Arena Still Seeking Its Triple Play

Editor's Note: When Seeking Alpha published Derek Lowe's May 18th piece on Arena Pharmaceuticals (ARNA), Michael Murphy wrote to tell us he disagreed with some of the points in Lowe's piece. After being informed of Murphy's dispute, Lowe responded with a second piece (links to both articles below). Here's Murphy's response to both of Lowe's items:

In Derek Lowe's original article with the alarming title: Arena Pharma Could Be on the Verge of Collapse, the second and third sentences state:

Their clinical data had come out, and things (at least to me) didn't look good. They didn't quite make the minimum threshold for efficacy, and the FDA isn't in a mood to take a flyer on things that don't quite work.

I disputed the article because it represented at least the second time that Mr. Lowe said the Lorcaserin Phase III results did not meet the minimum threshold for efficacy, even though I had corrected him on that point in the past.

Therefore, I was glad to see him acknowledge that he finally understand the following in his second article about ARNA, Arena's Prospects Will Be in the Eye of the Suitors:

...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.

My concerns have been met, and I don't expect Mr. Lowe to ever again say that Lorcaserin “didn't quite make the minimum threshold for efficacy.”

However, he went on to say that in the draft standard for mean or categorical efficiency “the FDA does not say 'efficacious enough for approval.'” He appears to believe there is a distinction between efficacious (the company met all the tests for efficacy with statistical significance) and “efficacious enough for approval,” a baffling new concept to me. Does he think the FDA might say they met all the standards for approval, but they didn't meet them enough? It's hard to say.

But that murky concept pales in comparison to his second idea that the FDA would be:

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).

Arena is seeking approval of Lorcaserin as a single-agent drug. They have not suggested or asked for approval in combination therapy with anything. Their marketing surveys show most practitioners will prescribe it as a single-agent drug. There has been no indication from the FDA that they want to see a trial of Lorcaserin in combination with anything. This is an idea so far out in left field, it is not even in the ballpark.

However, it is an idea that I hope the short-sellers and manipulators propagate, in order to keep the price of ARNA down until we can complete our triple play. (See this article for more)

Comments

[Intelledgement:]

We have not followed ARNA closely and have no position there. However, the author's implication that "so far out in left field, it is not even in the ballpark" behavior by the FDA is unlikely strikes us as optimistic.

Look at Dendreon's Provenge: the FDA's own advisory committee voted 13-4 it was efficacious against prostate cancer and 17-0 it was safe in 2007 and yet the FDA did not even approve limited use for terminal patients, insisting that everyone wait three years for the results of a third phase 3 trial.

Look at Neurocrine's Indiplon: an evidently efficacious insomnia remedy got an approvable letter in 2006, and the company worked with the FDA for a year to meet the agency's concerns only—after another six months of FDA review—to get another approvable letter mandating THREE MORE phase 3 trials…one focusing on elderly users, a second comparing major AEs for indiplon (which were extremely rare) with a product already on the market (an unprecedented requirement for a insomnia remedy), and a third focusing on the effects on third-semester pregnant animals (incredibly bizarre given [a] that there were no indications of effects on mammalian fetuses during the standard pre-human tests, [b] as with most insomnia remedies on the market, Indiplon was not indicated for use by pregnant humans, and [c] again, an unprecedented requirement for an insomnia remedy.

Look at Genta's Genasense: the FDA has twice appeared to "stack the deck" to get adverse recommendations from an advisory committee—once employing a nonstandard analysis methodology which later proved to have an egregious mathematical error—and then ultimately rejected the BLA, despite a phase 3 trial where Genasense (a melanoma and chronic lymphocytic leukemia drug) met both the primary and secondary endpoints.

The deck is stacked against developmental-stage biotech companies because the FDA approval process is quixotic at best, and knowing that, aggressive traders short the companies and unethical traders naked short them, limiting access to capital. Dendreon appears to have flown through the storm, but Neurocrine killed Indiplon and is down to one engine and Genta has run out of fuel and can't get the landing gear to deploy (the company is appealing the FDA rejection but has laid off staff and appears likely to run out of cash next month).

So if you are long ARNA (or any development-stage biotech), you are fighting the good fight in supporting innovation that has the potential to improve life on Earth...and we wish you luck, because you will need it.

May 26 02:51 PM

[Michael Murphy:]

Our opinions on the FDA and its process are very similar, and I have been through the Dendreon wringer the whole way. They could do something nutty like ask how lorcaserin does on people who are not overweight. But asking Arena to do a combination trial before approval, when the company has not indicated they want to give the drug in combination with anything? I stand by "out of the ballpark" on that one.

May 26 04:46 PM