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Spencer Osborne
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Spencer Osborne is founder of Satellite Standard Group [SSG], and a partner of Sirius Buzz ( Sirius Buzz covers the satellite radio industry as well as companies that do business in this sector. Sirius Buzz provides information and opinion to readers with an interest in... More
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  • Keep Comments Related To Subject Matter

    My response to your comment directed you here in the interest of efficiency. If you were directed here it is because your comment, statement, inquiry, or question contained substance that is not really relevant to the discussion, or would be distracting for other readers.

    Please refer to the list below for some detail:

    1. If your comment accuses me of being short the equity, the simple answer is that I am not. I typically do not play the short side of the market and as a rule NEVER write about equities that I short.

    2. If your comment insinuates that I am biased in some manner, you are certainly entitled to that opinion. As a rule, I do not let whether or not I am invested in an equity influence my opinion on that equity. I praise when praise is deserved, and I criticize when that is deserved. I tend to lean toward being conservative.

    3. If your comment is inquiring as to how many shares I have, then please understand something. The number of shares one has matters little. A very wealthy person can afford to buy more shares, but is actually taking less risk than someone with less shares. What may matter is how much of my portfolio I have in an equity. While not required to, I oft disclose a relative percentage of my portfolio that has exposure to an equity. I also am very clear in whether a play I make is modest or aggressive. Lastly, I am typically very transparent about my actions and actually telegraph them before making a trade.

    4. If your comment states that I must be on the payroll of a hedge fund, etc., you were likely sent here. I do not work for any hedge fund or entity. My writing is my own writing and no one directs what I write. Seeking Alpha is the only entity paying for my writing and even they do not dictate what I write or influence it. That being said, the Seeking Alpha payment model is very modest.

    5. If you are commenting on an investment I have in a different equity than the one that is being written about, you may have a response direct you here.

    6. If you are inquiring the disclose saying "I/We", then you were referred here. Seeking Alpha has many contributors. Some are individuals, others are companies or entities. In my case there is no "we". I am a sole proprietor of my writings.

    7. If you are making a trolling type comment that does not advance real and substantive discussion you will likely be referred here.

    8. If you state that "Spencer Osborne" is not my real name you will be sent here. My Name is indeed Spencer Osborne. I write under this name only. Many years ago I did write under a pen name. That name was Tyler Savery. I always make it clear that Spencer Osborne is my real name.

    9. If you are commenting that I am an identity on a message board, you will have been sent here. I do not post on message boards, and if I ever did it would be under the name Spencer Osborne. My personal belief is that if someone wants to write, they should not be a message board poster.

    10. If you attempt to misrepresent my investments or statements you will be sent here. I have been fully transparent on my trades and my opinions. If you are trying to misrepresent things, you are essentially trolling. Trolling will get a response that sends you here.

    The comments in articles can be a good place for the exchange of information, ideas, concepts, and even trading strategy. In an effort to keep the comment section as relevant as possible, I will be using this as a back-stop to clean up the dialogue. If you make a comment and get a response that sends you here, please take a look at your comment and see if there is a better and more tactful way to make it. Also consider whether or not it would be of value to other readers. You can certainly take an opportunity to rephrase your comment if you desire.


    Nov 04 2:02 PM | Link | 1 Comment
  • Arena: Belviq Sales Are Flat But Regain Second Place - Still Much Lower Than Needed

    Arena (NASDAQ:ARNA) investors can breathe a very small sigh of relief with the script numbers this week. After falling into third place in a race of three drugs last week, Belviq was able to edge out Qsymia from Vivus (NASDAQ:VVUS) with the sales figures this week. Belviq was 27 scripts better than Qsymia, but 3,657 scripts shy of what competitor Contrave from Orexigen (NASDAQ:OREX) posted.

    Belviq sales tallied the only gain among the three branded anti-obesity pills in the sector. That being said, selling 10,500 scripts this past week is well shy of what we need to see for sustained equity stability and appreciation.

    (click to enlarge)

    Chart Source - Spencer Osborne

    On a quarter over quarter basis the numbers remain depressing. Three weeks into Q4 has Belviq trailing the Q3 pace by 14.74%. Three months ago this week sales were at 12,000 scripts. Six months ago this week sales were at 14,800. Nine months ago this week sales were at 11,800. One year ago this week sales were at 12,200. The quarter over quarter story is not good, and at this stage Belviq is seeing bad year over year comparisons. The lack of a marketing effort by Arena's partner Eisai is impacting sales to a very strong degree.

