Don't Expect Amylin to Eat the Obesity Market's Lunch

Usually I don't dwell much on Amylin (AMLN), because with at least 15 sell-side analysts covering it and all kinds of press, I don't see that the investing community is clamoring for another opinion. However, as of Monday a few good little obesity calls do seem to be getting lost in the hullabaloo.

Obesity Partnership For AMLN with Takeda

AMLN announced Sunday night (Monday morning, in Japan) that it has partnered with Japan's Takeda (TKPHF.PK) to develop two Phase II injectable weight-loss candidates, some data regarding which AMLN presented in late October at the Obesity Society Annual Meeting. The deal includes two synthetic hormones (AMLN's modus operandi, and arguably its raison d'etre) -- a pramlintide-metreleptin combination and davalintide.

It certainly sounds like a good deal for AMLN. AMLN is to receive $75 million upfront from Takeda, and says future milestone payments (development, commercialization and sales) potentially total over $1 billion. Development costs associated with obtaining US approvals will be split 80% Takeda - 20% AMLN, and Takeda will shoulder 100% of development costs outside the US as well as all commercialization costs.

The products have promise. In Phase II results announced in July, patients in the pramlintide-metreleptin (please, Takeda, help us out and come up with a commercial name for this combo soon) high dose group lost an average of 11% of body weight. Monotherapy groups lost about 5%. (A Phase II trial for davalintide is currently underway and those results are not yet available.)

Based on all this, AMLN shares took off in early trading, and were up almost 15% by noon Monday.

AMLN Won't Eat VVUS's Lunch, Or OREX's, Or ARNA's

Certainly, there should be some first mover advantage to locking up the first major obesity marketing partnership. But let's not send the competitors with late-stage Phase III oral compounds for obesity -- VIVUS (VVUS), Arena (ARNA) and Orexigen (OREX) -- to the back of the lunch line. They all have two big advantages on their side:

1) VVUS, ARNA and OREX have Phase III products, with less risk and less time to market than a Phase II product, even a really extra-super-wonderful Phase II product. Even the plainest vanilla Phase III obesity trial involves a full year of dosing.

2) VVUS, ARNA and OREX are asking patients to take once-daily pills, while AMLN's products are injections. AMLN has argued that since many diabetics take injections anyway, this won't be such a big hump to get over. I'm not convinced. Besides, nowhere near all overweight people are diabetic.

In fact, the AMLN news is arguably good for all the obesity stocks. It shows there is serious interest among major drug companies in marketing obesity drugs. The kind of money we have been talking about evidently is possible. Why would Takeda pay so much for rights to midstage injectable drugs if Takeda were the only game in town? Watch this space.

Disclosure: Long VVUS, ARNA and OREX. No positions in other stocks mentioned.

Comments

[PhillyDan:]

Remember, if my memory serves me correct. Amylin's phase II study had only 128 people in it. More importantly, I agree that a lot of overweight/obese people won't be keen on taking an injectable medication. To me this bodes very well for Arna who will file their NDA in December. In addition, Lorcaserin offers good weight loss but more importantly is safe and tolerable and is a novel, well-patented drug. My concern about Qnexa and Contrave is they both have shown more adverse side effects, particularly Qnexa and because of that, I think they will have a more difficult time gaining FDA approval.

I would speculate that in the next few months, we will see partnership action with one or all three of the companies.
Two out of the three in my opinion, based on the Amylin deal stand to get even more lucrative deals based on the fact that all the development has been done and a year from now, one, two or three will have or be close to FDA approval.

Nov 03 01:28 AM

[Ruthanne Wi...:]

Hi PhillyDan, thanks for your comments, which are always welcome. There are two Phase II studies on the pramlintide/metreleptin combination. The first is the one with 177 subjects, and was a Phase IIa proof of concept study published here www.pnas.org/ in 2008 (search the archives on "pramlintide"). The second study is the Phase IIb study with results announced July 2009, which enrolled 600+ patients. I don't think this changes your point though.

I guess one reason I am less concerned about side effects of Qnexa and Contrave than you are (I know we have talked about this before) is that these are tolerability concerns rather than safety concerns. How uncomfortable are these effects, how long do they last, and are people willing to put up with them for a potential weight loss benefit? We already know that they weren't barriers to approval for the monotherapy component drugs for other indications.

Nov 03 09:44 AM

[cyclingscholar:]

For Pete's sake: eat less, walk more, and use the money you save to make four daily injections into your bank account. You realize that all the cows who drive their SUVs (could lose some weight there, too) to NFL weekend games where they swill beer and nachos are the primary target for this 'medication?' Why do ya think they need wide angle cameras? To cover play on the field? NAH! Its to cover the flabbergastingly flatulant fans!

