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In Q4 2010 and Q1 2011, patients, doctors, investors and three biotech companies each held their respective breaths as the PDUFA dates were approaching for Arena Pharmaceuticals (NASDAQ:ARNA), Orexigen Therapeutics (NASDAQ:OREX) and Vivus Inc. (NASDAQ:VVUS) for their blockbuster-potential weight loss drugs. Investors scanned through phase III data to ascertain which of the obesity drugs would fare the best in terms of efficacy and safety. Each drug went through its respective FDA advisory committee meeting with differing degrees of success and failure. Ultimately, each of the three was handed a complete response letter from the FDA stating that their NDA could not be approved in its current form. Biotech investors drawing their own conclusions about which one, two or three would be approved were bewildered with the CRLs and the timeframe and money that could be required to supply the additional data and/or trials before they could attempt another NDA. Recent 10-Qs from each of the companies and other press releases have given investors updates on each of their regulatory standings.

Arena Pharmaceuticals announced its CRL on October 23, 2010 for its weight loss candidate lorcaserin. In the CRL, the FDA mentioned diagnostic uncertainly pertaining to mammary masses (tumors) in rats, unresolved exposure-response relationship for lorcaserin-emergent mammary adenocarcinoma (cancer that develops in cells lining glandular types of internal organs, such as the lungs, breasts, colon, prostate, stomach, pancreas and cervix), and unidentified mode of action and unclear safety margin for lorcaserin-emergent brain astrocytoma. As a follow-up to the tumor occurrences, the FDA wants demonstration by Arena that the tumors in the rats receiving lorcaserin are reasonably irrelevant in relation to human risk assessment. They would also need independent pathological studies to re-analyze all mammary and lung tissues to more fully ascertain the potential human risks. The FDA did mention in the CRL that if the tumor concerns are not alleviated then another trial might be necessary to more fully determine lorcaserin’s risk-benefit profile. Essentially, like all drugs, will the benefits outweigh the risks? With marginal efficacy in patients with type 2 diabetes, the FDA also requested the data report from their soon-to-be-completing BLOOM-DM trial. The data have since been released with somewhat disappoint results. At 52 weeks, lorcaserin patients had achieved 4.5% weigh loss vs. 1.5% for the placebo group missing the FDA’s 5% weight loss criteria. However, Lorcaserin did meet the FDA minimal efficacy of twice as many patients losing 5% of their weight vs. those on the placebo (37.5% versus 16.1%).

In its Q1 10-Q Arena CEO Jack Lief noted, “we are making progress in executing activities to support the submission of our response to the FDA's complete response letter for our lorcaserin new drug application." Following is lorcaserin’s regulatory update:

  • A pathology working group has completed a blinded reassessment of the mammary tumors found in the rat carcinogenicity study, and the final report is being prepared.
  • Arena expects to initiate preclinical prolactin studies of three months and shorter duration once discussions with the FDA to finalize protocols are complete.
  • Arena and Eisai believe that prolactin studies of three months and shorter duration will be sufficient to test the hypothesis that lorcaserin causes mammary tumors in rats by increasing prolactin effects on the mammary gland, and currently do not anticipate initiating a 12-month study in female rats.
  • To address the finding of brain astrocytoma in male rats, Arena has completed dosing, and analyses are ongoing, of a Phase 1 clinical trial that involved collecting cerebrospinal fluid to provide an alternative means of estimating human brain levels at the intended therapeutic doses of lorcaserin.
  • Further assessments of receptor pharmacology and abuse liability are ongoing.

Depending on the results of these and other activities, as well as any new guidance from the FDA, Arena plans to submit its response to the CRL in late 4Q 2011. Arena expects to end 2011 with $58 million to $64 million in cash and should be in good financial shape if all goes as planned pertaining to the late 2011 NDA resubmission. However, additional required trials, a rejected NDA or another CRL would prove devastating to a company with no other drug in its pipeline ready for marketing in the near future. Arena investors must consider the risks associated with potential failure and the tremendous gains that could be made with a company having roughly a $201 million market capitalization dabbling in a blockbuster drug field. Amid the FDA’s more rigid criteria for the safety aspect of the drug’s life, Arena also has an additional chance at marketing lorcaserin in Europe. In a recent press release announcing the presentation of the three phase 3 trials data at ECO 2011, Arena mentioned that they plan on filing a Marketing Authorization Application for lorcaserin in Europe next year. It appears that lorcaserin has yet another chance at marketability though it appears it may be latter 2012 for the European market.

