As an investor and writer with no financial stake in any of the companies involved, watching the message board battles between Arena (ARNA) and Vivus (VVUS)
shareholders is good theater. Both companies have FDA-approved drugs on
the market that are effective in helping obese people lose weight, but
neither Arena's Belviq nor Vivus's Qsymia look like "the one obesity
drug to rule them all". Belviq is hampered by modest efficacy, while
Qsymia can produce scary side effects and has a more limited marketing
effort behind it.
Quite frankly, though, the Arena-versus-Vivus
battle may ultimately be just the undercard for the real battle. A
private biotech company by the name of Zafgen has drug in
clinical testing that has shown very impressive efficacy and solid
safety, and happens to work by a completely different mechanism than
biotech and pharma companies have pursued so far. While Arena and Vivus
likely have at least three years before Zafgen's drug becomes a clear
and present danger, investors in those companies may want to consider
the risk that their parties could be brought to a premature end if
Zafgen can continue to produce such strong data.
Please continue to the full piece here:
Forget Arena Vs. Vivus - Zafgen May Be The Ultimate Winner
Showing posts with label Orexigen. Show all posts
Showing posts with label Orexigen. Show all posts
Friday, June 28, 2013
Thursday, June 28, 2012
Investopedia: Arena Pharmaceuticals - One Huge Step Forward, But Many More Remain
Patient (or long-suffering, depending upon your point of view) Arena Pharmaceuticals (Nasdaq:ARNA)
shareholders got some major validation on June 27, 2012, when the
company announced that the FDA had formally approved the company's
weight-loss drug, Belviq (aka lorcaserin). With a commercial launch with
marketing partner Eisai expected around the end of the
year, investor attention now shifts to the questions of whether Belviq
will prove popular with doctors and patients, whether it will get
adequate reimbursement, and what the total market potential will
ultimately be.
Read more here:
http://stocks.investopedia.
Read more here:
http://stocks.investopedia.
Friday, April 27, 2012
Seekin Alpha: Novo Nordisk Finally Looks (Slightly) Mortal
To whom much valuation is given, much is expected. That's about the only sense in which Novo Nordisk (NVO)
disappointed anybody this quarter. While this highly-focused
pharmaceutical company has been enjoying phenomenal success in diabetes,
investors may just want to check into the estimates that underpin the
valuation before committing their capital to these shares.
Please follow this link for more:
Novo Nordisk Finally Looks (Slightly) Mortal
Please follow this link for more:
Novo Nordisk Finally Looks (Slightly) Mortal
Friday, February 24, 2012
Seeking Alpha: Vivus's Qnexa And Its Potential Value
Vivus's (VVUS) chances of getting FDA approval for Qnexa, its investigational drug combination for obesity, have never looked better. To suggest that the process has been difficult would be to say that War and Peace is a little wordy or that Michael Jordan could play a little ball.
Nevertheless, a surprisingly positive panel vote has investors excited that the FDA very well may approve the first prescription drug for obesity in over a decade. The question investors may want to ask then, aside from what the chances are that the FDA goes along with its panel, is how much appreciation potential may be left in the shares.
Please read the full piece here:
Vivus's Qnexa And Its Potential Value
Nevertheless, a surprisingly positive panel vote has investors excited that the FDA very well may approve the first prescription drug for obesity in over a decade. The question investors may want to ask then, aside from what the chances are that the FDA goes along with its panel, is how much appreciation potential may be left in the shares.
Please read the full piece here:
Vivus's Qnexa And Its Potential Value
Tuesday, September 20, 2011
Investopedia: Vivus Tries A New Path
If at first you don't succeed, keep trying until the money runs out. That would seem to be the underlying strategy at Vivus (Nasdaq:VVUS), as this biotech continues to try to find a successful path to FDA approval for its obesity drug Qnexa. With news that the FDA may be more amenable to a different label, investors may have some reason for cautious optimism that a new obesity drug could actually hit the market within the next 12-18 months.
If You Can't Beat 'em, Avoid 'em
One of the issues that has held up FDA approval of Qnexa (a new combination of previously approved drugs phentermine and topiramate) is the known birth defect risks of topiramate and the possibility that this new combination drug could have similar (or perhaps even worse) risks of teratogenicity. What makes this issue more complicated, though, is the fact that much of the birth defect data on topiramate was generated from women who also had epilepsy - and epilepsy is a known risk factor for birth defects.
To read more, click below:
http://stocks.investopedia.
