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Orexigen Therapeutics Inc. (NASDAQ:OREX)

Special Conference Call

September 13, 2012 8:45 am ET

Executives

Michael Narachi – President, Chief Executive Officer

Jay Hagan – Chief Financial Officer

Mark Booth – Chief Commercial Officer

Analysts

Moderator

All right, good afternoon. My name is Steve Byrne. I cover the small and mid-cap (inaudible) stocks in the States. It’s my pleasure to introduce the Orexigen team. We’re graced with three of their managers here – Mike Narachi, CEO, we have Mark Booth, Chief Commercial Officer, and Jay Hagan, CFO, so we’ve got quite a team here. So it’s all yours, Mike.

Michael Narachi

Yeah, thanks for inviting us and thanks for your interest in Orexigen, and probably if you’re interested in Orexigen you’re interested in the obesity space. It’s evolving rapidly over the last year or so, and I think the pace of new information and are we meeting or beating expectations is going to continue here over the next couple of years.

I’ll be making forward-looking statements today, and if you don’t mind I’ll sit so I can use my glasses and see the screen. I won’t try and read this – obviously lots of forward-looking statements. Things materially change in the future, and all of our documents are on file on our website and with the SEC.

In general, we have two late-stage obesity therapeutics. One’s been reviewed by the FDA and we got a complete response that asked us to rule out cardiovascular risk. The other has completed Phase IIb. We raised the capital, we started our large cardiovascular outcome safety trial, and we’re getting ready now to resubmit in the U.S. and submit in Europe and synchronize those approval processes so that we can then cascade into global approvals. We have a North American commercial partner in Takeda that’s committed to heavy resourcing of a blockbuster primary care launch when the approval comes, and we’re in the process of seeking a rest-of-the-world partner to commercialize Contrave. And our second product, Empatic, we have to make some strategic business decisions on how best to develop that, but our default position would be to put that into a rest-of-the-world partnership agreement and use some of those partner dollars to fund the development and probably not start Phase III development of that second product until rest-of-the-world commercialization partners are brought on board. We would expect that partnership to come together in the highest value-creating way for Orexigen around the same time that we have data from the cardiovascular outcomes trial.

Let’s talk a little bit about the path to approval in the U.S., and the European authorities have also indicated an interest in seeing cardiovascular data prior to our approval, so I think the data from the light study interim analysis will be necessary to go forward with Contrave. So in our NDA review by the FDA, there was only a single approval deficiency. Everything else, the boxes were checked but they wanted us to rule out excess cardiovascular risk with a large outcomes trial that was a placebo controlled randomized trial. We took about nine months with the FDA, unfortunately, to clarify what ruling out excess risk meant, and that led to the design of the light study so it was confirmed through a formal dispute resolution process with the FDA, so we got a very high level commitment to the parameters that would guide approval from the Director of the Office of New Drugs. Dr. Don Jenkins led that reply to our appeal.

And then with the review division, we worked out a special protocol agreement in very short order so that we had top-to-bottom alignment at the FDA of exactly what it’s going to take to drive this assessment of cardiovascular risk for an obesity therapeutic like Contrave, and that assessment essentially mirrored the diabetes guidance. We have to rule out a certain amount of risk to get approval with an interim analysis, and then you finish the study and rule out excess risk. And the risk that they’re asking people to rule out, and now the Europeans have actually adopted very, very similar guidance for diabetes drugs, where what they’re saying is the benefits that are presumed from lowering blood sugar for diabetes drugs or lowering weight with obesity drugs should outweigh at least 16 excess cardiovascular events – heart attack, stroke, cardiovascular death – to get approved. And then it should rule out at least six excess events per thousand years of exposure, so it’s a pretty tight hurdle for safety. We want to make sure there is not any more than 16 to get approved and 6 per thousand years of exposure, and the benefits clearly outweigh that in their mind. Now, that’s a subject decision.