Vivus Incorporated announced its CRL on October 28th, less than a week after Arena for its obesity drug, QNEXA. QNEXA is a combination of two FDA-approved drugs, phentermine and topiramate. Phentermine is an appetite suppressant used for short-term treatment of obesity with side affects including psychological dependence, increased heart rate, increased blood pressure and other side effects common to members of the amphetamine and phenethylamine classes of drugs. Topiramate is used to treat epilepsy in adults and children and was initially marketed as an anti-convulsant. It has also recently obtained FDA approval for the treatment of migraines. The combination of the two drugs is thought to have dual functions in controlling appetite and increasing satiety, two mechanisms affecting eating habits. With outstanding efficacy per the phase III data that exceeded the FDA benchmark for weight loss, the FDA’s concerns per the CRL were mainly safety related. Most notably, the FDA requested a more comprehensive assessment of the teratogenic potential of the drug combination for women of child-bearing age and their unborn children and also requested evidence that the increase in heart rate experienced with the drug doesn’t lead to an elevated risk for cardiovascular events. They also requested an additional date from the already completed SEQUEL study (OB-305), and a 52-week extension study for a subset of 675 patients who completed the previously reported 56-week CONQUER study.

In its Q1 10-Q, Vivus noted that it had met with the FDA on April 14 to discuss the possibility of performing a retrospective analysis using recorded data to access fetal outcomes such as major congenital malformations and oral cleft in children whose mothers were exposed to topiramate during pregnancy. Statistical analyses would be performed comparing these rates to control groups in which the mothers had no prior exposure to the drug. The study would be termed FORTRESS, for Fetal Outcome Retrospective TopiRamate ExpoSure Study. Subject to the finalization of the protocol, Vivus reached an agreement with the FDA on the eligibility criteria, study design, primary endpoints and study objectives. They also discussed the potential of a resubmission with a labeling change limiting the indication to weight loss only in men and to women with no child-bearing potential. Although the labeling change would dramatically reduce the marketability of the drug, the revenue could still be substantial for a company operating at a loss but with other promising drugs in the pipeline. The broader indication may have to come later to include women of child-bearing potential, but the company could be enjoying the revenue in the interim and sinking its money into its other advanced drug in the pipeline, Avanafil.

Vivus recently announced positive phase III results for Avanafil to treat erectile dysfunction in patients following a radical prostatectomy. It expects to file an NDA for Avanafil in 2Q 2011. Depending on the regulatory holdups, it rather than QNEXA may be Vivus’ first FDA-approved product and revenue generator. With an approximate $728 million market cap, Vivus investors likely endure less risk than Arena investors due to the possibility of two FDA approvals in the coming months. The potential gains would be respectable because of the likely approval of Avanafil and the possible approval of ONEXA at least for the limited indications, both of which could run Vivus’ market cap to well over $1 billion.

Orexigen Therapeutics announced its CRL for Contrave on February 1, 2011. Like ONEXA, Contrave is a mixture of two FDA-approved drugs, in this case naltrexone HCl and bupropion HCl. Naltrexone is an opioid receptor antagonist used for the management of alcohol dependence and opioid dependence. Bupropion is currently approved as an antidepressant (marketed as Aplenzin and the Wellbutrins) and a smoking cessation aid. The major concern of the CRL was the cardiovascular risks of the drug when used long-term in obese and overweight subjects. Unlike Arena and Vivus, the FDA gave Orexigen very little maneuverability and stated “before your application can be approved, you must conduct a randomized, double-blind, placebo-controlled trial of sufficient size and duration to demonstrate that the risk of major adverse cardiovascular events in overweight and obese subjects treated with naltrexone/bupropion does not adversely affect the drug's benefit-risk profile."

Orexigen’s Q1 10-Q on May 9 gave a regulatory update for Contrave noting that it has submitted a proposed trial plan to the FDA and will meet with the agency later in 2Q to discuss the proposal. Being developed under a partnership with Takeda (OTCPK:TKPHF), the terms of the partnership put most of the pre-approval burdens on Orexigen and the post-approval burdens on Takeda. Orexigen received an up-front payment of $50 million from Takeda and can be eligible to receive over $1 billion upon achieving certain regulatory and sales-based milestones. However, Orexigen has to endure another trial to get another chance at that revenue. Financials for 1Q 2011 stated that Orexigen operated at a loss of $11.6 million and had cash and equivalents on March 31 of approximately $76.6 million. The additional trial will likely burn through that cash quickly but convincing lenders to shoulder some of the risks is certainly within reason if interim safety data are favorable. With the smallest market cap of the three companies at $136 million, the upside is tremendous with Orexigen.

Investors interested in being part of one or all of these FDA regulatory plays will need to assess the risks and rewards, just as the FDA will do with the three obesity drugs. Arena will likely resubmit its NDA in Q4 and hopes it has done enough at that point to avert another trial. Of the two smaller-cap companies its NDA will be first, and it has at least a marginal chance of success with the second NDA well before Orexigen’s next attempt. Vivus will also try to resubmit its NDA in 4Q but with the option of potentially attempting an indication reduction if the retrospective FORTRESS trial data is not favorable while at the same time awaiting to hear back from the FDA on its other NDA filing, Avanafil. Orexigen investors will have the longest wait of the three for another chance at approval. However, with that wait and risk the upside for investors is likely the most substantial even while having to share some of that potential profitability with Takeda. The multi-billion dollar obesity drug market is ready to be infiltrated more fully, and these three companies are each hoping to have a big slice of that revenue.

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

Source: Arena, Orexigen and Vivus: An Update on Their Obesity Drugs