If You Can't Beat 'em, Avoid 'em
One of the issues that has held up FDA approval of Qnexa (a new combination of previously approved drugs phentermine and topiramate) is the known birth defect risks of topiramate and the possibility that this new combination drug could have similar (or perhaps even worse) risks of teratogenicity. What makes this issue more complicated, though, is the fact that much of the birth defect data on topiramate was generated from women who also had epilepsy - and epilepsy is a known risk factor for birth defects.
To read more, click below:
http://stocks.investopedia.
Monday, May 30, 2011
Investopedia: Arena's New Data Doesn't Change Obesity Pill Outlook
It is understandable that long-suffering Arena Pharmaceuticals (Nasdaq:ARNA) would react very positively to an almost sign of good news. After all, this company's stock has taken a pounding in the wake of the FDA's rejection of the company's drug lorcaserin for obesity. While any positive news relating to efficacy certainly does not hurt the prospects for refiling the drug application and eventually gaining approval, Thursday's news does not solve Arena's biggest problems.
Is Meta-Analysis the Same as Data Mining?
On Thursday morning, Arena announced data from meta-analyses of three of the trials for lorcaserin. This data was presented at the European Congress on Obesity and indicated that almost half of patients taking two 10mg doses a day saw more than 5% weight loss, more than double the rate of response in the placebo group. More than one-fifth of those same patients saw better than 10% weight loss; nearly triple the response seen in the placebo group.
Unfortunately, most observers are going to regard this data with a shrug. Clauses like "Modified intent-to-treat with last observation carried forward" are tantamount to data mining in many people's eyes, and the FDA has been very aggressive in rejecting such analyses. This is not to say that lorcaserin doesn't work; rather it just seems unlikely that the FDA is going to revise its viewpoint that lorcaserin offers "marginal efficacy" on the basis of a new look at old data (as opposed to a new study showing better outcomes).
To continue, follow the link:
http://stocks.investopedia.
Is Meta-Analysis the Same as Data Mining?
On Thursday morning, Arena announced data from meta-analyses of three of the trials for lorcaserin. This data was presented at the European Congress on Obesity and indicated that almost half of patients taking two 10mg doses a day saw more than 5% weight loss, more than double the rate of response in the placebo group. More than one-fifth of those same patients saw better than 10% weight loss; nearly triple the response seen in the placebo group.
Unfortunately, most observers are going to regard this data with a shrug. Clauses like "Modified intent-to-treat with last observation carried forward" are tantamount to data mining in many people's eyes, and the FDA has been very aggressive in rejecting such analyses. This is not to say that lorcaserin doesn't work; rather it just seems unlikely that the FDA is going to revise its viewpoint that lorcaserin offers "marginal efficacy" on the basis of a new look at old data (as opposed to a new study showing better outcomes).
To continue, follow the link:
http://stocks.investopedia.
Saturday, February 12, 2011
The MannKind Eulogy
I'm hardly the first (nor likely the last) to write what amounts to a eulogy for MannKind (Nasdaq: MNKD) after this week's earnings report and conference call. With too little cash on hand, too much still to do with respect to clinical studies, and a great deal of uncertainty about funding or partnering opportunities, it is clearly dark times for this company and its ongoing survival is hardly a sure thing.
Looking At The Balance Sheet
First thing's first, the company's earnings report was in some respects typical for a biotech – that is, the concern was all about the cash on hand and the cash burn. To that end, the company ended the period with $70 million in cash and still has access to a further $98 million drawdown.
In order to minimize the cash consumption and stretch out survivability, the company is cutting 41% of its workforce. At this point, MannKind is pretty much just be keeping the so-called “essential personnel” for getting Afrezza through the clinic and is putting the cancer vaccine programs on the backburner.
The End Of Easy Money?
None of that is terribly surprising. More concerning, though, was founder Al Mann's unwillingness to publicly commit himself to further funding of the company. MannKind exists in large part only because of Al Mann's wealth and if that spigot is now off the company is clearly looking at much more onerous funding terms in the future.
Honestly, I'm not sure how anyone could really be surprised by this. Self-made billionaires don't get that way because they're stupid or because they routinely throw money down bottomless pits. More to the point, there has to be a point of pain for even the most avid believer and Al Mann likely has to face a difficult decision about whether he wants to risk any more of his wealth (and the money he can give to his foundations) on what may be a doomed idea.
The Path To Go Forward
So where does the company go now? Management should be commended for being quite clear about what they think needs to be done to secure approval, and how long those steps will take. To wit, management laid out a clear path of about 15 months for a new submission. Assuming a decent FDA review period (and no particularly ridiculous delays for labeling decisions and what not), that would put the decision date at around the end of 2012/beginning of 2013.
