Seeking Alpha

Chimera Researc...'s  Instablog

Chimera Research Group
Send Message
The founding members of Chimera Research Group have over 50 years of combined experience in the biotech and pharmaceutical sector. Their experience includes work at Investment Banks, Hedge Funds, Pharmaceutical Companies, top-tier Universities, and the U.S. Food and Drug Administration (FDA).... More
My company:
Chimera Research Group
My blog:
Chimera Blog
My book:
The Biotech Trader Handbook (2nd Edition)
  • Vivus Has a Hit with Qnexa 0 comments
    Jun 4, 2010 7:59 PM | about stocks: VVUS
    Obesity has a high prevalence in the US and is now frequently cited as being a national health issue. It is on the rise in almost every industrialized and some industrializing ones. There are currently no blockbuster weight loss drugs due to lack of efficacy, though many have failed due to unwanted side effects.
     
    Some statistics:
    33% population over 20 years of age in the US are considered obese, meaning BMI >30. 14% have BMI >35, 6% BMI >40. A BMI >40 is considered morbidly obese. With 72% US population over age 20 and 33% of these obese, the addressable population is 52.7 million individuals in the US alone.

    A recent 10 year NEJM study of 527,265 individuals showed obesity increased the risk of death in otherwise healthy individuals by between two and three fold for both men and women. A 2005 CDC report states 112,000 deaths in the US are due primarily to obesity related causes. Treating a single person annually for obesity is cited as costing $1723

    Weight loss drugs are no longer considered “cosmetic”; they treat real health and quality of life issues. Weight loss in the range achieved with Qnexa have been shown to improve the risk of developing diabetes and improve cardiovascular health. These benefits will likely be considered along with the degree of weight lost when the FDA convenes to consider Qnexa’s NDA filing.

    GSK’s Xenical has a wholesale cost of about $2000/yr. It’s accompanied by gas, oily discharge, possible liver damage, and iffy efficacy. Even with that- Xenical together with little sister Alli, containing half the active ingredient, orlistat, have managed over $650 million sales in 2009.

    When Acomplia from Sanofi came around in 2007, analysts were estimating worldwide peak sales of $7 Billion, 10 times that of Xenical for an increase in efficacy from 3% to 5% weight loss. Unfortunately, Acomplia was never approved in the US due to its strong link to depression.

    There’s a very large untapped market for a safe and effective weight loss drug. Qnexa fits the bill.

    Let’s look at the results
    Vivus has run two large Phase III trials for Qnexa for the treatment of obesity: EQUIP examined Qnexa in a population of 1267 morbidly obese patients, comparing three doses of Qnexa vs. placebo; CONQUER examined Qnexa in 3750 overweight and obese patients with two doses of Qnexa vs. placebo. In both of these 56-week trials, all patients were asked to cut 500 calorie/day from their diet and advised to implement a simple lifestyle modification program. (Results for all doses not shown)
     
    EQUIP trial of morbidly obese patient
                                           ITT-LOCF                      Completers
                        ---------------------------- ----------------------------
                                  Qnexa      Qnexa              Qnexa      Qnexa
        EQUIP (OB-302) Placebo Low Dose Full Dose Placebo Low Dose Full Dose
        56 Weeks        (n=498) (n=234)    (n=498)   (n=241) (n=138)   (n=301)
        -------------- ------- -------- --------- ------- -------- ---------
        Mean Weight
         Loss (%)         1.6%     5.1%*     11.0%*     2.5%    7.0%*      14.7%*
        Greater than
         or equal to
         5% weight
         loss rate         17%      45%*       67%*      26%     59%*        84%*

     CONQUER trial of overweight and obese patients
     
                                           ITT-LOCF                      Completers
                        ---------------------------- ----------------------------
                                  Qnexa      Qnexa              Qnexa      Qnexa
        CONQUER (OB-303) Placebo Mid Dose Full Dose Placebo Mid Dose Full Dose
        56 Weeks        (n=979) (n=488)    (n=981)   (n=564) (n=344)    (n=634)
                        -------- -------- --------- ------- -------- ---------
        Mean Weight
         Loss (%)         1.8%     8.4%*     10.4%*     2.4%* 10.5%*      13.2%*
        Greater than
         or equal to
         5% weight
         loss rate         21%      62%*       70%*      26%     75%*        85%*

    *p<0.0001 vs. placebo

    ITT-LOCF: Intent-to-treat with last observation carried forward

    In these two trials, completion rates of up to 69% were significantly higher than placebo at all three doses of Qnexa. Another way to put this is more patients on placebo dropped out from the trial than patients getting Qnexa. For full dose Qnexa, patients who completed the trial had a mean placebo-adjusted greater than 10% weight loss in both trials. That’s pretty impressive. These results are on par with the infamous Fen-Phen combo, without the heart-valve disease.
     
    A separate Phase III trial, EQUATE, of 28-week duration in 756 patients also showed good activity. Patients taking full-dose and mid-dose Qnexa achieved an average weight loss of 9.2 percent and 8.5 percent, respectively, as compared to 1.7 percent reported for the placebo group
    These are the side effects listed from the trial:
     
    • 15-20% reported paresthesia (a feeling of “pins and needles” on the skin) versus 3% in the placebo group
    • 12-18% reported dry mouth versus 0% in the placebo group
    • 8-15% reported altered taste versus 0% in the placebo group
    • 6-11% reported constipation versus 6 percent in the placebo group
    • 0.9-1.9% reported depression and altered mood versus 1.8 percent in the placebo group
    Not noted in the EQUATE results, but difficulties with attention and memory led less than 2% of patients on high dose Qnexa in the EQUIP and CONQUER trial to drop out.

    Altogether, 5773 patients have been tested in Phase III alone for Qnexa in obesity. Phase IIs trials for diabetes and sleep apnea are ongoing. There should be more than enough data to put to rest any safety skeptics. Qnexa may not be Tylenol, but it treats serious problems with a very good safety profile.
    What size the market

    GSK and Roche have been able to enlarge the market for Xenical by cutting the pill in half to create Alli. While Xenical is prescription only and is for clinically obese, Alli is for all overweight. Vivus certainly has its eye on the overweight market as well as the obesity market as seen by its CONQUER trial which enrolled both the overweight and obese.

    The following uses conservative assumptions and looks only at the obesity market: The weight loss drug market is very small due to the lack of safe and efficacious drugs. It is estimated only 2% of Americans use weight loss drugs at all. Any good drugs would grow this market enormously. The obesity market is even more underserved than the overweight market. Sales of Xenical have fallen recently with reports of liver injuries and even death. If Qnexa even manages just 1% of the obesity market, at Xenical’s price of approximately $2000, that’s $1 Billion in the US alone.

    Of course, Qnexa is far more efficacious than Xenical. A 10% weight loss will provide huge benefits to both the physical and mental health of an obese individual. Tingly skin, dry mouth, altered taste? Try preventing or improving diabetes, improving cardiovascular health, improving sleep apnea, and looking better. Also, Qnexa will be seeking to gain sales in the overweight market.

    There looks to be some upside to this estimate.


    Disclosure: Long VVUS
    Themes: Vivus, Qnexa, Obesity Stocks: VVUS
Back To Chimera Research Group's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • $CELG $CELG Abraxane ph 3 pancreatic cancer trial shows stat sig improvemnt in overall survival! Suggested this back in June for subscribrs
    Nov 10, 2012
  • We are big believers in $PCYC, $MDVN, $INCY, $SGEN and more.
    Jul 10, 2012
  • $CHTP: 700 call contracts traded today. speculative interest returning...?
    Aug 10, 2010
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.