Nov 03 02:30 PM

[Ruthanne Wi...:]

Cyclingscholar, I am sure that if we were to sit down together IRL, you'd have no hesitation about saying all that to my face :-) Although, for the record, I drive a PT Cruiser not an SUV.

Of course just about everyone knows that if you eat less and exercise more, you will lose weight. However, lots of non-moronic people who know all this still are overweight. That is why there is a market for potential obesity drugs, on top of the existing $50+ billion market for non-prescription weight loss (that's Jenny Craig, Weight Watchers WTW, Nutrisystem NTRI, supplements, and so on). Some people may get excited about this as a big moral issue and go around calling names, but the point of this site is to look at markets and investment opportunities.

Nov 03 06:27 PM

[MarketGuy:]

I frankly believe the use of "medicines" is way overdone. Propagated, of course by the greed of pharmaceutical companies and the incompetence and corruption of the of the FDA. Most weight issues can be remedied with a simple change in poor habits (eating, exercise), and/or a simple understanding of hormonal and/or metabolism functions.

Heck, a simple thyroid functions test (basic blood and urine work) could uncover imbalances easily treated naturally. That would knock out a huge percentage in woman's obesity alone. It's time to get the pharma culture addiction out of America. There's a better, safer, cheaper way!

Nov 03 10:15 PM

[Ruthanne Wi...:]

Good idea MarketGuy, why aren't you out there marketing such a test?

Nov 04 12:05 AM

[MarketGuy:]

Ruthanne,

The tests are already out there. Go to lef.org/

Great site, services and products.

note: I am in no way affiliated with lef.org nor am I a medical professional. I am a happy lef customer however.

Nov 04 09:55 PM

[mdmrjsds:]

I think there is another perspective to weight loss that hasn't been mentioned in the comments. It is off topic from your article and for that I apologize. However, it might provide some value to another reader, so I will give a short blurb.

For many people, food is their medication of choice when they feel bad. In our society (and most societies) food is part of all major celebrations and gatherings. So we associate food with good feelings. And parents use food to calm and reward their children. So it isn't surprising that when bad emotional times hit, people reach for the fatty, sweet, and salty munchies. Unfortunately, it only serves as a temporary palliative, and doesn't relieve the underlying emotional need.

There are many effective ways of dealing with that underlying emotional need. In my opinion the best of them are outside of conventional and mainstream psychiatric intervention. One of the best I have found is called EFT. Simple, fast, easy, and effective. If you are in the category that finds yourself eating to relieve/forget emotional pain, you might want to head on over to emofree.com or do a web search for EFT. I recommend you download the free eft manual, and also the free palace of possibilities manual. After that you can read some of the archived newsletters on the site to get a feel for how actual people have used it for a wide variety of issues.

It's free, what have you got to lose? Except a few pounds. And some emotional baggage. ;-)

Nov 04 10:08 PM

[Ruthanne Wi...:]

Thanks all for your interest. Evidently the anti-obesity market, both prescription and non-prescription, is alive and well!

Nov 05 12:55 PM

[PhillyDan:]

Thanks for the correction. I did reread the press release and saw my mistake. That is the problem sometimes on relying on memory.

I am less concerned about the Contrave side effects except for a very few cases of patients in the study developing kidney stones.
Qnexa in my opinion is a different story in that they have so many side effects and to your point, most of them are tolerability issues. What concerns me is the Tingling and Dry Mouth side effects which are both greater than 5% over placebo should not be brushed away so lightly by the FDA. I also have researched the exclusion list for both Phentermine and Topamax and the list is a long one. My other concern that has never been fully satisfied by Vivus is how with the combination of these two drugs that the side effects are less than with each drug separately. It does not make sense to me nor do their explanations hold water.

I understand they have a proprietary drug delivery system added to the combination and that may account for some reduction in the side effects but not to the extent shown. Topamax alone has some serious side effects. I certainly understand that people taking Topamax have serious conditions and the benefit to risk ratio may be worth it for those patients, but for weight loss, I don't believe you take that risk for the benefit of weight loss.

On another note, I would like to see Arena publish the survey results of the MD's they surveyed at the Obesity Conference.


On Nov 03 09:44 AM Ruthanne Williams Roussel wrote:

> Hi PhillyDan, thanks for your comments, which are always welcome.
> There are two Phase II studies on the pramlintide/metreleptin combination.
> The first is the one with 177 subjects, and was a Phase IIa proof
> of concept study published here www.pnas.org/ in 2008 (search
> the archives on "pramlintide"). The second study is the Phase IIb
> study with results announced July 2009, which enrolled 600+ patients.
> I don't think this changes your point though.
>
> I guess one reason I am less concerned about side effects of Qnexa
> and Contrave than you are (I know we have talked about this before)
> is that these are tolerability concerns rather than safety concerns.
> How uncomfortable are these effects, how long do they last, and are
> people willing to put up with them for a potential weight loss benefit?
> We already know that they weren't barriers to approval for the monotherapy
> component drugs for other indications.