Can MannKind get there without more money? All of the analysts seem to say “no”, saying that the company has enough money to get through the end of 2011, but not beyond that. I think that may be a little too negative – I think its *possible* (but NOT probable) that the company could stretch their funding beyond that, but a lot of it will have to do with just how large these final trials have to be to appease the FDA. One way or another, though, the company will need more resources to survive to launch day.
Partners?
It was also interesting to hear the company continue to talk about partnering prospects; suggesting that there were multiple parties with at least some level of serious interest. Obviously, the company didn't name names, or was management very willing to talk specifics about what sort of deal they would find acceptable.
In terms of deals, MannKind is really over a barrel right now. It is unlikely that any Big Pharma CEO or VP would put his butt on the line and give a large upfront cash payment to MannKind when Afrezza has already been subject to two Complete Response Letters. At this point, then, MannKind investors should probably look at examples like Arena's (Nasdaq: ARNA) deal with Eisai for Lorqess or the deal between Orexigen (Nasdaq: OREX) and Takeda – deals that committed the larger partners to very little in the way of upfront cash and with all of the upside to the biotech on the back end.
That is not to say that nobody places any value on Afrezza. Even with past failures in inhaled insulin, I could see Sanofi-Aventis (NYSE: SNY), NovoNordisk (NYSE: NVO) and Lilly (NYSE: LLY) all being interested in Afrezza as a way of rounding out (and protecting) their diabetes franchises. The sticking point, though, is price and the structure of the deal. Any company that offers MannKind more upfront cash than is necessary to get Afrezza through the FDA is going to have to explain itself to an angry shareholder base if/when Afrezza fails again. Likewise, I cannot imagine that any company not currently engaged in diabetes is going to touch this drug – why build out a sales force for a drug that may not get approved or find much commercial acceptance?
What might a deal look like? If MannKind strikes a deal before FDA approval, I would expect a modest upfront cash payment – likely just enough to fund the remainder of the drug's development expenses, plus a milestone for approval – and a relatively large royalty on the backend. The sooner the company does the deal, the larger the upfront payment and presumably the smaller the backend royalty.
Unfortunately, the company does not have many other obvious options. The remainder of the company's pipeline is very early stage and likely not worth much in a sale. More to the point, I do not see any way that the company could sell its GLP-1 or cancer vaccine programs for enough cash to fully fund Afrezza through approval. So why bother? Why sell a future option for pennies on the dollar when those pennies won't really spell the difference between success and failure?
The Bottom Line
I've never been positive on inhaled insulin or MannKind and that's not changing today. I simply do not think the market is as large or promising as the bulls believe, and I base that on over a decade of following the diabetes market. Moreover, let's not forget that this is a company with a $500 million market cap and a $1 BILLION enterprise value. That is a pretty huge valuation for a very iffy product – Seattle Genetics (Nasdaq: SGEN) has what may be an incredible drug for lymphoma and trades at an EV of $1.3 billion,
I'm sure that anybody still owning MannKind today is not going to be easily swayed, and I don't really mean to change their mind. I just think that for me, MannKind does not make any sense as a stock when the company sports a billion-dollar valuation.
Wednesday, December 8, 2010
FDA's Bizarro World - Orexigen Gets Panel Approval
Welcome to Bizarro World, courtesy of the FDA. At the beginning of 2010, there was a widespread belief that Vivus (Nasdaq:VVUS) would get approval for its obesity drug Qnexa and that Arena Pharmaceuticals' (Nasdaq:ARNA) lorcaserin had at least a fighting chance; Orexigen (Nasdaq:OREX) was the long-shot candidate with its drug Contrave. When FDA panels subsequently voted down both Qnexa and lorcaserin and the FDA followed up with complete response letters (rejections), most observers thought Contrave had little chance.
Late on Tuesday, the FDA's panel reviewing Contrave voted 11-8 to recommend approval. That is a huge win for Orexigen. It also looks to be a boon for Vivus and Arena as well, though, as it raises the possibility that these companies will eventually convince the FDA to grant approval.
Going Through the Details
Contrave is a combination drug that blends the long-approved drugs naltrexone (originally approved to treat addiction) and bupropion (depression) into a single sustained-release treatment. Contrave missed one of the FDA's efficacy benchmarks (an average of 5% weight loss), but surpassed the other (35% or more patients achieving 5% or better weight loss). In terms of safety, the trials have shown some risks relating to blood pressure, but far and away the worst side-effect was nausea (which has led as many as one-quarter of patients in trials to drop out). (For more, see Orexigen Finds A Cautious Partner.)
Please follow the link for the full piece:
http://stocks.investopedia.
Thursday, October 21, 2010
Trick or Treat for Biodel?
