Orexigen's Contrave: Generic Would Be No Cheaper

On March 30, Arena Pharmaceuticals (ARNA) announced somewhat mixed Phase III trial results for its weight-loss drug lorcaserin. Questions immediately arose in several forums about whether lorcaserin would be at an advantage over other late-stage obesity candidates -- Contrave, from Orexigen Therapeutics (OREX), and Qnexa, from Vivus, Inc. (VVUS) – because both Contrave and Orexigen are combinations (albeit reformulated) of existing drugs.

For longtime holders of OREX and VVUS, it’s actually good news that these perennial concerns are getting aired out once again, because it means that new arrivals are coming to the story.

First, just to get this out of the way, both OREX and VVUS have over ten years of patent protection on their candidates post-launch, so it’s unlikely that anyone will try to manufacture a copycat. The concern is that doctors may prescribe combinations of the components in generic form instead of the branded drugs. We don’t think so, and here’s why.

Qnexa is a combination of two existing drugs, phentermine and topiramate (marketed for epilepsy and migraine as Topamax). Contrave is a combination of bupropion (marketed as Wellbutrin) and naltrexone (indicated for alcohol and certain drug addictions).

• While some generic versions of these drugs are available or will be by the planned 2010 launch, the specific doses included in Qnexa and Contrave are not available in generic form, nor are there sustained-release formulations, as included in Qnexa and Contrave.
• To approximate the doses, patients would have to take several pills during the day. The advantage in convenience and compliance to a single pill, particularly in a population that’s often already taking various medicines and supplements, is considerable.
• OREX’s market research suggests that after the “fen-phen” debacle, doctors are going to prefer to stick with FDA-approved drugs rather than risk improvising their own off-label cocktails.
• In addition, most primary care doctors are not prescribing naltrexone every day as things stand; the company believes that their comfort level with it is not high. By contrast, Nitromed’s (NTMD) ill-fated BiDil cardiovascular combination included only drugs that doctors were already routinely prescribing.
• All of the above is also why we don’t think there will be a big demand for re-titrating patient-specific doses independently. (Swivelchair, please feel free to expand on this idea further – you’re actually the first person I’ve ever heard bring it up, so you may be on to something.)
• VVUS has not made public an estimate of what Qnexa might sell for, but OREX is shooting for about $5 per day for Contrave. At that price, the generic substitution would be no cheaper. These are relatively expensive generics.

OREX at a Glance:

• Flagship Contrave is moving through Phase III trials for obesity.
• In Phase II trials, Contrave not only caused weight loss but also reduced the prevalence of metabolic syndrome. This is key for potential reimbursement down the road because Contrave confers a medical benefit, and is not merely a cosmetic aid.
• Empatic has initiated Phase IIb trials. It’s about a year behind Contrave in development, but may be even more efficacious.

• From the 48-week Phase II data, it also appears there is little or no weight loss plateau with Empatic.

• More data for both Contrave and Empatic is expected in mid-2009, with Contrave NDA submission now planned for mid-2010.

• Two directors made sizable investments in OREX in December on the open market.
• A new CEO, Amgen veteran Michael Narachi, has joined as of March 31, replacing Dr. Gary Tollefson, who resigned in December for health reasons. This seems to us an eminently reasonable period of time to find a CEO. We are pleased that the seat did not languish in interim status.

We’re still hoping that the two-year pivotal results from ARNA will now bring more attention to the entire obesity drug development space and its three-way race. OREX initially rose on the ARNA news but since has actually slipped over 15%. Current levels present an appealing opportunity to buy OREX, as well as VVUS, at prices representing significant upside.

Disclosure: no positions

Comments

[hoopdreamer...:]

The question is more whether Orexigen has an approvable concept than generic substitution. I would say it's iffy at this point.

Apr 05 09:36 AM

[Ruthanne Wi...:]

Thanks hoopdreamerz for your observation. This article is mostly a response to concerns raised in the comments threads to various articles I've written recently here on ARNA and to other comments threads on ARNA. Obviously you can't discuss any of ARNA, OREX or VVUS without at least looking in on the others. I see that you've also read my article here at SA on whether OREX has an approvable concept, so I guess we'll just have to agree to disagree, unless you want to go into more detail over there.

