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Before the FDA review panel’s of Vivus’s (NASDAQ:VVUS) drug Qnexa, I expressed significant doubt that the panel review would be positive based primarily on the safety issues surrounding one of its ingredients topiramate here. The safety issues had to do with contraindications between topiramate itself as well as contraindications with the other ingredient phenteramine. I made the following statements:
  • With so many contraindications and side effects of phentermine and topiramate, who can safely use Qnexa?
  • Given the FDA’s historic stance on the safety of weight loss drugs, and the long list of potential safety issues with phentermine and topiramate, is it likely that the FDA will allow its marketing?
I concluded (accurately) that Qnexa efficacy was never in question, and that these safety concerns would be the outstanding issues that would prevent Qnexa approval (PDUFA date is Oct 28, 2010). After the review panel vote, it appears that the only hope for Qnexa approval in October is that the FDA feels the safety risks are worth the clear weight loss benefit.
Finally, I finished up this discussion with this statement:

Investors should also consider the effects of any VVUS events could have on other companies developing obesity drugs. The outcome of the Qnexa panel review will have an impact on the trading of Orexigen (OREX) and Arena Pharmaceuticals (ARNA) obesity drugs up for review before the end of the year.

In this brief analysis, I compared Orexigen's (NASDAQ:OREX) Contrave to Arena’s (NASDAQ:ARNA) Lorcaserin and hypothesized how the Qnexa panel could affect the share prices of OREX and ARNA. I stated:

Between these three drugs, Qnexa is perhaps the most effective but also by far the one facing the most potential safety concerns. A favorable review for Qnexa is logically likely to rally VVUS but also OREX and especially ARNA stocks as it would demonstrate the review panel’s willingness to endorse an effective weight loss drug even in the face of potential side effects. An unfavorable Qnexa review is logically likely to cause a short term gut-response sell off in both of these stocks. However, a little further out I would expect ARNA not to recover (due to the safety concerns) but a rally in OREX could occur (due to its strong efficacy and very safe profile) as it demonstrates a continued concern over safety, and the elimination of its competitors.

What happened after the negative review panel is that all three stocks sold off significantly. VVUS sold off from about $12 to about $5 when it opened for trading, and has stabilized in the $6 range since. The day of the panel, OREX sold off from about $6 to $3.50 to close at about $4.50; and ARNA sold off from about $5.75 to about $3.75 to close at about $4.50 as well.
Two months later, ARNA has emerged as the clear winner in the market capitalization contest between ARNA and OREX as OREX shares have stabilized in the $5.50 range for an approximate market capitalization of $250 million; and ARNA shares have continued to rally close to the $7 range for an approximate market capitalization of $800 million.
Using market capitalization as a guide, apparently investors have the most faith in Arena Pharmaceutical’s Lorcaserin. Lorcaserin is a novel single agent that represents the first in a new class of 5-HT2c receptor agonists. In clinical studies, after one-year of treatment with Lorcaserin,about two thirds of patients lost 5% of their body weight and about 20% of patients lost at least 10% of their body weight, for an average of about 6%.
This was not as effective as Qnexa, whose trials showed that patients taking high dose Qnexa lost an average of about 15% of their body weight. Lorcaserin is thought to be the safest of the three (Qnexa, Contrave, Lorcaserin) as it has no known safety issues. Being a 5HT2c agonist, it was investigated as potentially increasing the chance of cardiac fibrosis; a known side effect of 5HT2b agonists. However, the safety study showed no increased risk, and investors have taken heart (no pun intended) in that.
By the same criteria, investors seem to have less faith in Orexigen's Contrave, which is a combination of the generic drugs naltrexone and bupropion, in a sustained release formulation. Bupropion is a widely-prescribed antidepressant and smoking cessation medication, while naltrexone is a treatment for alcohol and opioid addiction. In clinical studies, about half the participants who took Contrave lost at least 5% of their body weight, and about 25% of the participants lost at least 10% of their body weight, for an average of about 6%. This was similar in efficacy to Lorcaserin, but not as effective as Qnexa. Naltrexone is an opiod receptor antagonist and buproprion is a Selective Serotonin Reuptake Inhibitor (SSRI). Both drugs have limited side effects and favorable safety profiles. However, given the similarity to Qnexa (combination of two generic drugs), and the criticism of behavioral side effects and slight risk of seizures related to Buproprion, investors are more hesitant to embrace Contrave.
Investors should be wary of all three of these drugs, as the FDA has taken a firm stance on the safety of diet drugs. In June 2007, the FDA rejected Sanofi-Aventis' (NYSE:SNY) Acomplia saying that the drug's benefits did not outweigh its risks. In 2008, three drug companies pulled their weight loss drugs in clinical trials in response, citing a stringent regulatory environment: Solvay Pharmaceutical’s (now part of Abott (NYSE:ABT)) SLV319, Pfizer’s (NYSE:PFE) CP-945598, and Merck's (NYSE:MRK) Taranabant. Although already approved in the EU, in late 2008 Sanofi-Aventis withdrew Acomplia from the European markets based on post-marketing trials linking the drug to serious psychiatric disorders. This year the FDA released a warning citing severe liver toxicity for Alli and Xenical (orlinistat).
Investors should note the Metabolic Drugs Advisory Committee plans to review Abbott's (ABT) Meridia on September 15th, the day before the review for Lorcaserin. Meridia has been pulled from the market in Europe on concerns about cardiovascular side effects and the FDA is contemplating the same action in the US. This sets up a situation similar the Qnexa review, when the same panel held a two-day safety review of GlaxoSmithKline’s (NYSE:GSK) diabetes drug Avandia before evaluating Qnexa.
In the case of Avandia, FDA studies and others found over a 40% increase in heart attacks and a over a 60% increase in heart disease related deaths in diabetics taking Avandia (increasing the rate from 2% a year to 3% per year). GSK’s own safety study revealed no increased heart risk, but the FDA found that the study had wrongly excluded a number of patients who had heart complications or who died during the study. If they had been included, Avandia would have been deemed heart damaging. Manufacturer GlaxoSmithKline also appears to have deliberately hid safety data, according to internal company documents released by the Senate.