Biotech CEOs should be forgiven if they feel like the FDA has turned almost every day into Halloween. Companies ranging from Jazz Pharmaceuticals (Nasdaq:JAZZ) to Alexza Pharmaceuticals (Nasdaq:ALXA) to the obesity triumvirate of Vivus (Nasdaq:VVUS), Arena (Nasdaq:ARNA), and Orexigen (Nasdaq:OREX) have all seen the scarier side of the FDA drug approval process lately. The FDA has handed out rejections to the first two, panels have recommended against the next two, and Orexigen has been batted around by investors who wonder if the FDA (or its panel) will take out their knees next.
All in all, it is easy to understand why shareholders of biotech Biodel (Nasdaq:BIOD) would be nervous these days. Although the company's Linjeta insulin could be a blockbuster for the company, problems with a pivotal study and an October 30 FDA PDUFA date have investors wondering if they are going to be left waiting in vain for the Great Pumpkin on Halloween.
Please click the link for the full text:
http://stocks.investopedia.com/stock-analysis/2010/Trick-Or-Treat-For-Biodel-BIOD-HALO-SNY-LLY-NVO1021.aspx
All in all, it is easy to understand why shareholders of biotech Biodel (Nasdaq:BIOD) would be nervous these days. Although the company's Linjeta insulin could be a blockbuster for the company, problems with a pivotal study and an October 30 FDA PDUFA date have investors wondering if they are going to be left waiting in vain for the Great Pumpkin on Halloween.
Please click the link for the full text:
http://stocks.investopedia.com/stock-analysis/2010/Trick-Or-Treat-For-Biodel-BIOD-HALO-SNY-LLY-NVO1021.aspx
Saturday, October 9, 2010
Will Amylin Succeed Where Other Obesity Drugs Fail?
With Vivus (Nasdaq: VVUS) and Arena (Nasdaq: ARNA) going down in flames during FDA panel meetings for their obesity drugs, and Orexigen (Nasdaq: OREX) widely expected to incur a similar fate, the near-term outlook for effective obesity drugs is poor.
Enter Amylin (Nasdaq: AMLN).
Amylin is best known for Byetta, the first-of-its-kind GLP-1 receptor agonist analog. Also known as exenatide, Byetta was derived from research on gila monster spit and has been a relatively successful drug for Amylin and its partner Lilly (NYSE: LLY). Now investor attention has moved on to the company's long-acting version of exenatide called Bydureon. Due to be approved by the FDA any day now, this should be a formidable competitor in a billion-dollar-plus market.
But that is not all that makes Amylin interesting. The company has a promising combination drug therapy for obesity that is currently not getting very much attention. In a 26-week Phase 2 study, a combination of pramlintide and metreleptin showed significant weight loss efficacy - patients in the highest dose group had an average weight loss of 11% (about 22 lbs). Better still, the effect endured in a subsequent 26-week follow-up, while placebo patients experience weight re-gain.
Takeda partnered with Amylin for obesity drugs back in 2009, and the companies are putting this combo therapy into a Phase 3 trial. What makes this even more encouraging is that side-effects were pretty moderate (some injection site reactions and nausea) and there was apparently none of the psychological or cardiovascular effects that so worry the FDA. On top of that, half of the active combination (pramlintide) has been on the market for years, marketed as Symlin by Amylin for Type 1 and Type 2 diabetes. It is not a very successful drug, but the safety profile is pretty well known now, and that should help the FDA's comfort level if the drug makes it that far.
Now, this is an injected drug combo and that is going to limit the popularity to some extent. Still, I have to think that an effective weight loss aid is going to overcome needle-fear for a meaningful percentage of the target population.
Best of all, this could be the *only* new approved drug (if it gets approved, of course) on the market ... and that could be worth literally billions. So even if Amylin has to deal with competition in the GLP-1 space (and they do), they could have an arguably more lucrative drug on their hands if this combo works.
Oh, and for those who might be wondering ... yes, metreleptin is related to the work on the leptin hormone that Amgen (Nasdaq: AMGN) did years ago (remember the "fat mouse" and the "skinny mouse"?). As it turns out, leptin is not very helpful or effective as monotherapy, but it seems to have some pretty compelling synergies when given with some other compounds. If this works, Amgen will get a piece of the pie, though not a very large one.
I am not sure that I would buy Amylin just for this obesity drug candidate. Then again, it could very well be an important answer to the inevitable question of "ok, now what?" that will spring up once Bydureon is on the market. Of course, Lilly may just elect to take them out before then.
All in all, I think you can buy Amylin here and do pretty well. And who knows? Amylin wouldn't be the first example of a company to win a battle (in this case, a next-gen obesity drug) when most handicappers didn't even have them in the running.
