaches. While both components of Qnexa will be available in generic forms, topiramate is not indicated for weight loss and the dosages being evaluated in clinical trials would make dosing difficult using the two drugs individually.

Also, Vivus holds composition of matter and method of use patents for Qnexa as a combination treatment for obesity in the unique dosage forms being evaluated in Phase 3 clinical trials, with more than 4,500 patients currently enrolled in late-stage studies for weight loss and Type 2 diabetes control. Last year, Vivus reported results for Qnexa from the 28-week EQUATE Phase 3 clinical trial which met its primary endpoint by demonstrating superior weight loss with both the full-dose and mid-dose of Qnexa, as compared to the drugs used individually and placebo.

Subjects treated with full-dose and mid-dose Qnexa had an average weight loss of 9.2% and 8.5% respectively, as compared to weight loss of 1.7% reported in the placebo group (p<0.0001). Average weight loss was 19.8 pounds and 18.2 pounds in the treatment arms as compared to 3.3 pounds in the placebo group. Qnexa was well-tolerated, with no drug-related serious adverse events in the study.

The first pivotal Phase three trial in the general population for the Company's other late-stage drug candidate, avanafil, were initiated last December with topline results possible by year-end. Last month, a Phase 3 trial was initiated (REVIVE-Diabetes) to evaluate avanafil in diabetics. Avanafil is in the same class as erectile dysfunction (ED) drugs such as Pfizer's (PFE) Viagra, Lilly's (LLY) Cialis, and Glaxo's (GSK) Levitra, which represents a large market with over $3B in sales.

Avanafil is being developed through a low-risk $30M funding agreement with Deerfield Management ($20M royalty/funding agreement + $10M in Vivus common stock) as a next-generation, fast-acting oral PDE5 inhibitor. Avanafil is differentiated from what is a crowded market for ED drugs based on its faster onset of action (35 minutes) and better safety profile (shorter half life of 90 minutes means the drug is metabolized quicker with less chance for side effects or drug interactions).

Recent market volatility presents an excellent buying opportunity for shares of Vivus, which ended last year with a projected cash balance of $180M - compared to market cap of $218M and negligible debt of $8.7M. Vivus offers investors two late-stage Phase 3 drug candidates in Qnexa and Avanafil, with results expected at mid-year and year-end, respectively. Vivus also plans to file a NDA for Qnexa by year-end, pending the outcome of the two pivotal Phase 3 trials at mid-year.

Big pharma companies in search of new products and late-stage pipeline candidates will be watching closely as ARNA, OREX, and Vivus report their pivotal weight loss study results over the next few months and a major licensing deal or acquisition will likely follow for the company posting the best results in terms of safety and efficacy.

My bet is on Vivus and with the most recent leg of the market meltdown, the stock is trading at multi-year lows around three bucks - representing a steep discount to the timely $65M registered common stock offering last August at $7.77 per share and within the range of the previous two option grant prices to officers and directors at $2.69 and $3.75 per share.

Disclosure: Author holds a long position in VVUS

Comments

[Biotechs_Maven:]

Take a look at VVUS Phase 2 trial.At that time they actually use the same Generic Topiramate 100mg dose and Generic Phentermine dose too.They even do not bother to mix the two drug into one tablet at all.But the way they dose it was,
they give one drug in the morning and the other in the afternoon.
Only from Phase 3 that they change the formulation slightly, that because They need to make it different then the Generic formulation.
That show if the Phase 2 trial is doing just fine with generic dose, then most people will buy the generic Topiramate and Phentermine dose and use it just like the way VVUS use it in their Phase 2 trial.

also Topiramate had received FDA warning on 2001, that it might cause adverse event to the eye, and just few months ago, receive another FDA warning that Topiramate could cause 1 out of 500 patients with Suicide thought.

This same Suicide thought was the one that make Acomplia (another diet drug) do not get approved by FDA, and later Acomplia even get pulled back from European market where it were already approved.

Plus the fact that from Qnexa Diabetic 1 year trial, it is shown that Qnexa start to loss efficacy after only 28weeks of use, and then at week 44, the arm taking Qnexa actually start to GAIN Weight instead.

The Insider also had been selling lot of shares lately, in fact the CEO of VVUS is selling his shares the same day as VVUS R&D day. So during that day while VVUS is presenting the result of Qnexa Phase 3 Equate trial, VVUS CEO is selling his shares,
and had been selling more then $2.5million worth of VVUS shares for the last 18months.
and the insider that is selling is not limited to only VVUS CEO but many other insider also sell.