Then you translate that into the statistics for the studies on where you need to rule it out on a hazard ratio basis, and I’ll go through that. But our trial essentially mirrored the diabetes guidance for absolute risk, the relative risk or the hazard ratio scores, then we need to rule out a doubling of risk for approval and a 40% increase in risk for the final analysis. An event-driven trial, so that means we need about 87 events to do that with high confidence for the interim analysis, and the trial is basically a very simple, straightforward study that’s tracking heart attack, stroke and cardiovascular death. That’s the primary and secondary endpoint, and an intent to treat basis.

So we decided that we would enroll somewhere between 7,000 and 10,000 patients and then observe those patients, and so we accrued the 87 events, and then for the final analysis about 371 events. We targeted a population that was an on-label population, so we want the results to be generalizable to what happens in the real world, and we also wanted to use the product in the study the same way that it would be used in the real world, so we offered all patients a comprehensive weight management program that’s internet-driven, interactive, and it has counseling, which is how we’d like to commercialize it because we think a pill and a program together are going to be a much more effective long-term solution for any patient that needs to go through a change process.

And then at Week 16, there’s a therapeutic evaluation – have you lost weight or not? That’s the dotted line on the early phase of the trial, and if you have not lost at least 2% of your body weight, you’re discontinued from blinded study drugs. So people going forward in the trial long-term are only responders, so the only way that Contrave long-term can contribute to risk in this study is in a responder population, and the responder population your blood pressure goes down, your lipids improve, your inflammatory markers improve, your blood glucose parameters improve, your weight circumference—all the risk factors are going in the right direction.

I talked about the hurdles. What makes us believe that this trial will be successful, and how were we able to easily raise capital to fund the study? It’s about $100 million to get to the approval point, about $150 million all-in for the study. The trial is, again, looking for a hurdle of excess risk of twofold, so the point estimate at the interim can be as high as 1.31. So out of 87 events, we can have—the worst case scenario is 49 on Contrave and 38 on placebo, and that passes that hurdle. If you ran the trial 100 times and truth was 1.0, it would come closer to 45 and 45 on each side.

The trial in the early days, it’s hard for these two agents to separate unless one of them is really bad, so I think the FDA really is looking for us to rule out basically a disaster. So that’s one of the reasons, I think, that the trial is bound to succeed. The other is we have no signal after 25 years, 50 million users of bupropion, no signal that is evident in the errors data We’ve looked carefully against control groups – no signal in large, 10,000-plus registries or observational studies. If there was something really bad there, we feel like it would have showed up in the market and in the literature, but nobody’s done a prospective randomized trial of this magnitude for bupropion or, frankly, any other sympathic (ph) emetic in this space other than sibutramine. So sibutramine, the weight loss drug marketed first by Knoll then Abbott, did the large scale trial and showed up with a 16% increase in risk, and that’s what caused the concern.

Ironically, the scout trial with sibutramine, which is a different drug and more potent sympathic emetic, would not have detected a twofold increase in risk at their interim analysis, so that’s another reason for confidence. So the tool that we’re using is not that sensitive at the interim analysis, and that’s all agreed to by the FDA. They understand that you can’t really—it couldn’t ask somebody to complete $150 million outcomes trial prior to approval. They didn’t do that for diabetes; they realized that would just crush any innovation in the space, so they tried to work out a compromise where you could actually get it done.

Let’s talk a little bit about why we’re doing this therapeutic evaluation at Week 16. Here you see a typical distribution of weight loss in any Jenny Craig, Weight Watchers, a drug trial, diet and exercise programs, et cetera, where some people gain a little bit of weight on the left-hand side of the chart and other people lose a little bit of weight, and then a nice significant third or half of the group loses a lot of weight. Obviously, the therapy is focused on the people on the right-hand side of the graph, so it’s pretty obvious to say let’s just focus on those and after a brief therapeutic trial, if it’s not working, come off the drug. And there’s a lot of reasons why a therapy would not work, some of which is just the patient wasn’t ready to change. This is true for bariatric surgeries as well – the lap band curves look just like this. The shape looks a little different, but in general it’s the same pattern. And the rest could be mechanism driven – some drugs will work in some patients and not in others. So we’re focusing on the right-hand side both commercially and in the light study.

