Penn Bioinvestor's  Instablog

VIVUS to Host Conference Call and Webcast Discussion of Avanafil Phase 3 Results

MOUNTAIN VIEW, Calif., Nov. 17 /PRNewswire-FirstCall/ -- VIVUS, Inc. (Nasdaq:VVUS) plans to announce the results from the avanafil REVIVE (TA-301) phase 3 clinical trial on November 18th prior to market open. The announcement will be followed by a webcast and conference call at 8:30 a.m. Eastern time.

VNDA  currently share price is heavily manipulated by shorters, much under-performed comparing to TTNP. But it is the time to buy cheap shares now.

Target: 20 and above, good chance of buy out above $25(depending on sell number of Fanapt).

Valuation calculation:(in a conservative way)

1) 200M Cash from Novartis

2) Another ~200M Cash from ROW partnership as predicted by morningstar
once ROW approvals are in order

3) 265M Cash eligible from Novartis achieving sales milestones in USA
and Canada - lets discount this cash to 50M since VNDA obviously
doesn't have it yet.

4) Another 50M of discounted value due to a similar sales milestone
arrangement (again, referring to the morningstar piece) with a ROW
partner.

5) A "just-off-the-top-of-my-head" discount of ALL the future
royalties (both USA/Canada and ROW) to the current amount of 50M. (should be much more than that: Consider TTNP receive 8-10% of US sell and now valued at $100 Million, VNDA will receive worldwide in double digits)

6) Basically no debt, according to Yahoo and some $27 million cash.

So, that gives us:
200M + 200M + 50M + 50M + 50M = 550M
-----> 550M / 27M shares outstanding = ~$20 per share.

Morningstar analyst report:
Vanda Partners Fanapt with Novartis
by Lauren Migliore | 13 Oct 09 |

After months of anticipation, Vanda Pharmaceuticals' VNDA plan to commercialize its antipsychotic drug Fanapt has finally come to light. Vanda will award Novartis NVS exclusive commercialization rights to Fanapt in the United States and Canada in return for an up-front payment of $200 million, double-digit royalties on sales, and up to $265 million in development and commercialization milestones. The terms of the deal are very similar to our predictions for the schizophrenia drug's future and thus have a net neutral impact on our valuation of the company.

Additionally, Novartis will be responsible for future clinical development of Fanapt, including the development of a long-acting injectable formulation. This aspect of the deal is especially important, in our opinion, as it unburdens Vanda of any future financial obligations, thereby freeing up funds for other pipeline candidates while still allowing the firm to utilize any data generated toward Fanapt's approval abroad. Novartis was the obvious choice for a commercialization partner, as the pharma firm outlicensed Fanapt to Vanda in 2004 and still owns significant financial rights to the drug. We expect Vanda to strike a similar deal with the Swiss drugmaker for commercialization rights outside North America following Fanapt's marketing approval abroad.

Although the terms of the deal were not eye-popping, we think this is a favorable arrangement for Vanda shareholders. Vanda is much better positioned with Novartis in its corner--as opposed to trying to commercialize the drug alone--and should generate meaningful revenue from Fanapt royalties going forward. After a roller-coaster ride during the last 12 months, including a nonapprovable letter from the Food and Drug Administration followed by the surprise approval of Fanapt in May, Vanda's partnership with Novartis marks the climax of Fanapt's long journey to market. This deal dissolves a great deal of the ambiguity surrounding Fanapt's commercialization, and we plan to lower our fair value uncertainty rating. 

VNDA is still rated 4 out of 5 stars, and Fair Value Estimate $20.00

Xenoport: Good risk/reward for likelihood of FDA approval in Restless Leg Syndrome .It is NOT a surprise at all for FDA delay three months of approval for XNPT drug. FDA Neuro division almost never approve a CNS drug on time. REMS is normal, unlike efficacy or request for additional studies which is reason to panic. I see so far everything is just same as expected. I expects that XP-13512 will ultimately get approved. Given the pullback in the stock, there is good risk/reward on XNPT as expectations are low for the upcoming PHN study as all neuropathic pain studies are risky and this study utilizes gabapentin failures. The prior Phase IIa showed XP-13512 was active in gabapentin failures and the high dose has shown solid efficacy. I believe the FDA will approve the drug given efficacy/safety and use of gabapentin. 

Disclaim: Start to accumulate XNPT shares while they are cheap now.

Vanda Pharmaceuticals Inc. (VNDA) has entered into an agreement with Swiss drug maker Novartis AG (NVS) to commercialize and develop its schizophrenia drug Fanapt in the U.S. and Canada.

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A very nice article from Brian Orell at fool.com, well written and right on point:
www.fool.com/investing/high-growth/2009/...

Shares of Arena Pharmaceuticals (Nasdaq: ARNA) have been on a roller coaster over the past 24 hours. It rose by 38% after hours on word that the company would release data for its obesity drug, lorcaserin, today. Then it opened down 10% after the data was released only to rebound and climb by 20% after management had its say.

That's the craziness of biotech for you.