    (click to enlarge)

    Source of Charts - Spencer Osborne

    In terms of market share, Belviq remains below a 30% share at 29.89%. This is the second week that Belviq market share is below 30% for branded anti-obesity pills in the United States. This week Belviq edged out Qsymia from Vivus which had a 29.83% share. The sector leader is Contrave at 40.29%. The bottom line here is that Contrave is selling 35% to 40% more scripts than either of its competitors. In my opinion it is critical that Belviq be able to stay above a 25% share in this space. If market share drops to much, it makes any deal relating to Belviq much more difficult to negotiate at terms that are half-way decent.

    (click to enlarge) Chart Source - Spencer Osborne

    One big issue is that if you apply a trend line to the three drugs in the space you can see that Belvioq is the only player trending downward. Qsymia is trending flat, and has actually had a very flat trajectory for the better part of 18 months. Contrave is still trending upward even though we will see that trajectory shift down a bit as Q4 is typically the weakest sales quarter in this sector. From a pure trend analysis standpoint, Belviq is demonstrating the least promise. In theory, by the end of this year, Belviq will be in third place.

    (click to enlarge)

    Chart Source - Spencer Osborne

    In looking at revenue, I anticipate that the trend downward will show through clearly in the upcoming Q3 report and even more clearly when Q4 is assessed. I anticipate that Q3 "royalty" revenue will be $500,000 less than Q3, and that Q4 "royalty" revenue will dip at least another $500,000.

    The bottom line here is that Arena is now reverting back to a more speculative play and that the street is already making assumptions that revenue from Belviq is not going to drive this equity. Management has laid out a bit of a focus on the pipeline, but at the same time has not yet updated investors on the hunt for a new CEO. There will be some technical ranges that this stock trades in, but any real movement is not likely to come from the sales of the ant-obesity pill Belviq. As stated earlier, it is quite paramount that Belviq be able to keep a respectable market share level. If market share dips to low, the street will see it as a clear signal that Contrave will walk away with this sector. That is not to say that the street will be vastly impressed with the sales of Contrave, but rather to say that Belviq will become more of a non-factor in the eyes of the street.

    In my opinion, investors in Arena need to base their decisions on the pipeline probabilities of success and consider Belviq as "neutral" to an investment thesis. There is a lot of news in the next 12 to 15 months anticipated on the pipeline. Arena as an investment can ill afford any of that news to be bad. The bottom line is the risk profile of Arena has ratcheted up a bit and the reward is reliant on a string of successes with the most near term pipeline candidates. Stay Tuned

    Nov 02 2:19 PM | Link | Comment!
  • Oprah Buys Weight Watchers Stake - Can That Actually Help Vivus, Arena, And Orexigen?

    Weight Watchers (NYSE:WTW) got a huge celebrity endorsement this week when media mogul Oprah Winfrey took a 10% stake in the company and joined its Board of Directors. The news sent shares of Weight Watchers up about 80%. The stock closed at $6.79 on Friday and currently trades over $12. Weight Watchers uses consulting, meal plans, and a support system to help people tackle weight loss, diet, and proper eating.

    This is the type of move that investors in Vivus (NASDAQ:VVUS), Arena (NASDAQ:ARNA), and Orexigen (NASDAQ:OREX) would love to see. These three companies all produce pills that work to control appetite in patients. All three drugs also offer a support system of one form or another as well. The big issue that all three of these companies face is slow sales and a lower than desired refill rate on prescriptions.

    Vivus makes the weight loss drug Qsymia, Arena makes Belviq, and Orexigen makes Contrave. All three drugs have struggled to meet sales expectations and prospects of these drugs being profitable seems distant.

    Vivus was unable to gain a marketing partner and has had sales that are very flat for well over a year now. The year over year growth for Qsymia this year looks like it will be in the 5% to 7% range. Qsymia was first to the market and launched 9 months before its competitor Arena. Qsymia weekly sales are at about 11,000

    Arena has partnered Belviq with Eisai. Sales of Belviq passed Qsymia pretty quickly and peaked at over 15,000 scripts per week back in April. Recently weekly sales have dipped to about 11,500 per week.

    Orexigen has partnered Contrave with Takeda and its product just came on the market a year ago. Contrave has had the most successful launch of the three drugs and weekly scripts are at about 15,000.

    All three of the pill companies are seeing sales that are 4 to 5 times less than what is really needed to excite the street. All three are in the same ballpark in efficacy and safety, and all three seem to have about the same dynamics in terms of new scripts vs. refills.

