Will VIVUS' (VVUS) Qnexa be approved in 2012? This author's opinion is "Yes" and "Likely" on the following two points:
- Efficacy - "Yes"
- Safety - "Likely"
The rest of this article represents the thought processes employed to arrive at the stated conclusion.
I. Presuppositions & Risk Statement
First, this article represents the opinion of its author, that is all. These days, there are a lot of opinions floating around the internet about whether Qnexa may be approved. Opinions clearly vary, but no opinion-based article has any bearing on the FDA's decision. The more an investor can disconnect from what is hoped may happen, the better. Black and white objectivity is much better than grey subjectivity. Right now, Qnexa is not approved, but that may change. If it does change, it is essential to think why it might change.
Second, irrespective of the banter between pumpers and dumpers, competing interests, and what other biotech firms are doing in the obesity space is irrelevant to the question of Qnexa's outcome before the FDA. The FDA will make its decision on Qnexa based on Qnexa. Perhaps a good way to evaluate Qnexa's opportunity would be to solicit the help of an argumentative friend. Argue your case, then be ready to listen.
Third, opinions may differ, but I don't see the FDA bowing to political pressure on either side of the Qnexa equation. Irrespective of the obesity problem, the FDA focuses on the science, and while the climate for a new obesity drug may seem ripe, more than a decade of no new obesity drugs favors the credibility of the FDA. The FDA doesn't want an obesity heart-attack or cancer debacle. People, however, aren't infallible; errors in judgment may be made. Qnexa's future rests upon the fallible judgment of its FDA jurors.
Fourth, stock board chat sites are full of nonsensical noise. They add little to no due diligence on Qnexa. They are the haunts of shorts, self-motivated day-traders, and very few long-term investors. Rare exceptions of actual due-diligence do exist, but in the case of Qnexa, I'm still looking. No offense, but my money isn't on Qnexa because of internet commentaries. Here's what investors are looking for: reasoned argumentation for why Qnexa may or may not be approved.
Fifth, the risk and/or reward is that Qnexa may or may not be approved. However, in the rest of this article I explain how I came to my own conclusion. Nevertheless, I am not offering individual investment advice as investors buy and/or sell at their risk. What am I stating? Read carefully: my conclusion may be right or it may be wrong.
II. A Historical Perspective From 2010-2011
In Qnexa's case, the history of non-approval may be the strongest evidence for impending approval. It begins with: Why did the FDA not grant approval in 2010?
A. Advisory Panel: In 2010, the advisory panel voted 10-6 against recommending approval. 37.5% favored its approval; 62.5% did not. Why? Observe: The panel recognized Qnexa's (1) efficacy, but raised (2) safety concerns ("known and theoretical") captured in this article:
But the drug has side effects, both known and theoretical. It may cause birth defects, it may increase suicide risk, it can cause a condition called metabolic acidosis that speeds bone loss, it increases risk of kidney stones, and may have other serious effects.
Observe that Qnexa was not rejected for poor efficacy, but for concerns surrounding its long-term safety, known and theoretical concerns. The panel chair Dr. Kenneth Burman of Georgetown University stated:
"It is difficult if not impossible to weigh these issues as the clinical trials went on only for a year, and patients will use this drug for lifetime," Burman said. "It is impossible to extrapolate the trial data to the wider population".
Since 2010, I concluded that Qnexa would have been recommended by the advisory panel if (1) efficacy was the only variable, but it was (2) the safety issues that seems to have led 62.5% to vote against Qnexa. Dr. Burman put his finger on the key issue when he said: "only for a year" (Ibid). From what I see coming out of the FDA, it demands no less than 1-3 years of clinical data for a drug candidate like Qnexa. Qnexa's original submission looks to have been ahead of the original clinical curve.
B. VIVUS's PR of the FDA's Complete Response Letter:
Beyond the advisory panel's published rationale for rejecting Qnexa, it is essential to read and study VIVUS' press release in response to the FDA's Complete Response Letter [CRL].
First, we read: "the NDA cannot be approved in its present form" (Ibid). In my opinion, the FDA postponed Qnexa's approval, but not until it is presented in a "form" that satisfies the FDA. The language employed implies that Qnexa did not hit a brick wall, but it was an invitation to come back (as it has) with data, information, and plans that would satisfy the FDA's concerns.
Second, the FDA clearly focused its cause for not granting approval on two key safety issues: "topiramate's and phentermine/topiramate's teratogenic potential" and "the risk for major adverse cardiovascular events" (Ibid). Unless, VIVUS has fully satisfied the FDA between the issuance of the CRL in 2010 until here in 2012, Qnexa may not be approved.
It is observed that:
The FDA requested that VIVUS formally submit the results from the already completed SEQUEL study (OB-305), a 52-week extension study for a subset of 675 patients who completed the previously reported 56-week CONQUER study. Top-line results from the two-year SEQUEL study were announced by VIVUS on September 21, 2010 and a final study report is being prepared for submission to the NDA.
