Complete Response Letter for Obesity Drug Revives Vivus

 |  Includes: ARNA, OREX, VVUS
by: EP Vantage

FDA’s complete response letter on Qnexa was probably the best Vivus (NASDAQ:VVUS) could have hoped for. Given the negative news on obesity candidates recently, a request for already completed trial data and refinement of post-marketing safety plans seems a mild hit that the California developer might, just might, be able to recover from.

With shares already trading at half the value they were before an FDA expert panel voted against the drug, investors took the letter as good news and drove shares up 28% to $7.86 in early trading. (Vivus sheds more weight after Adcom rejection of Qnexa, July 16, 2010). The market response suggests some are betting that Vivus can address the regulatory concerns without expensive new trials.

Building a mystery

As with Arena’s (NASDAQ:ARNA) Lorqess, the complete response letter was a fait accompli given the advisory committee vote and the FDA’s heightened concerns over obesity drug safety (Meridia adcom leaves obesity space clear as mud, September 16, 2010). The only mystery left was what the FDA would ask of Vivus. New clinical trials to allay safety concerns would have surely pushed back launch by more than a year, and as the only unpartnered candidate in the obesity space, added tens of millions of dollars to Qnexa’s R&D costs.

FDA did not ask this. Instead, the agency asked for the two year data from the Sequel trial, an extension to its pivotal Conquer trial, along with further information on labeling, the risk evaluation and mitigation strategy (REMS), an update on adverse events, and informed Vivus that Qnexa would be a schedule IV drug regulated by the Drug Enforcement Administration.

As with Arena executives’ stance following the Lorqess complete response letter last week, Vivus’ management made the best of the situation (Without delay, FDA sends Lorqess back for more work, October 25, 2010). They said they will be able to respond to the FDA within six weeks. Depending on whether agency officials tag it as class I or II response, a new decision could follow two months or six months later.

Heart risk

Among the safety data FDA has sought is an assessment of whether elevated heart rate resulting from regular use of Qnexa, a combination of the older weight loss drug phentermine and the epilepsy compound topiramate, increases the risk of heart attacks or strokes. Vivus said it is preparing such analyzes from its studies of Qnexa in patients with complications of obesity and sleep apnea, but acknowledges that additional trials may be required.

In addition, the FDA is looking for tight controls over exposure to pregnant women because of concerns about the risk of birth defects resulting from topiramate. In a call with investors Friday, Vivus chief executive Leland Wilson said an existing registry amongst epilepsy patients has not established any birth defect risk, but said a registry for Qnexa will likely be a part of the REMS established for Vivus, should it be approved.

There is some question whether either the new data or a REMS will be adequate, however. Analysts from Cowen, for example, note that the 675-patient sample in the Sequel trial may be too small for a proper cardiovascular outcomes assessment.

Meanwhile, registries and risk mitigation have been insufficient at keeping women taking teratogenic drugs from getting pregnant in other cases – for example, Accutane – and this may prove an insurmountable hurdle for Qnexa.

No readthrough

So far, there has been no sign of readthrough to either Lorqess or Orexigen’s (NASDAQ:OREX) Contrave, which is due for an advisory committee meeting in December. Shares in Arena were up less than 2% and Orexigen 1%, suggesting that of the three, most bets are being placed on Vivus.

Whilst this is not necessarily unwise, given the relatively benign nature of FDA’s letter and the concerns raised – with Lorqess, a novel drug, there is still some discussion of a cancer signal – the path to market is still looking like it will lead well into 2011. And no matter what investors believe today, it may ultimately lead to a dead end.