    Over the years there have been many fingers pointed as to why these pills have not lived up to market expectations. With between 80 million and 100 million U.S. patients that could qualify to take these drugs, just a very small portion are even willing to try. We have hear of insurance companies being the blame, management being to blame, doctors being the blame, and even the commitment of partners being to blame. It seems that the blame pie looks at everything but what may really be the issue.

    Allow me to be blunt. In my opinion the biggest issue with all of these drugs is that they carry an unclear message and people feel that they do not work well. Before investors in these companies chop off my head, let me go deeper.

    The biggest amount of weight loss in these drugs comes in the first 12 to 16 weeks of initiating treatment with them. The clinical trials show that indeed this is the case.

    (click to enlarge)

    Essentially, what is happening in many cases is that a patient starts the drug, lose some weight, and continues. In month two they lose weight again. The same happens in month three, and perhaps month four. At that point, the average patient sees a plateau of sorts, is not seeing weight come off like it was when they started, and seems to stop taking the drug.

    This dynamic is compounded by a couple of other factors. These drugs seem to work well in about 25% of the patients, work "okay" in another 25%, and 50% do not seem to respond. That means that "word-of-mouth" organic growth is challenged. For every person that raves, there will be a person who's testimonial will be that the drug does not work. A second compounding factor is that these drugs are designed to work in conjunction with proper diet and proper exercise. Essentially, these drugs are relying on the patient to do some work as well. That is something that is difficult for any of these companies to control. Each company has apps, programs, scales, counseling, etc. None of them seem to take it to the level that makes the numbers shift.

    In the end, what we have are three drugs that see the average patient stay on them for 3 months instead of an indefinite time table that makes the business model of these drugs work.

    This brings us full circle to the news of Oprah's involvement with Weight Watchers and whether or not this can spur an entire sector. My gut tells me that Oprah can help Weight Watchers in a very substantial way, particularly if she is active in the marketing campaign. My gut tells me that Oprah will get the word out about the importance of proper diet and exercise, but that this message will not really connect itself to Vivus, Arena, and Orexigen. Simply stated, the Oprah Factor will not really be a factor for the three branded pill products on the market.

    Now that I have taken the wind out of the sales of investors in this sector, I will perhaps put a little wind back. The first branded obesity drug to actually utilize the Weight Watchers program as part of its support mechanism will instantly see a massive shift in sales. Getting to that point is not easy. Cross branding prescription drugs with traditional products is a touchy subject. The key in such a deal is that the branded pill utilize Weight Watchers as a support arm for the diet, exercise, and counseling aspect. The cross-promotion is that Weight Watchers can implant information about the branded drug into its website, advertising and literature while stating clearly that a patient needs to consult their doctor.

    Can one of these weight loss companies pull off a deal with a company like Weight Watchers? Anything is possible, but investors need to be realistic. These branded pills need Weight Watchers more than Weight Watchers needs any of these companies. This means that Weight Watchers has the most leverage in such a discussion. In my opinion the company with the easiest path to a Weight Watchers deal is Vivus.

    For the first time since Qsymia was launched, the lack of a partner for Vivus is actually good. Vivus has the ability to construct and work on a deal without having to consider a partner. Arena has a partner in Eisai, and Eisai is responsible for marketing Belviq. This means that Eisai would need to strike a deal that works for Eisai. At the moment, Eisai is not making money on Belviq, and if it could, would probably love to renegotiate its deal with Arena to pay a bit less of a "royalty". Orexigen has a partner for Contrave with Takeda. Takeda, after seeing the massive challenges in the sector, used leverage of its own to renegotiate its deal with Orexigen. Orexigen has been unable to partner Europe despite Contrave being approved there. Simply stated, it would appear that Takeda is limiting its exposure in the sector rather than expanding it.

    Vivus has cut costs to the bone, is having trouble gaining traction on Qsymia, and recently saw a lot of its debt bought up at a discount by Carl Icahn. While I see the buying of debt as a predatory move, I do feel that the move is about gaining leverage. Icahn does happen to be a player that uses outside-of-the-box thinking to tap into potential. A Vivus and Weight Watchers deal could be very compelling. At this stage it is pure speculation, but in looking at the realities of the sector challenges, it should be clear (even if some do not want to admit it) that the ills of these pills is the refill rate and the number of refills the average person buys before dropping off. Stay Tuned!

    Oct 19 11:20 AM | Link | 4 Comments
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