Third, in the CLR, since 2010 Vivus has been working on supplying answers to the FDA for these issues:
The FDA reserved the right to comment further on proposed labeling. On REMS, the FDA requested that a discussion of an already submitted REMS plan be continued after the written response from VIVUS has been submitted. The agency also requested a safety update of any new adverse events be submitted to the NDA. Finally, the FDA stated that if approved, phentermine/topiramate would be a Schedule IV drug due to the phentermine component.
As part of the written response, VIVUS plans to compile analyses integrating existing nonclinical and clinical data to provide a comprehensive assessment of the teratogenic potential of topiramate. In addition, VIVUS plans to provide several new analyses to demonstrate QNEXA does not increase the risk for major cardiovascular events, which would include data from our OB-305 and OB-204 studies. In the CRL, no new clinical studies were requested; however, in the event that any of the FDA concerns are not alleviated, additional clinical studies may be required.
In the final analysis, one envisions all of this information going into the NDA finally accepted by FDA in early November 2011 with a particular focus on the known and theoretical safety issues. After all, why would the FDA accept VIVUS' NDA unless it addressed the 2010 issues?
III. An Evaluation of Events in 2012
From the NDA submission of October 2011, we learned:
- The SEQUEL study presented to the FDA long-term data.
- "The proposed labeling includes a contraindication for women of childbearing potential. The resubmission also includes a proposed Risk Evaluation and Mitigation Strategy (REMS)."
First, Qnexa met its primary endpoint in three phase 3 clinical studies (one being an extension study).
To summarize, VIVUS states on its own website:
- Equip Study: "Average weight loss for Qnexa patients who completed the EQUIP study was 14.4% and 6.7% with top dose Qnexa and low dose Qnexa, respectively, compared to 2.1% in the placebo group (p<0.0001)"
- Conquer Study: "LS Mean percent weight loss at week 56 was 7.8% and 9.8% (ITT-LOCF), respectively, for the mid and top dose as compared to 1.2% for the placebo group"
- Sequel (Conquer Extension Study): "Average weight loss at week 108 was 9.3% and 10.5%, respectively, for the mid and top dose of Qnexa as compared to 1.8% for the placebo group (LS mean ITT-LOCF)"
Regarding efficacy, it would appear that Qnexa has the green light, which is why I conclude "Yes" to efficacy.
Second, from what I've been reading, the NDA resubmission appears to make the safety question a "Likely" candidate for approval. I base this on the Q1 2012 announcement 20 to 2 affirmative vote by the U.S. Food and Drug Administration Endocrinologic and Metabolic Drugs Advisory Committee that voted in favor of Qnexa's approval.
I venture the safety issue has been answered on three fronts:
- The birth defect issue has been answered by: [a] labeling, [b] REMS, and [c] clinical data that mitigates the risk with respect to low dosage.
- The heart-safety issue has been countered by the positive impact on other heart disease issues Qnexa positively improved in clinical studies. Regarding Qnexa, the company has published: "The presentations highlighted the long-term beneficial effects of Qnexa® treatment in addition to double-digit weight loss. Specifically, Qnexa patients had significant improvement in liver function and reductions in medications used for diabetes, high blood pressure and high cholesterol. In addition, Qnexa was found effective in treating severely obese patients (BMI>35). Severely obese patients who were treated with Qnexa top dose for two years had weight loss over 12%."
- I also interpret the PDUFA three month extension as a genuine positive that illustrates how the FDA is working with VIVUS towards the goal of granting drug approval. The work going into Qnexa's REMS will ultimately reflect the information sharing between VIVUS and the FDA. I view this extension as affirmative as the advisory panel's earlier 20 to 2 favorable vote.
On efficacy, I conclude Qnexa is a "Yes" and with the company's two year work to answer the FDA's safety concerns, I see this variable as "Likely". I conclude Qnexa has an 80% favorable opportunity to receive approval from the FDA. I don't see a slam-dunk, but I do see Qnexa winning approval. I also suggest the FDA's decision may unexpectedly come before July since VIVUS most likely fine-tuned its REMS program.
I hope this article helps investors think through the issues. Feedback on Qnexa is warmly welcomed.
V. Speculation Addendum
Should Avanafil receive FDA approval, it would not surprise me if VIVUS on Qnexa's approval surpasses $50/share. If Avanafil is delayed (I don't see anything less than this), Qnexa's approval would push the share price above $40/share before retracing into the $30/share price range. In my opinion, Avanafil's approval may trigger a buy-out because I think Qnexa's approval is inevitable, whether in Q2 or before year-end. At about $22/share, would it surprise anyone if a big pharmaceutical company makes its move before the FDA renders its decision?
Disclosure: I am long VVUS.
Disclosure: Investors buy and/or sell at their risk. "Long" means until I decide to sell for my own personal reasons. As a private investor, I reserve my right to buy and/or sell at any time. I submit articles to SA as a freelance writer.