When you focus on responders, these are the results from Contrave, and responders of Contrave yield really truly market meaningful weight loss, so a 5% weight loss at Week 16, they continue and they go on to lose a lot of weight. Here you can see quarters, almost up to a third of patients losing greater than 15%, greater than 10%, greater than 5%. And then some even in the yellow, they were a responder and they relapsed, but that’s a pretty small proportion once you’ve been identified as a responder.

So when we do market research here, market meaningful weight loss, these are the cardiometabolic and other risk factors like CRP and quality of life that improve when you lose weight. These are all going in the direction you’d expect, and the magnitude that you would expect – very, very solid improvements in all of the other parameters that drive risk or quality of life improvements. The only one for the Contrave profile that didn’t improve more than placebo was heart rate and blood pressure, but you see declines from baseline for responders. So Contrave responders still have an improvement in blood pressure, just not as good as the rare placebo responder.

If you put all that into risk engines like Framingham or QRisk and model it over a decade, you get the predicted decreases in cardiovascular risk, and you see for the responders it’s much more dramatically emphasized, so that paradigm makes sense and you see the FDA labeled both Lorcaserin and phentermine topiramate according to that paradigm – go through a therapeutic evaluation, in those cases Week 12, 5%, 3% response, cut off. If you’ve made it, go forward; if not, consider discontinuing the drug. And so they are aiming to try to get people that are on the right-hand side of this chart on long-term therapy.

So we enrolled the light study accordingly, on-label population, but we aimed for the higher risk population but still on-label, so we targeted these demographic characteristics – older with CVD, history of cardiovascular disease, or diabetes and a couple of co-morbidities so that we can get enough events in the population to actually measure it. The obesity population de novo, the typical pharmacotherapy seeking obese patient, their event raised only, like, 0.1 or 0.2% per year, so that would take either a long time or an enormous study to measure cardiovascular events, so we focused on the older with a little more risk for cardiovascular disease, targeting about a 2% annualized rate for the population by epidemiology, and then they’re in a study so we’re expecting that to drop down to maybe 1.5%. Those are the actual demographics of the first 4,500 enrolled, so we’re enrolling the population that we targeted, which is great news.

So if you then take the observation months that we’re going to get from 7,000 to 10,000 people in the study, and it’s enrolling incredibly fast – about 500 patients a week right now, and we’ll probably finish enrollment within six months of starting the trial. And then you ask, okay, so now you’ve got your observation months. The rest of the (inaudible) equation is what’s the event rate? So we just did a little chart here between 2 and 1.25%. Events should come in, the 87th event sometime between Q2 and Q3 next year, which I am happy to say the first person to figure out the model accurately was Steve Byrne.

Commercial – I’ll spend a minute on commercial. We’re getting lots of questions on commercial now. With two approved drugs in this space, I think it’s really crossed the line – now people are focused on how are you going to really maximize the success of these products commercially, and Mark Booth, who is here, made this slide up. These are some of the building blocks that you really want to see if you’re looking for a blockbuster billion-dollar brand to come into the market – huge market, market growth, limited competition, or large unmet need. Here we have both. A very differentiated product profile – each of the three drugs that are in late stage are very different mechanisms, and we’ll talk about the profile for Contrave. But then you’ve still got to resource it. This is a medical market still; it’s not going to be—we don’t believe it’s going to be crazy, a drug that sells itself, Internet go viral, et cetera. You’re still going to have to call on physicians, get them to adopt. You’re still going to have to be in those professional channels. I think it’s going to be a professionally driven market. It’s not going to be like Botox or (inaudible) or something like that. I think that weight loss is hard and the risk of disappointing if you’re not helping through the process for the patient, I think is high.

This is the way that we try to help people understand how the market segments out on the patient side. There are a lot of patients with dyslipidemia and diabetes. That’s about two-thirds. But half of the patients and half of the physicians identify people that have uncontrollable food cravings or food eating issues – binge eaters, sweet addicts, salt addicts, midnight snackers, whatever. They’re on a program and they fail because they just can’t resist something – that’s about half. And then there’s about two-thirds – one third that are depressed, another third that have signs and symptoms of depression with obesity. And then about three-quarters of them are women that typically seek therapy, and most of them of child-bearing age.

