Orexigen's Contrave Receives Panel Backing: Great News for Vivus

Includes: ARNA, OREX, VVUS
by: Chimera Research Group

In a shock to watchers of recent developments in the area of weight loss drugs, the FDA panel of expert advisors voted 13 to 7 recommending the approval of Contrave from Orexigen (NASDAQ:OREX). They also voted 11 to 8 - with one member abstaining - that a long-term cardiovascular study should be conducted after approval of the drug.

Combined data from the Contrave trials involved a total of 4,500 patients, but only lasted one year. Results put it in the middle of the pack between Arena’s (NASDAQ:ARNA) Lorcaserin and Vivus’ (NASDAQ:VVUS) Qnexa. After the rejection of both Lorcaserin and Qnexa just months earlier, expectations were low for outright approval of Contrave. This was especially true considering Lorcaserin had been positioned as the safest candidate, yet dealt the heaviest blow.

Contrave is a combination of two well-known drugs, naltrexone and bupropion, in a sustained release formulation. It is thought to work through affecting both reduction of appetite and increase in metabolism. Both naltrexone and bupropion have known side effects, so not surprisingly the combination pill was linked to more cases of high blood pressure, some psychiatric side effects, dizziness and kidney dysfunction.

And although Contrave induced somewhat greater weight-loss than Lorcaserin, it too, only passed one of the FDA’s two benchmarks. On average, patients only had a 4.2% placebo adjusted weight loss. 5% is the FDA goal. It did hit the second goal with about 50% of patients achieving 5% weight loss. The FDA requires at least 35% of patients losing 5%, with that population equating to twice those on placebo. Success in either goal is deemed to be sufficient for efficacy.

Even with a positive recommendation, there is no guarantee of approval; after all, it is non-binding. A recent study shows the FDA only followed its panel recommendation 74% of the time. There may still be some doubt with panelists underwhelmed by the efficacy data and lack of sufficient safety data.

Suppose Contrave is approved in the first go round. Orexigen will have hit the jackpot. Some have estimated Lorcaserin sales could have peaked at $800 million (before the FDA panel meeting). With similar efficacy but a less optimal side effect profile, I would estimate peak sales for Contrave would be somewhat south of that. That leaves ample room in the market for a competitor drug.

This positive opinion bodes well for Qnexa. Vivus stock has risen significantly since the company received its relatively light complete response letter (CRL) from the FDA, which did not ask for any additional trials. It spiked another 10% on today’s news. Qnexa faced some similar concerns from the FDA as Contrave, involving cardiovascular and psychiatric side effects. The panel’s ability to take a balanced view and weigh the total risk/reward profile with only one year of data may signal a softening of stance at the FDA.

Vivus is now preparing its written response involving further analysis of its two-year trial data, which the FDA now has. The company will analyze cardiovascular data and assess the teratogenic risk of topiramate, one of the two ingredients in the combination drug. Topiramate’s possible teratogenicity is seen by many as a major reason for Qnexa’s rejection. Discussions are ongoing on a REMS plan for women of childbearing potential. The FDA is not requesting a complete REMS at the time of the written response, suggesting it may not be as overly concerned about this issue as the advisory committee.

This would only make sense considering topiramate has been on the market since 1996 and considered safe enough to treat migraines. An association between topiramate and birth defects is noted, but data is limited. One study published in the journal Neurology, Preliminary experience from the UK Epilepsy and Pregnancy Register, put the risk at about 4%. The average rate of birth defects is between 2 to 3%.

When Qnexa is approved, REMS measures will certainly impact sales, depending on the severity. But even if strictly limited to obese patients- that is, BMI >30, the target population is still very large with over 60 million obese adults in the US alone. I have no doubt Qnexa will do at least as well as Contrave despite being later to market.

Neither drug will work for every patient, but on average, superior efficacy combined with similar side effects gives Qnexa a clear edge.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.