Apr 06 10:49 AM

[Eric Dorris:]

I would argue that you CAN discuss any of the three without looking at the others. They really aren't related to each other at all and therefore shouldn't be compared. There should only be discussion regarding the results and how they met/didn't meet the draft guidance endpoints. The FDA is not bound by the candidated brought forth by these three companies. If the Agency wished it could approve all three, approve one, approve any two or even deny all three. In my opinion, this shouldn't even be called a race. A race means there will be a winner. Theoretically, all could lose...

Apr 06 01:59 PM

[Ruthanne Wi...:]

Eric, your point is well taken with regard to the FDA. With regard to the stocks of the companies, though, I believe an investor should also consider commercialization potential post-approval. Now reasonable people can disagree on how the approval of any of these drugs would affect the commercial potential of the others, but it would be silly to just assert flat-out that it would be irrelevant.

Apr 06 04:50 PM

[hoopdreamer...:]

On the surface Vivus is ahead with better data, that's two strikes against Contrave. Further Orexigen didn't meet the FDA standard of a 5% improvement over placebo (4.3%), while Vivus did (7.5%). I would also argue the Vivus combo is better tolerated and safer. I also have serious doubts about whether Orexigen has the competence to adequately complete a filing for approval given a lot of recent turnover at the top of their company most notably their CSO. On safety, 26% of Contrave patients dropped out, 2X the rate of placebo. I believe for an obesity study usually you'd see the opposite. They also had changed the formulation or titration period as I recall to address major problems with nausea. These drugs are all going to be very carefully reviewed by the FDA. So in sum, I'd tilt the scales toward Qnexa and Vivus over Orexigen and see no reason to own Orexigen stock. I own shares in neither mind you.

Do you disagree with your fellow blog writer Derek Lowe that Arena's candidate won't be approved?

Apr 07 08:55 AM

[PhillyDan:]

Yes, I disagree with Derek that Lorcaserin won't get approved. Instead, I agree with Michael Murphy's excellent analysis of the Lorcaserin results. I strongly believe that the Blossom study results will remove any doubts about Lorcaserin's effectiveness as a weight loss drug.

I do agree with you that Onexa by Vivus looks to be a very good candidate to get approved but somewhat concerned that they only got the 7.5% result with the higher dosage of the drug. I do not know if that will turn out to be an issue or not. My guess is not.

I also believe that Orexigen's Contrave could pass muster but appears that it might have more tolerability issues than either Onexa or Lorcaserin. As I replied to the person that had been on the Contrave study, I would like to see all three drugs get approved.
One for competitive choice. Two, because I think patients will see results differently depending on which drug their Doctor prescribes for them. In plain words: One patient may do better with Lorcaserin, another with Contrave, another with Onexa. Three, it give Doctors that treat obesity more weapons in their treatment arsenal.

Overall, I do appreciate and enjoy reading your comments.

Apr 07 04:40 PM

[Ruthanne Wi...:]

I have been a huge fan of Derek's for ages. I do agree with him that lorcaserin is less likely to get approved now than I thought it was before the results, but the FDA is unpredictable and I wouldn't go so far as to say it certainly won't get approved (in fairness to Derek, he's not that emphatic about it either).

Main reason: the huge disconnect between the company's build-up of the results and then the actual results. Why not say "we are hopeful" or "we are optimistic, tempered with the usual caution"? Also, according to Mike Huckman at Pharma's Market, they held a call for reporters an hour before the call for analysts. If one of those reporters had managed to get something out before the analyst call was over, that would surely not have endeared ARNA management to many sell-side analysts -- their sales people would be fielding nasty calls from clients yelling "Why am I reading about this on the Internet, what the #$%^& is your analyst doing anyway" etc. I realize that relations with reporters and analysts is only one of management's many jobs, but jeez, considering they pay several people to help them with this, you'd think it would go a little smoother.

Apr 07 07:20 PM

[PhillyDan:]

We will have to agree to disagree about Derek's opinion that Lorcaserin will get approved. I strongly believe it will get approved.

I have been an investor and following Arena for over 4 years and I strongly disagree with your assertion that management had hyped the build-up of the results. They were positive but not over-the-top positive as you seem to indicate. The results if you look at them in more detail were in fact positive and this will be proven out by the results of the Blossom study.

Mike Huckman is a cry baby for his whining about the conference call. I got an alert on Sunday from Arena about the conference call and I'm sure the analysts did as well. In addition the pre-market price of ARNA had dropped drastically prior to the call starting which indicates that the analysts did get the press release prior to the call. I know the person that handles their Investment relations and he is a very competent person. He has always responded to my queries in a timely fashion.