There is no doubt that Qnexa have decent efficacy, but efficacy alone is not enough to guarantee approval of Qnexa.

VVUS share price also had been trending down this past few months after the result of Equate phase 3 study (a short 6months study with not large patients involved).

so maybe VVUS is a good short term play, but before you decide your self for long term hold on VVUS, you got to do more due dilligence on the data itself.

My bet is on ARNA instead, because ARNA is brand new drug (not generic combo), and management of ARNA mostly buying shares or holding to ARNA shares, (very dismal selling).
ARNA also had enough money to last until NDA on early 2010,
and the CEO of ARNA even decide to pay up the convertible holder with CASH instead of diluting shareholder by paying with shares.That show ARNA is very confident with the result of Lorcaserin.ARNA also enrolled more then 7100 patients in their Two Phase 3 trial, far larger then VVUS or OREX Phase 3 study.
and their First Phase 3 trial is a 2 year trial, so this should satisfy the FDA about Lorcaserin long term use.

Disclosure: I holds a LONG positions in ARNA

Mar 04 07:05 AM

[Mike Havrilla:]

Biotechs_Maven, check out my new website at BioMedReports.com -- we are looking for contributors on the site so email me if you are interested, Mike


On Mar 04 07:05 AM Biotechs_Maven wrote:

> Take a look at VVUS Phase 2 trial.At that time they actually use
> the same Generic Topiramate 100mg dose and Generic Phentermine dose
> too.They even do not bother to mix the two drug into one tablet at
> all.But the way they dose it was,
> they give one drug in the morning and the other in the afternoon.
>
> Only from Phase 3 that they change the formulation slightly, that
> because They need to make it different then the Generic formulation.
>
> That show if the Phase 2 trial is doing just fine with generic dose,
> then most people will buy the generic Topiramate and Phentermine
> dose and use it just like the way VVUS use it in their Phase 2 trial.
>
>
> also Topiramate had received FDA warning on 2001, that it might cause
> adverse event to the eye, and just few months ago, receive another
> FDA warning that Topiramate could cause 1 out of 500 patients with
> Suicide thought.
>
> This same Suicide thought was the one that make Acomplia (another
> diet drug) do not get approved by FDA, and later Acomplia even get
> pulled back from European market where it were already approved.
>
>
> Plus the fact that from Qnexa Diabetic 1 year trial, it is shown
> that Qnexa start to loss efficacy after only 28weeks of use, and
> then at week 44, the arm taking Qnexa actually start to GAIN Weight
> instead.
>
> The Insider also had been selling lot of shares lately, in fact the
> CEO of VVUS is selling his shares the same day as VVUS R&amp;D day.
> So during that day while VVUS is presenting the result of Qnexa Phase
> 3 Equate trial, VVUS CEO is selling his shares,
> and had been selling more then $2.5million worth of VVUS shares for
> the last 18months.
> and the insider that is selling is not limited to only VVUS CEO but
> many other insider also sell.
>
> There is no doubt that Qnexa have decent efficacy, but efficacy alone
> is not enough to guarantee approval of Qnexa.
>
> VVUS share price also had been trending down this past few months
> after the result of Equate phase 3 study (a short 6months study with
> not large patients involved).
>
> so maybe VVUS is a good short term play, but before you decide your
> self for long term hold on VVUS, you got to do more due dilligence
> on the data itself.
>
> My bet is on ARNA instead, because ARNA is brand new drug (not generic
> combo), and management of ARNA mostly buying shares or holding to
> ARNA shares, (very dismal selling).
> ARNA also had enough money to last until NDA on early 2010,
> and the CEO of ARNA even decide to pay up the convertible holder
> with CASH instead of diluting shareholder by paying with shares.That
> show ARNA is very confident with the result of Lorcaserin.ARNA also
> enrolled more then 7100 patients in their Two Phase 3 trial, far
> larger then VVUS or OREX Phase 3 study.
> and their First Phase 3 trial is a 2 year trial, so this should satisfy
> the FDA about Lorcaserin long term use.
>
> Disclosure: I holds a LONG positions in ARNA

Mar 04 07:41 AM

[Biotechs_Maven:]

Thank you for your kind invitation Mike,
I will visit your new website soon.

Best regards,
Biotechs_maven

ps: another disclosure I am NOT and NEVER had any SHORT position on VVUS or OREX.

Mar 04 08:17 AM

[Sanford:]

"the dosages being evaluated in clinical trials would make dosing difficult using the two drugs individually."

Not true at all. Vivus' own Phase II trial used the two drugs individually.

Sep 28 10:32 AM