So how does Contrave fit into this segmentation? First, with the dyslipidemia and diabetes, Contrave has great numerical reductions in hemoglobin A1c that are commensurate with weight loss, TriCor-like reductions in trigs, and Niaspan-type HCL reductions. So the weight loss is doing what it’s supposed to do, and we’ve got the data to back that up. Interestingly because Contrave—bupropion plus naltrexone, the anti-addiction drug. we studied in Phase III how did it do on craving scales, and we showed statistically significant reductions in exploratory analyses on these, and it makes sense when you show a physician a profile of the drug, they go, oh naltrexone, this is the anti-addiction drug, and then they say, I want to use that in my food cravers, which as I showed you is about half the market.

In the depressed obese, we did an open label study here on—the two panels on the right showing depression scores improving from pretty high and moderate scores down to no depression, and then we showed about 10% weight loss in this open label trial, which is what you’d expect to see in six months in the open label study. So great news for the obese depressed, and physicians, when you show them the profile, they say I’m going to use Contrave in my food cravers and in my obese depressed. And remember – that was half the market and two-thirds of the market, and those segments overlap. Right there, that’s success. That’s clear success, and that’s without showing them the data. You don’t have to show them the data – you just say, bupropion and naltrexone, they give you those two segments.

Here’s the women of child-bearing age. Here’s where I think preference share will steer away from drugs that are riskier for women of child-bearing potential. The blue bars are women – that’s a majority of the U.S. market from this IMS data, and then the box is somewhere in the range of child-bearing potential – 50 and under. And that’s the majority of these patients. So if you ask a woman, which we’ve done in recent market research that we fielded, and we’ll have the results later this year, what do you think of these profiles? I can predict they’re not going to like the one that has a risk of birth defects if they’re of child-bearing potential. And then you show them Contrave, which has got no teratogenicity in its background, it should be the drug of choice for women of child-bearing age.

I’ll talk very briefly of Empatic. I mentioned it in the introduction. It’s our Phase IIb completed drug. It’s bupropion plus zonisamide, the anticonvulsant. It’s more Qsymia-like on the anticonvulsant side, but bupropion and phentermine are very different for the other side of the drug. This was a randomized Phase IIb trial at two different doses that ran out six months, and an extension of a Phase IIb trial, you can see about 15% weight loss versus the 1 or 2%, 3% on placebo in that trial. This program would move into Phase III, as I said, with a commercial partnership and we think it could be quite competitive to Qsymia, although it would launch several years later, but it would be nice to come into that market with an unscheduled drug – so a scheduled abuse liability drug in the U.S., we’ve got Drug Enforcement Agency restrictions, record-keeping hassle, and liability for both physicians and pharmacists for scheduled drugs. This drug would not be scheduled.

And then on the other attributes, it does have the antidepressant attribute. It should not – we don’t predict it to have depression AE issues. Depression should be zeroed out by the antidepressant from the cognition and depression attributes of the anticonvulsant. And then on the cognition, we also see that in our Phase IIb, we kind of titrated and we don’t see in the Phase IIb any cognition deficits from the combination. So we think that our dose, our targeted dose would be the dose that delivered this weight loss. So we’d have a weight loss attribute that’s the most potent in the marketplace.

Resourcing – these are hard markets to really build and crack, and I think that the team led by Jay and Mark did a great job in bringing in a really capable, dedicated partner with heavy resources to the table. Takeda has got years of relationships in the diabetes writing positions in the United States, so they’re already calling on 50,000-plus physicians that write a lot of diabetes drugs and selling billions of dollars of access. That group, that company, that team is going to launch Contrave in the United States, Mexico and Canada, and we couldn’t be happier with the selection of them and the overlap in the footprint, the call patterns, the experience, the managed markets team, et cetera. We just think they’re going to be able to do a terrific job.