Disclosure - I own shares of Amylin.
Enter Amylin (Nasdaq: AMLN).
Amylin is best known for Byetta, the first-of-its-kind GLP-1 receptor agonist analog. Also known as exenatide, Byetta was derived from research on gila monster spit and has been a relatively successful drug for Amylin and its partner Lilly (NYSE: LLY). Now investor attention has moved on to the company's long-acting version of exenatide called Bydureon. Due to be approved by the FDA any day now, this should be a formidable competitor in a billion-dollar-plus market.
But that is not all that makes Amylin interesting. The company has a promising combination drug therapy for obesity that is currently not getting very much attention. In a 26-week Phase 2 study, a combination of pramlintide and metreleptin showed significant weight loss efficacy - patients in the highest dose group had an average weight loss of 11% (about 22 lbs). Better still, the effect endured in a subsequent 26-week follow-up, while placebo patients experience weight re-gain.
Takeda partnered with Amylin for obesity drugs back in 2009, and the companies are putting this combo therapy into a Phase 3 trial. What makes this even more encouraging is that side-effects were pretty moderate (some injection site reactions and nausea) and there was apparently none of the psychological or cardiovascular effects that so worry the FDA. On top of that, half of the active combination (pramlintide) has been on the market for years, marketed as Symlin by Amylin for Type 1 and Type 2 diabetes. It is not a very successful drug, but the safety profile is pretty well known now, and that should help the FDA's comfort level if the drug makes it that far.
Now, this is an injected drug combo and that is going to limit the popularity to some extent. Still, I have to think that an effective weight loss aid is going to overcome needle-fear for a meaningful percentage of the target population.
Best of all, this could be the *only* new approved drug (if it gets approved, of course) on the market ... and that could be worth literally billions. So even if Amylin has to deal with competition in the GLP-1 space (and they do), they could have an arguably more lucrative drug on their hands if this combo works.
Oh, and for those who might be wondering ... yes, metreleptin is related to the work on the leptin hormone that Amgen (Nasdaq: AMGN) did years ago (remember the "fat mouse" and the "skinny mouse"?). As it turns out, leptin is not very helpful or effective as monotherapy, but it seems to have some pretty compelling synergies when given with some other compounds. If this works, Amgen will get a piece of the pie, though not a very large one.
I am not sure that I would buy Amylin just for this obesity drug candidate. Then again, it could very well be an important answer to the inevitable question of "ok, now what?" that will spring up once Bydureon is on the market. Of course, Lilly may just elect to take them out before then.
All in all, I think you can buy Amylin here and do pretty well. And who knows? Amylin wouldn't be the first example of a company to win a battle (in this case, a next-gen obesity drug) when most handicappers didn't even have them in the running.
Disclosure - I own shares of Amylin.
Monday, September 20, 2010
FDA To Obesity Drugs: Drop Dead
Lorcaserin, Arena Pharmaceutical's (Nasdaq:ARNA) experimental obesity drug, was not necessarily the last best hope for new obesity medications, but a 5-9 panel vote against recommending FDA approval is a pretty clear indication that the standards for obesity drugs are exceptionally high. This ruling is not altogether shocking in the wake of Vivus' (Nasdaq: VVUS) similar rejection on Qnexa, but it should certainly have Orexigen (Nasdaq:OREX) shareholders feeling nervous when their company's number comes up.
Why The Panel Said "No"Are
It was clear from listening to the proceedings that many panelists had issues with the efficacy and safety of the drug, as well as how Arena went about designing the trials and performing the statistical analysis. If I may be so bold, though, it sounded like at least a few panel members went in locked and loaded with a mindset against this drug and judging by their comments and concerns, it is difficult to foresee just how good a drug would have to be to get their blessing. (For more, see Arena's Big Day Looms Large.)
To read the full piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/FDA-To-Obesity-Drugs-Drop-Dead-ARNA-VVUS-OREX-PFE0920.aspx
Why The Panel Said "No"Are
It was clear from listening to the proceedings that many panelists had issues with the efficacy and safety of the drug, as well as how Arena went about designing the trials and performing the statistical analysis. If I may be so bold, though, it sounded like at least a few panel members went in locked and loaded with a mindset against this drug and judging by their comments and concerns, it is difficult to foresee just how good a drug would have to be to get their blessing. (For more, see Arena's Big Day Looms Large.)