On Apr 07 07:20 PM Obesity Investor wrote:

> I have been a huge fan of Derek's for ages. I do agree with him that
> lorcaserin is less likely to get approved now than I thought it was
> before the results, but the FDA is unpredictable and I wouldn't go
> so far as to say it certainly won't get approved (in fairness to
> Derek, he's not that emphatic about it either).
>
> Main reason: the huge disconnect between the company's build-up of
> the results and then the actual results. Why not say "we are hopeful"
> or "we are optimistic, tempered with the usual caution"? Also, according
> to Mike Huckman at Pharma's Market, they held a call for reporters
> an hour before the call for analysts. If one of those reporters had
> managed to get something out before the analyst call was over, that
> would surely not have endeared ARNA management to many sell-side
> analysts -- their sales people would be fielding nasty calls from
> clients yelling "Why am I reading about this on the Internet, what
> the #$%^& is your analyst doing anyway" etc. I realize that relations
> with reporters and analysts is only one of management's many jobs,
> but jeez, considering they pay several people to help them with this,
> you'd think it would go a little smoother.

Apr 08 01:54 PM

[Eric Dorris:]

Because we're talking about Vivus's liklihood to go to market I'd like to make a couple comments. After looking at their exclusion criteria for their latest, famous clinical trial enrollment it became apparent that this company intends on treating a unique group of people who have certain disorders, many being common. The following people were excluded from participating in Vivus's study that ended in 2008:

clinicaltrials.gov/ct2...
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
Glaucoma or elevated intraocular pressure
Pregnancy or breastfeeding
Drug or Alcohol abuse
Smoking cessation within previous 3 months or plans to quit smoking during study
Eating disorders within past year
Cholelithiasis within past 6 months
Type 2 diabetes
Previous bariatric surgery
Bipolar disorder or psychosis
Steroid hormone therapy not stable for 3 months
Systolic blood pressure > 160 mmHg, diastolic blood pressure > 100 mmHg

If approved, will all of this really be put on the label? Will those people who fall under the 'exclusion criteria' section of the clinical study be excluded from taking the drug (if approved)? The conservative play by Vivus of strict enrollment is directly connected with the known unpredictability of the anticonvulsant, topiramate and will be kept under extremely close scrutiny by the FDA. Opinion: if, for some reason, the FDA deems this as safe and gives the ok Qnexa's intended market will be narrow.

Now, because Arena's BLOOM data is being talked about I thought I'd throw in some thoughts here, too. Please see the FDA's draft guidance document regarding obesity study endpoints to assess efficacy:
www.fda.gov/ohrms/dock...

Lorcaserin met the endpoint by showing that 47% of those on the Lorcaserin arm lost = or > 5% of their weight. Period. Additionally, 3000+ subjects were dosed, the drug was well tolerated, and the exclusion criteria was merely the following, where the diabetes group is being addressed in the BLOOM-DM study:

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

I am also having a hard time seeing what investor expectations has to do with likelihood of FDA's approval. ObesityInvestor, you mentioned that the main reason that Lorcaserin is less likely to get approved is basically due to the disconnect between investor expectations and Arena's manner of issuing results. I can agree that this led to a stock price collapse but I don't believe we can use these investors' feelings to make any statements regarding the Agency's tendency for approval/denial of Lorcaserin.

Just rest in the fact that Lorcaserin is safe in a very broad group of people and met the Agency's draft guidance endpoint to establish efficacy. Lowe mentioned the FDA could reject Lorcaserin due to lack of efficacy. I suppose that's true but would that make much sense since Lorcaserin met the endpoint for efficacy? No.

Apr 08 03:32 PM

[hoopdreamer...:]

What would worry me about Lorcaserin is i didn't realize patients weren't allowed to take SSRI drugs if they were in the trial. Considering the millions and millions of people taking them, how can the fda approve without knowing if this combination is safe? Lorcaserin also acts on the cns, i would be very worried about things like seratonin syndrome with people on ssri's. It's just not realistic to think that people will follow the label especially if doctors don't know what the real risks are.

On the vivus list of exclusions, all of those sounded normal. I wouldn't be surprised if the arna list was similar.

Apr 11 12:28 PM