We hope that our colleagues in this space that are launching the other two drugs do a great job with their smaller resource team, and then perhaps they’ll build or get partnerships that enable them to really put the resources on the ground. The better job everyone does here, that will grow the market for everyone, so we’re encouraged by their plans for launch and we hope that they are able to attract even more resources to their launch to help build the market faster.

So with that, I can wrap up. We think Orexigen’s an attractive value proposition. We’ve got a strong team. We’ve been on the east coast for most of this month so far, and we’re delighted to be here, Steve. This is a great opportunity for us to be over in Europe, and Mark, Jay and I can each field any kind of detailed questions that anyone may have.

Question and Answer Session

Unidentified Analyst

Hi, I’ve got a question that bothers me. I mean, I first thought of it when I saw that the guys selling Plavix and Lipitor will not have liquids to sell for a year, so—and right now, Takeda did not get their DPP-4 approved. It was—I think it’s going to be delayed, and

Actos just lost patent. What do you do with the sales force for a year, I mean, because Contrave has been delayed. So yes, it’s true that Takeda had, like, a massive metabolic sales force in the United States, but they don’t have the DPP-4 to sell, they don’t have Actos to sell because it’s off-patent. What do you do – do you warehouse these sales force people? Do you tell them wait until you have something to sell, or do you just fire everyone and then when you have something to sell, you rehire? It’s a question that’s kind of poked my mind, so.

Michael Narachi

Yeah, Mark was president in North America for, what, about eight years, so Mark’s probably in a great position to answer that question.

Mark Booth

Yeah, thanks. I can’t tell you exactly what they are going to do, but they’ve re-filed alogliptin, and so they should know at the end of this year. And they’re assuming alogliptin approval, which would put them in a first quarter launch of alogliptin.

Unidentified Analyst

(Inaudible)

Mark Booth

Well no, they’ve got a product portfolio. They’ve got a gout drug, they’ve got the Prevacid follow-on, they’ve got Amitiza for chronic constipation. They’ve got a hypertensive drug that they launched about a year ago, so there is definitely things fro the reps to do.

Michael Narachi

And they’re still probably promoting Actos a bit.

Mark Booth

Yeah, maybe a little bit. Yeah. And if they were going to—my guess, if I was still running the place, if I was going to lay off due to the Actos going generic, I would have done it by now.

Unidentified Analyst

(Inaudible)

Mark Booth

They’ve got still a couple thousand reps. Yeah, it’s a very solid U.S. presence, and as Mike mentioned, years and years of relationships with the doctors that write a lot of diabetes products.

Michael Narachi

They did announce a downsizing quite a while ago with the generic when we got our delay and they knew Actos was going. But they still have the resources that Mark mentioned.

Unidentified Analyst

(Inaudible) Shire addressing binge eating disorders, and they say if Vyvanse gets approved, that will give them $750 million revenue uplift. And looking at Contrave, do you see that as another indication you’d want to go for?

Michael Narachi

Yeah, it’s an interesting—I mean, I guess the short answer is no. I think studies in binge eating and demonstrating better improvement in patients with binge eating and showing the improvements and just having the information available, maybe doing it rigorously enough to add it to the label; but as an indication, I think we’re going to get the benefit without going through the work and the effort to actually get an indication. But solid clinical data, we’re actually planning a trial where we’re doing binge eating scale scores in a peri-approval setting now, so there’s quite a lifecycle planned for Contrave. You could do smoking cessation without weight gain, you could do binge eating, you could do (inaudible) approved quality of life PRO scales. You could do obese depressed, like the open label study I showed you. There’s lots of things you could do, but a lot of these attributes and features are presumed benefits already based on a constituent drug and some of the data that’s already going to be in the package insert.

Unidentified Analyst

So in your cardiovascular trial, the big trial, have you looked at any secondary endpoints such as diabetes in the trial? And I suppose the second question – any ideas on timing from your 87th event until a potential launch?