To read the full piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/FDA-To-Obesity-Drugs-Drop-Dead-ARNA-VVUS-OREX-PFE0920.aspx
Wednesday, September 15, 2010
Arena's Big day Looms Large
For investors who believe in the predictive power of Wall Street, things are not looking good for Arena Pharmaceuticals (Nasdaq: ARNA), the small biotech that is facing an FDA panel meeting for its potential obesity drug lorcaserin. Amidst downgrades and worries about FDA concerns regarding safety and efficacy, Arena shares were off more than a third midday Tuesday. This follows in the wake of the surprising recommendation against approval in July for Vivus' (Nasdaq:VVUS) drug Qnexa and widespread uncertainty regarding Orexigen's (Nasdaq:OREX) Contrave.
Is the Data Good Enough?
The biggest problem for Arena is the efficacy data. Although the one-year efficacy data on lorcaserin is okay, it is no blockbuster. More than 47% of patients who took lorcaserin in the BLOOM trial lost 5% or more of their baseline weight (versus about 20% in the placebo group), with an average loss of 5.8%. More than one in five people who took Lorcaserin saw better than 10% weight loss.
Please click below to continue to the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Arenas-Big-Day-Looms-Large-ARNA-VVUS-OREX0915.aspx
Note: The editors at Investopedia made a small error here in the original version, capitalizing "lorcaserin", "valvulopathy", and "fenflueramine". That should all be changed and corrected soon.
Is the Data Good Enough?
The biggest problem for Arena is the efficacy data. Although the one-year efficacy data on lorcaserin is okay, it is no blockbuster. More than 47% of patients who took lorcaserin in the BLOOM trial lost 5% or more of their baseline weight (versus about 20% in the placebo group), with an average loss of 5.8%. More than one in five people who took Lorcaserin saw better than 10% weight loss.
Please click below to continue to the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Arenas-Big-Day-Looms-Large-ARNA-VVUS-OREX0915.aspx
Note: The editors at Investopedia made a small error here in the original version, capitalizing "lorcaserin", "valvulopathy", and "fenflueramine". That should all be changed and corrected soon.
Friday, September 3, 2010
Orexigen Finds A Cautious Partner
Big Pharma is certainly no longer in a big rush to partner up with biotech companies working on obesity drugs. Stung by catastrophes like Wyeth's ill-fated partnership with Interneuron in the 1990s, Sanofi's (NYSE:SNY) failure with rimonabant, disappointment from Roche's (Nasdaq:RHHBY) Xenical and Abbott's (NYSE:ABT) Meridia, and a generally unwelcoming FDA, many companies have backed away from this space entirely
Consequently, Orexigen's (Nasdaq:OREX) announcement of a partnership deal with Takeda for OREX's weight loss drug Contrave needs to be seen in the context of a grudging buyer's market.
The Best Deal Available?
On the surface, Orexigen's deal with Takeda does not look great. Takeda is offering only a $50 million milestone payment (which may be the only guaranteed money Orexigen gets). That said, the back-end of the deal is favorable if Contrave makes it to the market and achieves good sales. Takeda will be paying tiered royalties that reach into the 35% range, as well as potential future milestones that could be worth up to $1 billion.
For the full piece, please go to:
http://stocks.investopedia.
Consequently, Orexigen's (Nasdaq:OREX) announcement of a partnership deal with Takeda for OREX's weight loss drug Contrave needs to be seen in the context of a grudging buyer's market.
The Best Deal Available?
On the surface, Orexigen's deal with Takeda does not look great. Takeda is offering only a $50 million milestone payment (which may be the only guaranteed money Orexigen gets). That said, the back-end of the deal is favorable if Contrave makes it to the market and achieves good sales. Takeda will be paying tiered royalties that reach into the 35% range, as well as potential future milestones that could be worth up to $1 billion.
For the full piece, please go to:
http://stocks.investopedia.
Thursday, July 15, 2010
FDA Panel Rejects Vivus Obesity Drug
Wow!
I am cynical and bitter enough that very little surprises me any more (hey, I lived in DC four years, worked on Capitol Hill for a year, and worked for investment firms through two bubble/busts!). But I have to say that I am very surprised to see Vivus get KO'd at the FDA.
In a 10-6 vote, the FDA's panel voted NOT to recommend Qnexa for approval. The panel was apparently bothered by the risks of depression, birth defects, and memory loss, particularly in relation to the weight loss benefits seen with the pill. Overall, it looks like a lack of safety data is what really bothered the panelists.
Now, the FDA could go against this recommendation and approve the pill anyway. In the wake of the panel decision, even representatives from the FDA expressed surprise and made comments that could be interpreted as suggesting the panel was too conservative and was not "strongly" opposed to Qnexa.