Nov 21 02:13 PM

[PhillyDan:]

Ruthanne:
Maybe not the right place for this. Here is an analysis that I did yesterday of the results from Bloom and Blossom vs. Equip and Conquer. In my analysis I focused on the number of people as opposed to percentages since both the Bloom and Blossom studies had more people in their studies. I think the information I uncovered is compelling in that the efficacy between Lorcaserin and Qnexa is not as far apart as some would have you believe.
I state it in this post that I used Completer data rather than ITT-LOCF data.

Detailed analysis of Bloom and Blossom 20-Nov-09 08:58 pm
vs. Equip and Conquer. I just posted this on the Vivus board to educate them on how to do read results and do analysis. I used completer data not ITT-LOCF for the analysis. Very interesting results when you peel back the onion. This was in response to someone who mixed dropout rates for all reasons with dropout rates for adverse side effects:

Here is an education in how to read the data from results.

Discontinued rates are different than drop out rates for adverse side effects. For your information, the Equip study started with 1230 people and at the finish only 680 completed for a dropout rate for all reasons of 45%.

The Conquer study started with 2448 people and 1542 people completed for a dropout rate for all reasons of 38%. But the drop out rate for side effects for the highest dosage was 18%. The mid-level dosage drop out rate for side effects is 12%. The Blossom study had over 4000 people in the study. Bloom had approximately 3100 people in that study.

Go up to the Vivus and Arena websites and read the press releases on the results and then do the math. Basically the completion percentage rates were similar. The FDA will look at drop out rates for side effects and Lorcaserin's drop out rates for side effects are lower than Qnexa. 7% for Blossom vs. 12% and 18% for the Conquer study.

Bloom had 1767 people complete the study vs. Equip's 680.
Blossom had 2419 vs. Conquer's 1542.

Bloom had 66% or 1166 people that lost greater then 5%, 583 people lost greater than 10% and 442 lost greater then 15%.
As you can see 583 people is more than 439 people and 442 people is more than 301 (see Equip below).

Blossom had 63.2% or 1529 people that lost greater than 5%, 868 people lost greater than 10% and 604 lost 16.3%.
As you can also see, 868 people is very close to 978. The same for 604 vs. 634. (See Conquer below).

Equip had 439 people greater than 7% or 65% of completers, and 301 lost greater than or equal to 14.7% or 44% of completers.
Conquer had 978 greater than or equal to 10% and 634 greater than or equal to 13.2% of the completers.

As you can see, that a significant number of people (2,695 for Bloom/Blossom combined lost greater than 5% of body weight), that is much greater than the number of people who completed the Equip/Conquer studies (1417 combined who lost greater than 5% of body weight) lost a significant amount of weight in both Bloom and Blossom. Certainly Qnexa showed better efficacy numbers but averaged over a smaller number of people. In addition, the phaseIII studies were totally designed differently than each other. Lorcaserin for safety and Qnexa for efficacy.

The bottom line is that the Lorcaserin's efficacy numbers are very good when you do the detailed analysis. Way good enough for FDA approval on top of it's excellent safety profile. The facts are that Qnexa's safety profile is in question. You might not like hearing that but that is the facts.

All numbers are for completer data or per protocol not ITT-LOCF that the FDA will use but do the analysis and the same results will be shown.

I know the issue of placebo adjusted weight loss comes into play but I question why the weight loss of the placebo patients in the Qnexa studies was not much higher? Particularly when the Qnexa studies had a stricter diet. Something to think about and the reason why the FDA has "either/or" guidelines.

Disclosure: Long Arna, had a position in Vivus but sold after phase III results for Qnexa were announced.


On Nov 03 09:44 AM Ruthanne Williams Roussel wrote:

> Hi PhillyDan, thanks for your comments, which are always welcome.
> There are two Phase II studies on the pramlintide/metreleptin combination.
> The first is the one with 177 subjects, and was a Phase IIa proof
> of concept study published here www.pnas.org/ in 2008 (search
> the archives on "pramlintide"). The second study is the Phase IIb
> study with results announced July 2009, which enrolled 600+ patients.
> I don't think this changes your point though.
>
> I guess one reason I am less concerned about side effects of Qnexa
> and Contrave than you are (I know we have talked about this before)
> is that these are tolerability concerns rather than safety concerns.
> How uncomfortable are these effects, how long do they last, and are
> people willing to put up with them for a potential weight loss benefit?
> We already know that they weren't barriers to approval for the monotherapy
> component drugs for other indications.

Nov 21 02:34 PM