Michael Narachi

Yes, so the first question – we resisted the temptation to add much to the large outcomes trial other than heart attack, stroke and cardiovascular death. That’s really what the trial is focused on, and that’s partly why we’re able to do it at a cost that’s reasonable--$150 million isn’t very reasonable but typically, these trials and big pharma costs – you know, 300, 400, $500 million, and one of the reasons is simple, is there is no labs in the trial. This is just a screening lab. We’re not even collecting adverse event data because we finished that in Phase III. We know the adverse event profile. We’re only collecting SAEs. And we’ve already done a diabetes study where we showed fantastic reductions in hemoglobin A1c, and there are already two large prospective trials that show that a small amount of weight loss leads to 40, 50% reductions in the progression of diabetes, so that’s established.

Now, could we repeat that with Contrave? Sure, but that would have added tremendous cost and time to the study, so this study is really only measuring heart attack, stroke and cardiovascular death.

Oh, the second question was timing. Yeah, I showed a slide in here, but essentially what we need to do is we need to observe patients with this presumed background event rate for about 70,000 patient months, and so you can get there faster if you have 8,000 patients versus 7,000. So when we announce the final sample size, Steve can update his accurate models and tell you when we’re going to have 70,000 patient months of observation. And then when we announce, hey, the event rate looks like it’s on track or a little higher or a little bit lower, then that will narrow that window. But right now, we’ve told people by the slide that it should occur within those assumptions of 2 and 1.25% between Q2 and Q3.

And so then what happens after the 87th event occurs, there is some time to adjudicate an event, so a patient—we call up Mrs. Jones. Mrs. Jones says yeah, I went to the hospital last week with a chest pain, and they think it was a heart attack. So we go get the data and then it goes to the blind adjudication committee at Cleveland Clinic. Cleveland Clinic says we look at the EKGs, adjudicated it was an MI, and then it goes into the hopper of an adjudicated event. So that process can take a couple weeks to a couple of months. So when the 87th event occurs, we finalize all the adjudication of the final events – you know, we’re doing them now as we go. And then you basically push the button for the analyses.

The analyses will all be pre-run with dummy data. The reports will be written with the presumed outcome, and so it will be rapid from the date of adjudication to the analysis and the submission. And then FDA with a type 2 resubmission, because it contains data, would take about six months. We’d like to drop that data, and our default assumption right now is we could answer cardiovascular risk questions in Europe but with that data, so it really shouldn’t change the time clock.

So the two have the potential to be approved late in 2013 or early ’14, somewhere in that window.

Unidentified Analyst

Thank you. Lyrica in weight loss – I mean, I’m trying to think about—from my point of view, I think it’s going to be good for you guys if it gets approved in the sense where you have—when you see analyst reports, you have statins, you have diabetes control, but you will have an obesity class. So it will be something that psychologically you can do with drugs – you can treat obesity with drugs and (inaudible) like a massive sales force. But do you think the first couple of years it will be net-net positive, or negative? How do you think it’s going to play out when and if Novo Nordisk enters the market with on-label indication for obesity? Thanks.

Michael Narachi

I think net-net it will be positive for multiple—think of all the big—you know, hypertension, dyslipidemia, diabetes. You’ve got multiple brands, different mechanisms, 30, $40 billion globally in sales for hypertension and dyslipidemia. And I think it took a while to get there, where the prescription for hypertension and dyslipidemia used to be change your diet and exercise. And then we got drugs and then we proved that they worked for long-term outcomes, and the class just took off with lots of players and lots of promotion. And we’re not there yet, but I think you’re exactly right – with more products with different mechanisms, people are saying, hey look, we now have a solution to weight loss because you should clearly lose weight if you’re diabetic, dyslipidemic, hypertensive. It improves everything, so if weight loss can be a cornerstone of care—it isn’t now because there isn’t a solution. It’s like, diagnostics don’t sell when there’s no therapy, right? So it’s easy to diagnose overweight and obese, but there’s not an easy solution. So if we get a handful of players out there and we create solutions that work, not only the therapies but I think the follow-on – you know, how do you help these people change? Because the primary care physician isn’t really going to be able to help that much, so we need to work on that a little bit. But I think, yes, it’s upside if Novo goes out there and hits it hard.