In the Avandia review, 12 of the 33 members of the FDA panel voted to withdraw Avandia. But 10 voted that it should remain available, with serious label revisions and possible restrictions on its sale. Seven voted to add further warnings to the drug's label. Three voted to continue to allow sales without any change in its status, and one member abstained.
This mixed vote left both sides of the argument unsatisfied, and after two days of reviewing more than 1,000 pages of information and hearing from 18 speakers who presented more than 500 slides of data, no clear decision on Avandia was made. Most of the panel members weren't satisfied with the quality of the studies conducted since the drug was approved 11 years ago, and some said they couldn't conclude from the evidence that Avandia was any riskier than Actos, its major rival in the same drug family.
The review committee is full of people, and people have flaws, the most common being impatience. As much as we would like to believe the Avandia hearings had no bearing on the Qnexa vote, after two days of debating safety it is hard not to think that this was not in the forefront of their mind going into the Qnexa review. The panel voted 10 to 6 against the approval of Qnexa citing a number of safety concerns.
The next controversial drug up for re-review, the day before Lorcaserin, is Meridia (sibutramine). Meridia was approved by the FDA in 1997 as a prescription-only weight loss supplement for obese patients with other risk factors such as diabetes, high cholesterol and controlled blood pressure. In November 2009, the FDA announced that they were reviewing potential heart problems from Meridia after data suggested that side effects of the drug may cause users to suffer a higher number of cardiovascular events, such as heart attacks, strokes, resuscitated cardiac arrest or death.
A long term safety study of Meridia, called Sibutramine Cardiovascular Morbidity/Mortality Outcomes in Overweight or Obese Subjects at Risk of Cardiovascular Event (SCOUT), funded by Abbott, tracked 9,804 high-risk patients with heart disease, diabetes or both to see if the medicine influenced their cardiac health. The results showed that 11.4 percent of those given Meridia died or suffered a heart attack, stroke or cardiac arrest, compared with 10 percent given a placebo.
At first glance, this data doesn’t seem damning. Although there is a slightly elevated risk in cardiovascular events, particularly in patients who already had heart disease, one could easily argue that the benefits far outweigh the risks. However, the fundamental problem was in fact with the benefits of Meridia: Critics were always skeptical of Meridia’s benefits, as it barely reached the minimum threshold of demonstrating 5% weight loss in 1/3 of the patients in one year. However, the clinical trials by Abbott did not raise any safety concerns, and in fact demonstrated increased cardiovascular health due to weight loss.
For the review panel and FDA, it was a seemingly a clear decision: Merida is only modestly effective but completely safe so the risk/benefit profile is acceptable.
When questions about long term safety arose, Abbott performed 3 years of studies to try and quiet concerns. The data that came back seemed to show there was only slightly elevated risk with Meridia but in fact was quite damning because it showed an increased risk in a drug that had little benefit, that the FDA deemed to be completely safe and had seemingly compromised efficacy for safety. This is the exact same argument being made about Lorcaserin: Lorcaserin is only modestly effective but completely safe so the risk/benefit profile is acceptable and the FDA will approve it.