I'm really not sure what management said that got investors so excited; the data is lackluster at best. Lorcaserin might be strong enough to get approved, but it still pales in comparison to efficacy data released by VIVUS (Nasdaq: VVUS) and Orexigen Therapeutics (Nasdaq: OREX).

For instance, VIVUS' Qnexa resulted in weight loss of 11.0% and 10.4%, beating placebo by about 9 percentage points in two recently completed trials. Lorcaserin, on the other hand, resulted in a 5.9% reduction in body weight, a mere 3 or 4 percentage points better than placebo, depending on which patient group you look at. Comparing data across trials can be deceptive at best, but in this case I think we can call a qualitative winner.

Sure, the drug is safe. It doesn't seem to have the heart problems that plagued Wyeth's (NYSE: WYE) fen-phen or the psychiatric problems that plagued drugs from sanofi-aventis (NYSE: SNY), Pfizer (NYSE: PFE), and Merck (NYSE: MRK). And management wants to argue that it'll be a first-line treatment for that reason alone.

But I have a hard time seeing doctors rushing to get their patients on lorcaserin when there may be other drugs on the market by then that help people shed so many more pounds. If doctors are looking for a low-risk solution, they might be better off prescribing diet and exercise changes than trying to eke out an additional 6- to 8-pound loss for a 200-pound person on lorcaserin.

There may be some smaller role for lorcaserin on the obesity market, just as there has been for other less-than-stellar diet drugs before it, but if you're looking for a blockbuster homerun, I'm not sure you'll find it in this Arena.

J. P.Morgan latest analyst report on ARNA:
This morning, Arena (ARNA) released what we consider to be disappointing Phase 3 results from the BLOSSOM obesity trial. Lorcaserin’s efficacy was once again underwhelming – even worse than the prior BLOOM trial – and, indeed, some may debate whether this even satisfies FDA requirements for approvability. Either way, we're concerned with any obesity drug having to argue semantics from an efficacy standpoint with the FDA. On the positive side, safety was reassuring and thus makes lorcaserin potentially amenable to combination use. However, no such trials have been conducted (or are even planned), which we continue to find troublesome. Remain Neutral on ARNA.
BLOSSOM background. Recall that BLOSSOM is a Ph 3 trial evaluating lorcaserin (10mg QD and 10mg BID) for 52 wks in 4,008 pts (BMI 35.9, baseline weight 220lbs), including those with valvulopathy.

Pbo-adjusted weight loss even worse than BLOOM. BLOSSOM results showed that lorcaserin achieved pbo-adjusted weight loss of an anemic 3.1% and 2% in the BID and QD arms, respectively (pbo=2.8%). These results are even weaker than BLOOM, where lorcaserin showed disappointing 3.6% pbo-adjusted wt loss. For comparison, we note that Qnexa recently showed pbo-adjusted wt loss of 8.6-9.4%, and Contrave has shown 4.8-5.2%.
Lorcaserin may satisfy categorical hurdle. The proportion of pts losing 5% or more of their body weight in the BID and pbo arms of BLOSSOM was 47.2% and 25%, respectively (QD=40.2%). While this may be viewed by FDA as meeting the guidance requirements, it still remains an open question whether the magnitude of weight loss benefit will be viewed as clinically and commercially significant. Recall that in BLOOM, lorcaserin met the categorical hurdle (48% vs. 20%). By way of comparison, Qnexa (EQUIP 45% vs 17% pbo and CONQUER 62% vs 21% pbo) and Contrave (45-56% vs. 16-19% pbo) handily cleared this hurdle.

Recap of FDA guidance. As a reminder, the current FDA draft guidelines for obesity drugs read “... A product can be considered effective for weight management if after 1 year of treatment either of the following occurs: 1) The difference in mean weight loss between the active-product and placebo-treated groups is at least 5% and the difference is statistically significant, or 2) The proportion of subjects who lose greater than or equal to 5% of baseline body weight in the active-product group is at least 35%, is approximately double the proportion in the placebo-treated group, and the difference between groups is statistically significant.” Clearly, lorcaserin does not meet the first requirement, and is right on the cusp of the second.

Important secondary endpoints remain a question mark. Little information was provided in the press release regarding lorcaserin’s effect on important secondary endpoints such as blood pressure, cholesterol, blood glucose, etc. All that was said is there was either a significant improvement or “strongly favorable trends” on these measures. In our view, an obesity drug’s impact on these key risk factors is critical in forming the overall risk/benefit profile for a drug and potentially securing reimbursement. We look for incremental information on the conference call.

Safety is the lone bright spot, and makes lorcaserin amenable to combination use. As with BLOOM, there were no surprising safety signals in BLOSSOM. Overall, more lorcaserin-treated pts completed the trial than pbo (57% BID, 59% QD, 52% pbo). Of note, discontinuations for adverse events were slightly higher with lorcaserin (7.2% BID, 6.2% QD, 4.6% pbo). Importantly, no difference in the rates of valvulopathy were seen (2% BID, 1.4% QD, 2% pbo). Indeed, the company noted that an integrated analysis of the ECHO data ruled out the risk of valvulopathy. Recall that FDA required the company to rule out a ≥1.5 fold relative risk of valvulopathy in pooled BLOOM and BLOSSOM data.