The FDA did ignore a negative panel vote on an obesity drug before; that years ago when a panel voted against a weight loss drug called Redux. The FDA approved the drug anyway, the drug was a major hit initially ... and then was withdrawn because of severe side-effects. All in all, it cost Wyeth (now part of Pfizer) billions in legal costs and class-action settlements.So, I have to think that the FDA is going to be *extremely* cautious about doing anything that could repeat that disaster.
What's more, I hate to say it, but drugs like Qnexa are not strictly necessary. You *can* lose weight without drugs. I speak from experience; I have been fat my entire life, but I have lost about 65 lbs in the last 9 months, and I have not been using any pharmaceuticals (just diet and exercise).
Vivus' news is clearly going to chill the sector. I would expect to see Arena and Orexigen both sell off tomorrow on the presumption that the FDA is just not receptive to less-than-perfect obesity drugs. I think Orexigen's drug Contrave is particularly at risk - the efficacy is not that great and the side-effect profile was worse than Qnexa.
Arena does still have an outside shot here. The drug is not extremely effective, but it does help some. What's more, while it has side-effects, they do not seem to be too serious. My bigger fear, though, is that Arena gets caught up in guilt-by-association with Redux. Arena's drug lorcaserin is superficially similar to Redux and my fear is that the FDA panel looks at it and says "eh, why risk it?" and blacklists without realizing that Arena is different. Redux non-selectively stimulated 5-HT2b receptors; lorcaserin selectively stimulates 5-HT2c receptors. That is a major difference at the biochemistry level, and Arena's trials have shown none of the valvulopathy and pulmonary hypertension risks that doomed Redux, but will the panelists or the FDA care?
Vivus is not doomed yet. There is the chance that the FDA will overrule the panel. Vivus could also elect to try again when data from a 2-year study comes out later this quarter. Alternatively, the company may have to do a massive (10,000) additional Phase 3 study to fully allay these worries. Given the environment for financing right now (and the unusual deal that Arena had to strike with Eisai), I am not sure they can afford that.
All in all, a very surprising day.
I am cynical and bitter enough that very little surprises me any more (hey, I lived in DC four years, worked on Capitol Hill for a year, and worked for investment firms through two bubble/busts!). But I have to say that I am very surprised to see Vivus get KO'd at the FDA.
In a 10-6 vote, the FDA's panel voted NOT to recommend Qnexa for approval. The panel was apparently bothered by the risks of depression, birth defects, and memory loss, particularly in relation to the weight loss benefits seen with the pill. Overall, it looks like a lack of safety data is what really bothered the panelists.
Now, the FDA could go against this recommendation and approve the pill anyway. In the wake of the panel decision, even representatives from the FDA expressed surprise and made comments that could be interpreted as suggesting the panel was too conservative and was not "strongly" opposed to Qnexa.
The FDA did ignore a negative panel vote on an obesity drug before; that years ago when a panel voted against a weight loss drug called Redux. The FDA approved the drug anyway, the drug was a major hit initially ... and then was withdrawn because of severe side-effects. All in all, it cost Wyeth (now part of Pfizer) billions in legal costs and class-action settlements.So, I have to think that the FDA is going to be *extremely* cautious about doing anything that could repeat that disaster.
What's more, I hate to say it, but drugs like Qnexa are not strictly necessary. You *can* lose weight without drugs. I speak from experience; I have been fat my entire life, but I have lost about 65 lbs in the last 9 months, and I have not been using any pharmaceuticals (just diet and exercise).
Vivus' news is clearly going to chill the sector. I would expect to see Arena and Orexigen both sell off tomorrow on the presumption that the FDA is just not receptive to less-than-perfect obesity drugs. I think Orexigen's drug Contrave is particularly at risk - the efficacy is not that great and the side-effect profile was worse than Qnexa.
Arena does still have an outside shot here. The drug is not extremely effective, but it does help some. What's more, while it has side-effects, they do not seem to be too serious. My bigger fear, though, is that Arena gets caught up in guilt-by-association with Redux. Arena's drug lorcaserin is superficially similar to Redux and my fear is that the FDA panel looks at it and says "eh, why risk it?" and blacklists without realizing that Arena is different. Redux non-selectively stimulated 5-HT2b receptors; lorcaserin selectively stimulates 5-HT2c receptors. That is a major difference at the biochemistry level, and Arena's trials have shown none of the valvulopathy and pulmonary hypertension risks that doomed Redux, but will the panelists or the FDA care?
Vivus is not doomed yet. There is the chance that the FDA will overrule the panel. Vivus could also elect to try again when data from a 2-year study comes out later this quarter. Alternatively, the company may have to do a massive (10,000) additional Phase 3 study to fully allay these worries. Given the environment for financing right now (and the unusual deal that Arena had to strike with Eisai), I am not sure they can afford that.