Indeed, Lorcaserin’s efficacy is not much greater than Meridia’s (5% in 1/2 the patients for Merida vs 5% in 2/3 the patients for Lorcaserin).. Although ARNA performed the valvuopathy studies and did examine safety for 2 years, there is no longer-term safety profile that the FDA may be particularly concerned about in the face of the Meridia hearings. I expect the FDA review panel to demand this, especially since the parallels with Merida are so clear and the review panel is literally one day before. This does not bode well for Lorcaserin, to say the least.
The 5-HT2C receptor (commonly known as the serotonin receptor) significantly regulate mood, anxiety, feeding, and reproductive behavior. Meridia (sibutramine) is a serotonin-norepinephrine reuptake inhibitor which increases the levels of serotonin, thereby stimulating serotonin receptors and regulating the levels of norepinephrine and dopamine in a way that makes people feel full and not want to eat. This phenomena is known as satiety. Lorcaserin directly activates the serotonin (5-HT) type 2C receptor and regulates the levels of norepinephrine and dopamine in a way that makes people feel full and not want to eat. So the general concept of both drugs are the same, and in fact they are modeled after each other in this manner.
Importantly, there are nuances to how Lorcaserin works compared to Meridia, specifically related to the 5-HT2c receptor. Lorcaserin selectively activates the 5HT2c receptors, and not the sister 5HT2b/a receptors, which excludes it from the known cardiac risks of 5HT2a,b receptor agonists. Several companies have worked on developing selective 5HT2c agonists and noted the satiety effects. A great description of this exact subject can be found here. Although Lorcaserin has much higher affinity for 5HT2c receptors over the sister type 2a and 2b receptors, it still does have activity for these at higher doses.

One criticism of Lorcaserin is based in this: Although the potent appetite suppressive effects of 5HT2c agonists are well known, cross-reactivity with the 2a and 2b receptors prevented higher doses of Lorcaserin being administered to maintain its safety profile. Thus, the modest efficacy seen with Lorcaserin could be increased if it could be dosed higher safely; but it can’t. Thus, its window of safety and efficacy is very small. So yes, if used as directed, Lorcaserin is safe, but it isn’t very far from not being safe either. This is likely to make the FDA review panel very nervous; if patients believe the drug is safe, why not take more to increase the efficacy? Why won’t doctors prescribe higher doses “off label” and/or combine it with other diet drugs?
Part of this may be satisfied by an aggressive risk mitigation strategy (REMS); which ARNA has been criticized for not having adequately designed. This puts it at significant risk for rejection.
Interestingly enough, the idea of Lorcaserin was designed around dexfenfluramine, also known as Redux, which was pulled from the market in 1997 due to cardiac side effects. Dexfenfluramine is related to fenfluramine, the heart-attack causing component of the diet drug Fen-phen. The safety side effects of both of these were solved by the creation of sibutramine, which was thought to be a safer alternative. In case you haven’t made the connection just now, sibutramine is known as Meridia.

So as I mentioned before, Lorcaserin is trying a similar approach in supressing appetite as Merida, but unfortunately seems to be taking too similar of a biochemical approach as well. Lorcaserin is being touted as a “modestly effective but safe drug” which is avoiding the pitfalls of all its predecessors. Certainly this seemed a good plan of action several years ago when Lorcaserin went into clinical development, but unfortunately recent events surrounding Merida have cast a long shadow on Lorcaserin. And worse yet, that shadow does not have to be too long, as very same Metabolic Drugs Advisory Committee will be reviewing Meridia the day before Lorcaserin.
The Endocrinologic and Metabolic Drugs Advisory Committee review panel is meeting September 16th to discuss Lorcaserin and December 7th to discuss Contrave. The FDA is expected to make a final decision on Lorcaserin by October 22, 2010 and Contrave by January 31, 2011. The timing of these panels and PDFUA dates is very interesting: Investors will have the opportunity to hear about the Meridia and Lorcaserin panel review and final FDA decision on Qnexa before the panel meets to discuss Contrave.
Any number of mixed outcomes can cause a variety of price movements in VVUS, ARNA, and OREX. A negative Meridia and/or Lorcaserin review panel will shake not only ARNA but OREX investors as well. Positive reviews from the panels may have the opposite effect, or a mixed effect on ARNA and OREX as ARNA investors take heart and OREX investors still need to wait for their judgement. A negative Lorcaserin review followed by a FDA rejection for Qnexa may further shake all investors. A negative Lorcaserin review followed by FDA approval of Qnexa will have a mixed effect, on ARNA and OREX as clearly Qnexa is the most effective drug. And so on….
Personally, I would not want to have a position in any of these stocks at this critical juncture.
Author's note, Sept. 9, 2010: Due to the overwhelming response to this article, I cannot continue
responding to all the comments. Thanks for your interest and the many insightful comments which have helped readers form opinions on this situation. I look forward to hearing the outcome of the FDA review
panels and FDA decisions for all these drugs.

Disclosure: No positions in any of the stocks mentioned

Source: Arena's Lorcaserin: Weighed Down by Qnexa and Meridia