Ruthanne Williams Roussel's  Instablog

Domain Partners, OREX's founding VC, has upped its stake in OREX through a series of recent share purchases on the open market, according to a series of Forms 4 filed with the SEC on November 24.  The purchases total just over 400,000 shares at $6.93 per share for a market value of nearly $2.8 million dollars, or about 6.9% of OREX's market cap of $40 million.

OREX's Chairman, Eckard Weber, M.D., is a partner in Domain Partners, and Brian Dovey, another Domain partner, also sits on OREX's board.  Domain may well have good reason to believe that the $6.50-$7 per share range around which the stock has traded for the last month is a good buy-in point.

Like a lot of people, I regard insider buys as stronger indicators (bullish ones) than insider sells are (bearish ones).  This is because insiders often have a high proportion of their net worth tied up in a company, and even if they don't, may still have all kinds of reasons to sell (a divorce, an aging parent's care or plain old diversification).  By contrast, there is usually only one reason to buy.

On past occasions, some investors have found Domain's Form 4 filings a little confusing, but they don't have to be. 

Usually I don't dwell much on Amylin (AMLN) because with at least 15 sell-side analysts covering it and all kinds of press, I don't see that the investing community is clamoring for another opinion.  However, today a few good little obesity calls do seem to be getting lost in the hullabaloo.

A second set of Phase IIB results for Orexigen's (OREX) second weight-loss combination drug, Empatic, was released Wednesday.  Two days later OREX and its two main competitors Arena Pharmaceuticals (ARNA) and Vivus Inc. (VVUS) are all down slightly. 

Some wag said that VVUS went up immediately on the OREX Empatic news because Empatic prospects had been overhanging the share price of VVUS -- clearly a burst of creativity.  No doubt the Booker Prize for fiction will be sent over to a certain brokerage firm in short order.  

OREX's news was actually fine and bodes well for partnership.  Mean weight loss at the high dose of Empatic was 6.1% placebo-adjusted over 24 weeks (ITT-LOCF).  As expected, efficacy and safety data were good, reasonably comparable to earlier Phase IIb results and to OREX's flagship drug Contrave.  Efficacy did not plateau at 24 weeks, and was better in combination than either of Empatic's constituent drugs alone. 

OREX now envisions the entire obesity franchise, essentially its two late-stage drug candidates Contrave and Empatic, being offered in a single partnership and marketed in a complementary way, with Contrave as the first-line therapy.  Empatic will likely carry a Class C pregnancy warning, as zonisamide now does, marking it as unsuitable for use by women who may become pregnant.  To put this in perspective, women who weigh 200+ pounds like many patients in these trials are often counseled by doctors to lose weight before trying to become pregnant.

A second set of Phase IIB results for Orexigen's (OREX) second weight-loss combination drug, Empatic, was released this morning, to a resounding -- um, a resounding whatever the sound of high expectations being met is, maybe a subdued high-five.  The stock price has barely wiggled so far today, since all this good news was apparently priced in.

Mean weight loss at the high dose of Empatic was 6.1% placebo-adjusted over 24 weeks (ITT-LOCF).  As expected, efficacy and safety data were good, and reasonably comparable to the earlier Phase IIb results and to OREX's flagship drug Contrave.  Efficacy did not plateau at 24 weeks, and was better in combination than either of the constituents alone. 

This bodes well for partnership.  OREX now envisions the entire obesity franchise, which is essentially its two late-stage drug candidates Contrave and Empatic, being offered in a single partnership and marketed in a complementary way, with Contrave as the first-line therapy in most cases.  Empatic will likely carry a Class C pregnancy warning, as zonisamide now does, marking it as unsuitable for use by women who may become pregnant.

While OREX sometimes has focused reporters' and analysts' attention on completer data -- that is, data only from patients who completed the trial -- the FDA looks at a stricter standard, "intent to treat, last observation carried forward" (ITT-LOCF) data.  In this stricter method, patients who began the trial but then dropped out are included in the final analysis as well. 

However, even using the ITT-LOCF method, high-dose Empatic handily meets the FDA efficacy guidelines, and over a 53-week period both doses would likely meet both guidelines.  (Technically, a drug has to jump only one of the two hurdles for approval, although seemingly hardly anyone in the analyst community had noticed this until OREX brought out its first Contrave Phase III results and pointed this out.)

The first efficacy guideline is that overall mean weight loss for patients taking the drug must be at least 5% over 52 weeks. The high dose of Empatic had 6.1% placebo-adjusted weight loss, as noted above.  Low-dose patients lost 4.7% over 24 weeks.

The second is a "categorical guideline."  The "categorical guideline" says that at least 35% of the patients on the drug must lose 5% or more of their body weight, and that this proportion must be at least approximately twice that of placebo.  The idea is to give a fighting chance to drugs that may have a smaller population of strong responders -- i.e. they work like gangbusters for some subgroup but do little for everyone else.

Heads up! Orexigen (OREX) is to release Phase IIB data for its second weight loss drug Wednesday morning before market open, then hold a conference call at 8:30 a.m. ET.  Empatic weight loss results have been somewhat better than those for OREX’s other drug Contrave so far, but it is about a year farther back in development.

As a reminder, both these drugs are combinations of existing, approved drugs available in generic form, with a view toward treating obesity as a disease of the central nervous system.  Empatic is a combination of zonisamide sustained release (SR)/bupropion (Wellbutrin) SR, while Contrave is a combination of bupropion SR/naltrexone SR.  Zonisamide is used for adjunctive treatment of partial seizures, a form of epilepsy.  Its precise mechanism of action is unknown. 

What we should be hearing about tomorrow is results from OREX’s second Phase IIb trial, a 24-week study on healthy, non-diabetic, obese patients.  This is the first trial in which Empatic has been reformulated with sustained-release components to allow a single daily dose and reduce side effects.  

The single daily dose is a bigger deal than one might think at first glance.  Many obese patients, even supposedly “uncomplicated” obese patients like those in this study, take all sorts of pills and drugs already, some of which have to be taken apart from one another, or on an empty or full stomach, or as far from bedtime as possible -- so it really can make it much more feasible and practical to take another pill (in medical jargon, this is called “improve compliance”) if there is only one of it.

Previous results for Empatic were strong.  Mean weight loss (placebo-adjusted) was 7.5% at 24 weeks and 15% at 48 weeks, with, importantly, little sign of plateau.  While I don’t expect to see wildly different results from the new trial, it will certainly be noteworthy if we do.  Also, with all the hoopla that has surrounded recent announcements by competitors Vivus, Inc. (VVUS) and Arena Pharmaceuticals (ARNA), it can't be bad for OREX to pull the spotlight back toward itself for a while, and may even bring OREX to the attention of any new investors that have started to look at the obesity space lately.  (Although I think they should have noticed it before!)

Side effects were mild, with the most common being anxiety, nausea, insomnia and dry mouth.  In an earlier study, at the highest dose level, 16.9% of participants discontinued due to adverse effects (AE), while only 9.7% of the placebo arm discontinued due to AE.  This difference is not statistically significant.  We can expect plenty of questions about AE on the call though.

I expect the NDA for Empatic to be submitted in 2011, about a year after the Contrave NDA, which puts an expected FDA decision for Empatic in 2012.