All in all, a very surprising day.
Thursday, July 1, 2010
Arena Pharm - Probably The Best They Could Have Hoped For
It's interesting to see how Big Pharma's attitude about obesity drugs has changed. There was a time when that was one of the most appealing areas. Now, though, they seem to be rather cagey about the space.
To wit, Arena Pharmaceuticals (Nasdaq: ARNA) announced a deal today with Eisai to market its lorcaserin anti-obesity drug, assuming it gets final FDA approval later this year (or early next). Arena gets $50M upfront and another $90M if/when the deal goes through. On top of that, Arena will get a royalty of 31.5% of sales on amounts under $750M and 36.5% on amounts above that.
It's an interesting deal. On one hand, 30%+ of revenue is a very healthy royalty rate (amounts in the 20%'s are arguably more common). Given that Big Pharma net margins are typically in the 20%'s, that's not a bad deal for Arena. Then again, that upfront payment is on the low side for a drug with $1B+ potential.
So what should be read into this? Well, it's a pretty clear sign that Eisai is not convinced that the drug gets approved - Eisai is apparently willing to trade a sizable chunk of future profits in exchange for minimal upfront risk. For the other obesity companies, Vivus (Nasdaq: VVUS) probably gets a bigger upfront payment (higher likelihood of approval and commercial acceptance), but lower royalties. Orexigen (Nasdaq: OREX) likely won't get such a good deal - they may have to accept a smaller upfront payment, and I'd be surprised if they pull as large of a royalty.
All in all, not a bad deal for Arena. And even with today's big jump, I think the stock is still cheap. That all depends on getting FDA approval for lorcaserin, though, and that seems probable, but certainly not definite.
To wit, Arena Pharmaceuticals (Nasdaq: ARNA) announced a deal today with Eisai to market its lorcaserin anti-obesity drug, assuming it gets final FDA approval later this year (or early next). Arena gets $50M upfront and another $90M if/when the deal goes through. On top of that, Arena will get a royalty of 31.5% of sales on amounts under $750M and 36.5% on amounts above that.
It's an interesting deal. On one hand, 30%+ of revenue is a very healthy royalty rate (amounts in the 20%'s are arguably more common). Given that Big Pharma net margins are typically in the 20%'s, that's not a bad deal for Arena. Then again, that upfront payment is on the low side for a drug with $1B+ potential.
So what should be read into this? Well, it's a pretty clear sign that Eisai is not convinced that the drug gets approved - Eisai is apparently willing to trade a sizable chunk of future profits in exchange for minimal upfront risk. For the other obesity companies, Vivus (Nasdaq: VVUS) probably gets a bigger upfront payment (higher likelihood of approval and commercial acceptance), but lower royalties. Orexigen (Nasdaq: OREX) likely won't get such a good deal - they may have to accept a smaller upfront payment, and I'd be surprised if they pull as large of a royalty.
All in all, not a bad deal for Arena. And even with today's big jump, I think the stock is still cheap. That all depends on getting FDA approval for lorcaserin, though, and that seems probable, but certainly not definite.
Tuesday, June 22, 2010
Can Investors Fatten Up On Weight Loss?
I would like to make one addition (or rather, an extended explanation) to part of this article. In it, I discuss Arena's lorcaserin and mention its somewhat dicey legacy. What I did not have time to adequately mention in the original is that there is a significant biochemical difference between lorcaserin and its predecessor fenfluramine. Fenfluramine caused serious cardiac side-effects because of its effects on type 2b and 2c receptors. Lorcaserin is active only with the 2c receptors and does not cause the same side-effects.
That said, investors would be mistaken to believe that many (or even "most") physicians will do the perfunctory research necessary to understand that distinction. Consequently, there is a real risk of "guilt by mis-association". If Arena can get a strong marketing partner, one that can spend the time educating docs, it won't be a problem. But if Arena has to go it alone, they may be hampered in their efforts to really get docs to understand the difference and use the drug.
You cannot read a majorU.S.
Diet, Exercise and SupportIn terms of non-medical intervention, there are two clear leaders in theU.S.
For the full column:
http://stocks.investopedia.
That said, investors would be mistaken to believe that many (or even "most") physicians will do the perfunctory research necessary to understand that distinction. Consequently, there is a real risk of "guilt by mis-association". If Arena can get a strong marketing partner, one that can spend the time educating docs, it won't be a problem. But if Arena has to go it alone, they may be hampered in their efforts to really get docs to understand the difference and use the drug.
You cannot read a major
Diet, Exercise and SupportIn terms of non-medical intervention, there are two clear leaders in the
For the full column:
http://stocks.investopedia.
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