Unidentified Analyst

Is there anything that precludes you from dialing up the event risk, the event rate in the remaining couple thousand patients? I mean, like you said, 500 a week – you could dial that event rate risk up by just raising the age, the lower age or something like that. Is there—

Michael Narachi

Oh, I thought you meant make everybody run 10 miles uphill or something.

Unidentified Analyst

No. No, I mean you’re targeting for something over 2% per year event rate, and you set some criteria and had a slide here that shows that overall, you’re maybe even pushing a little bit above that on average. Is there anything in your agreements with the agency that would preclude you from pushing it even harder, given you’ve got 500 people thrown into the hopper every week? Your time to hit that 7,000 is not really going to be that much of a challenge, but you could pull forward the event—the interim read if you dialed up that event rate. Could you do that?

Michael Narachi

Yeah, it’s a good point. So for example, if we knew that we were at 1.5, then we would do that if we knew—you know, or lower. We don’t know where we are, and we wouldn’t want to go too high. And the reason is that the agreement that we reached is really grounded in ruling out 16 excess events on an absolute basis in the target population. So if the target population was more like the diabetes population – 3% risk, for example – then they should change the upper bound of the confidence interval from 2.0 to 1.8. That should move based on the population that you’re using.

Now that applies to the final analysis, and actually we won’t know what the event rate in the trial is until we get to the final. Even at the interim – let’s say that the observed event rate is 3%. That doesn’t meant that’s what the event rate is going to be at the end, because who knows what’s happening early with only 87 events.

So your point is well taken, and we do have agreements and actually an adaptive design in the protocol that we could pull some levers to change slightly the demographic characteristics of the patients that come into this trial. But we feel pretty good about where they’re coming in. We’re not sure we’d want to get more patients with cardiovascular disease. We wanted to get the diabetics. We could go a little over, but the age looks just where we want it to be, and you don’t want to get too far away from the generalizability of the treated population either.

So it feels pretty good. It might save a little bit of time if you went higher. I mean, you could see the sensitivity just in that chart, but it feels pretty good.

Unidentified Analyst

With respect to your enrollment rate, you could be at the 7,000 number in another month or so.

Michael Narachi

Well yeah, we’ve given you three points on the line – 0, 1,500 and 4,500, and it’s linear, right?

Unidentified Analyst

Yeah, and it is relatively linear? I mean, is it—

Michael Narachi

It’s actually—you know, it went faster from the first month.

Unidentified Analyst

So how do you think about the consideration of bringing in a few more before the end of the year and hitting your full cohort to go all the way through to final data?

Michael Narachi

I think it’s highly likely that if we said stop today, that the train would blow through the 7,000 barrier by the time we could stop it. So actually we’ve already had planning meetings that how soon do you have to push the button to actually stop it before you go too far, and also what’s the value of the spend, because there is an incremental spend pre-approval on getting the extra patients. And it’s highly valuable because every month we can get approval faster is very, very valuable to us.

So I think you’re on the right track. With the machine that’s enrolling 500 patients a week right now, we’d probably keep it going a little further than 7,000. But within a matter of months, we’ll be able to tell you we stopped and we got however many patients. It might be 8,000 patients, it might be 9,000 patients. It depends on how it goes, and we’ll tune some of the analyses.

Enrollment usually slows down around the holidays anyway, so probably what we’re talking about is between now and Thanksgiving, a big push. And when you do say stop, you don’t say stop. You say in a couple weeks, we’re going to stop paying for screening. Remember, they move through screens, enroll, randomize. So once they’re enrolled, you’re committed. You’re not going to tell somebody, sorry, you don’t get a chance to randomize. Once you’re screened, we’re going to say yeah, you get to go ahead and enroll. But what we can do is we can say we’re not going to do any more screenings, or don’t screen anybody else, we’re not paying for any more screenings. But we want to give them some time before that, so we’ll tell our centers that you’ve only got a couple weeks to go. That’s probably going to drive, okay, I’ve got 10 in the hopper – I better get them in next week.

So you’ll get this last push. How big is that last push? Is it 1,000 in the last week? Is it 600 in the last week? We don’t know, but we don’t want to be 10,000 in the last week.

