Arena's Prospects Will Be in the Eye of the Suitors

I’ve been getting a lot of objections to my opinion on Arena’s (ARNA) obesity candidate lorcaserin. Specifically, the first level of the dispute seems to be whether or not the recent clinical trial results met the FDA’s criteria for efficacy or not. So, let’s look at the details. Here’s how Arena press-released the results of the trial:

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 This result satisfies the efficacy benchmark in the most recent FDA draft guidance.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.

Lorcaserin patients who completed 52 weeks of treatment according to the protocol lost an average of 8.2% of body weight, or 17.9 pounds, compared to 3.4%, or 7.3 pounds, in the placebo group (p<0.0001).

Now let’s go to the FDA’s 2007 draft guidance for weight management therapies. Regarding the primary efficacy endpoint in a Phase III trial of such a new agent, the agency says:

The efficacy of a weight-management product should be assessed by analyses of both mean and categorical changes in body weight.

• Mean: The difference in mean percent loss of baseline body weight in the active-product versus placebo-treated group.
• Categorical: The proportion of subjects who lose at least 5 percent of baseline body weight in the active-product versus placebo-treated group.

And here’s the part that people keep wanting me to highlight:

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.

So lorcaserin showed 47.5% of patients losing at least 5% of their body weight, versus 20.3 for placebo. And yes, that does appear to meet what the FDA's looking for in terms of categorical efficacy, which is why the company highlighted that result in their press release. And yes (here it comes, Arena fans), the FDA does say ("in general") that an agent can be considered efficacious if a compound meets either the mean or the categorical standards.

But (and you knew that this paragraph was going to start with that word), the FDA does not say "efficacious enough for approval". In general, to use their phrase, the agency does approve things that are efficacious and show safety. But they do that on their own terms, and they are (for better or worse) completely within their rights to turn around and ask for more details - for example, how well a compound like this performs as a combination therapy (which is how many physicians would likely wish to prescribe it).

Then we have the issue of "efficacious to interest a partner". Arena is surely looking to do that, since (as noted the other day) it does not appear that they have the resources to push the product through on their own. Given the potential size of the market for an effective obesity drug, we can be sure that a number of potential partners have been approached, and have taken a meaningful look at the data. So far, no one has taken them up on it. And whatever one thinks about the press coverage that lorcaserin has received (or the reaction from analysts who follow the stock, which has also not been good), it's for sure that these opinions don't count for much when it comes time for two companies to do a deal.

Put more directly, if Arena sits down with Merck (MRK) or Pfizer (PFE), what I say on this blog means nothing at all once the door closes. Heck, what they say at JP Morgan means nothing at all, either, because we're all outsiders. Potential partners are getting a chance to look over Arena's prospects, and if the numbers look convincing, someone will bite. If no one bites, we can assume that no one was convinced.

Or perhaps they're waiting for Arena to get even more cash-strapped and desperate. That isn't a very nice way to do business, but isn't unheard of, either, and I can tell you that these aren't very nice times in the drug business. At any rate, for those Arena fans who have been waiting for me to say something about all this, well, here you are. This is as good as you'll get from me - but really, you're wasting your time. You need to be hoping to persuade the people who can initiate nine-figure wire transfers.

Disclosure: Author has no position in stocks mentioned

Comments

[married wit...:]

Mr. Lowe, Do you have any "position in stocks" for OREX or VVUS, which were creatively or intenetionally not mentioned?

May 25 01:46 PM

[Monkey_D_Luffy:]

So, yes, ARNA meets FDA requirements.... and it's still a loser?!?!
I suppose you think there are better and safer "drugs" out there for the number one killer of people in the United States, obesity?

May 26 12:32 PM

[PhillyDan:]

Derek: This is the article you should have wrote. It is fairer and states your opinion without stating facts incorrectly. I don't agree with your interpretation of how the FDA will review the efficacy of Lorcaserin. Since they developed the guidelines and the results showed that Lorcaserin exceeded the guidelines, it is logical to conclude that they would give strong consideration to approval.

In my opinion, I don't think they will ask Arena for how it would perform as a combination therapy. If they were going to do this, they would have already indicated this to Arena. Arena has been very careful in working with the FDA on what results and supporting data they want to see for Lorcaserin. Therefore, I don't see them asking for Arena to do a "combo" study. Could they ask for more safety information from Arena. Yes that is possible but not likely, since once again with the upcoming Blossom results, Arena will have more than enough safety data to present in their NDA.

I would agree with you that when it comes to the FDA, nothing is a "slam dunk". But with the obesity epidemic growing by leaps and bounds, I think the FDA will want to get a safe, efficient and well-tolerated drugs into the market to combat this epidemic. This is what Lorcaserin is all about.

My opinion is that not all analysts following Arena are negative and the ones that are negative tend to focus on the cash situation as opposed to the approvability of the drug. Maybe for them, that is the right thing for them to focus on, but I think that is the wrong focus.

As you said in your closing, it will really come down to Arena securing a partnership deal. I for one believe that will happen. There might be a game of "chicken" going on between Arena and potential partners but then again, that is negotiating 101.

May 27 05:36 PM

[PhillyDan:]

Derek: Check out these secondary endpoint results for Lorcaserin:

Cholesterol decreased 3.2±0.6 mg/dL at yr 1 in the LOR group vs. 0.3±0.7 mg/dL in PBO (p=0.0002);
triglycerides decreased 19.0±1.5 mg/dL vs. 9.2±1.6 mg/dL, respectively (p<0.0001).

Blood pressure decreased significantly in LOR vs. PBO.

Lorcaserin, a drug that lets you safely lose weight, lowers your cholesterol and improves your blood pressure.

What's not to approve?

May 29 07:49 PM

[Monkey_D_Luffy:]

C'mon PhillyDan, based on his previous post, he doesn't think that deeply. Why bother him with data and facts?

May 31 01:48 AM