Unidentified Analyst

Right. You were mentioning the limited amount of data, no labs in the light study. But you are getting some weight reduction data through Weight Mate, and do you have an interest in trying to quantify the incremental weight loss benefit of Weight Mate? You know, it’s not just your standard diet and exercise. It’s more intensive than that, and do you see value and kind of bundle that in quantifying the weight loss benefit that you can get from that?

Michael Narachi

Oh, absolutely. I think Weight Mate could be a core strategic asset for Contrave and its commercialization, so I think it adds tremendous value across the board. It’s a virtuous cycle – you’ll lose more weight if you’re on Contrave and a weight loss program, a lot more weight, and more patients, a greater proportion of patients will be successful, and I think it will drive long-term success. So that drives a lot of value. It means you’ll sell more Contrave, it means people will like it, they’ll have more success versus failure. You’ll have information and data. You can educate continuously about weight loss, about appropriate uses of product. So there’s a lot of value in doing that, so in the study—yeah, we have some information already, but remember we’re only 15 weeks in the study, so the maximum information we’ll get out of it will probably be in that Week 15.

But everything is on track for what you’d expect as far as just weight reduction in the early time point. I think the question you’re asking is what are we going to do with the program, and we’re going to keep working on it. We’re working on the next version already for sort of a real world experience on Contrave as the next beta-2 test for commercialization.

Unidentified Analyst

Do you think the placebo arm will be more than 1 or 2% weight loss that is typical?

Michael Narachi

Yeah, it should be more like diabetes prevention program type weight loss. You know, it should be—yeah, it could be up to 5%.

Unidentified Analyst

So the (inaudible) arm could be double digit?

Michael Narachi

Yeah.

Mark Booth

(Inaudible)

Michael Narachi

And there’s a lot of diabetics – 60% are diabetics. Yeah, Steve, maybe the best way to answer your question – the data that you’d like to see us generate from your question, we’re going to generate it before approval with a step-out study. And it doesn’t take 10,000 people to do that, it takes a couple hundred. So what we want to do is we want to generate information that shows people the potential of Contrave if used in a real world setting with an on-label population with Weight Mate versus standard of care. That would be really illuminating.

Unidentified Analyst

You made a comment about having the interim data from the light study at a time that you would be in position to maybe crystallize some ex-U.S. partnerships. Where do you think you’ll be at in the European approval process at that point?

Michael Narachi

Submitted and getting into the review.

Unidentified Analyst

So does that mean submittal in coming months?

Michael Narachi

No. So again, if the interim analysis can be ready in Q3 and if the default plan, which we haven’t solidified yet, is to submit and then essentially answer a clinical question on cardiovascular safety with the data, we would want to—we don’t want to have that question asked and not be able to answer it, so we’d need to submit in the time frame that fit that. The alternative is to wait until we have the data and submit, and so we haven’t definitively decided on that, which of those two, and it’s going to take a little bit more input from the European authorities to make that final decision. But we’re working towards the option of submitting without it and then supplementing. So when we know—when we can narrow this window that’s on this chart here, that will help us a lot with the timing of the European submission too.

But to your point, though, you started with the crystallization of the partnership process. I think Jay’s goal is to, like we did in North America, drive a competitive process and get everyone who is interested ready and wait for the day. Now, someone may want to be preemptive because they want to get started earlier, but we wouldn’t do that unless the offers were really, really solid, and we think we can drive more competition in that process and select the best partner for us and for them when everyone gets a chance to look at the information.

Unidentified Analyst

But having the initial round of questions from the EMA would be helpful.

Michael Narachi

Yeah, it would; but let’s make sure—this is a rest-of-the-world partnership process, and the U.S. approval can drive approvals in huge important markets. I mean, Europe was about 25% of the weight loss market in the past. Latin America’s big, southeast Asia is big, so we’re not focused just on Europe. Europe, you need European approval, but you don’t need European approval for Latin America.

Steve Byrne

Right, I think we’re out of time. Thank you, Mike. Appreciate it.

Michael Narachi

Thank you.

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