Nothing to See Here, No Huge Sales Yet

Eisai and Arena Pharmaceuticals (NASDAQ: ARNA  ) logged $4.1 million in net sales of their obesity drug Belviq in the second quarter.

I will leave that statement without comment.

Because none is really warranted.

The sales come from less than a month on the market -- the drug launched on June 11 and the quarter closed on June 30 -- and can't tell you anything about the long-term potential for Belviq.

What investors should be paying attention to is management's comments on the plans to accelerate sales from here. Of course, Arena doesn't sell Belviq directly, so most of the information has to flow from Eisai.

From launch through July 19, Arena said that 12,500 prescriptions had been written by 3,900 physicians, which works out to about 3.2 prescriptions per doctor. Only the prescriptions written in the first week and a half would have been up for refills, so it seems safe to assume that doctors are prescribing it to multiple patients. Early adopters don't appear all that worried about safety issues, or they'd only prescribe it to one patient and see how the patient did before pushing it on other patients. Now Eisai just needs to reach the 20,000 to 30,000 patients that the company has identified as the most likely to prescribe the drug.

Eisai plans to run direct-to-consumer advertisements, but not until "sufficient physician education efforts are completed," president and CEO Jack Lief told investors on the call. There's no reason to spend money getting patients to ask their doctors about Belviq if the doctor doesn't know anything about the drug.

Besides getting people to the drug, one of the main roadblocks to converting that into a sale is the price of the drug. For now, Eisai has been giving away a 15-day supply and offering a savings card for up to $75 off the cost of the $200 medication.

Looking at the longer term, though, Eisai and Arena need to gain reimbursement from insurers and pharmacy benefit managers. Arena said Eisai is shooting for coverage of approximately 30% of insured lives, possibly as much as 50%, by the end of next March. VIVUS (NASDAQ: VVUS  ) , which launched a competing drug, Qsymia, last September, has guided for 50% coverage by the end of the year, so Eisai's goal looks reasonable.

Increasing the weight loss
The main knock against Belviq has always been that it produces less weight loss than Qsymia, Orexigen's (NASDAQ: OREX  ) Contrave, and the newest player, Novo Nordisk's (NYSE: NVO  ) Victoza. My hypothesis is that many patients will start on Belviq because it's the safest, but when they only see minimal weight loss, they'll switch to Qsymia or to Contrave, once it's approved. Because it has to be injected, Victoza, which is approved as a diabetes drug, will mainly be used for overweight diabetics.

To increase weight loss, which should keep patients on the drug longer, Eisai and Arena's plan is to combine Belviq with phentermine, a generic obesity drug that was the phen part of the infamous fen-phen. Belviq works in the same way as fenfluramine, the fen part, but is designed not to hit the receptor that leads fenfluramine to cause heart valve problems.

Eisai plans to start a phase 2 trial with the combination drug near the end of the year or the beginning of next year. If the four-month trial is positive, it isn't clear how much more data -- especially safety data -- the FDA would require Eisai and Arena to generate. My guess is that the FDA would want at least a year of data from patients on the combination product, which would put an expanded approval in 2016 at the very earliest.

For now, VIVUS, Orexigen, and Novo Nordisk don't have too much to worry about.

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Read/Post Comments (12) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 02, 2013, at 12:20 PM, Chaz13 wrote:

    "Now Eisai just needs to reach the 20,000 to 30,000 patients that the company has identified as the most likely to prescribe the drug."

    Didn't realize patients were prescribing drugs now.

    Think it was stated the pilot trial was to be 12 wks, that's 3 months, not 4.

  • Report this Comment On August 02, 2013, at 12:25 PM, krapbuster wrote:

    Too much emphasis on Belviq's 3 to 4% overall average weight loss being giver by media writers like those at MF who are assisting hedge funds.

    Responders, the subset taking Belviq during Lorcaserin trials that actually responded to the drug, are a group that lost on average 11% weight during 1st year. Again no media focuses on this fact. Belviq responder rate so far in early script numbers up 2 to 3 times what was seen during Lorcaserin trials per ARNA mgmt during yesterday's conference call. If information is true then shorts need to cover and soon.

  • Report this Comment On August 02, 2013, at 12:28 PM, shaso wrote:

    one belvig user, ellie wenker has experienced almost 10 percent loss of her body wgt in 6 weeks. Belviq users are reporting wgt loss far greater than the results in the clinical trials. Belviq works great by itself. You forgot to mention arena booked 65.5 million in milestones payments.

    It was a genius move by Eisai to offer the saving cards right out of the gate as well as the free trials (paid for by Eisai. Arena has 3 partners now, not bad for a small biotech as well as being nominated for 2013 Prix Galien USA Award

  • Report this Comment On August 02, 2013, at 1:07 PM, marp11 wrote:

    your fool articles become more and more deranged as arna shorts find the door is almost shut. belviq is going to be a blockbuster, even you fools know it, panic.....its a ugly thing to see,,,unless you are long ARNA

  • Report this Comment On August 02, 2013, at 1:07 PM, marp11 wrote:

    ONE THING IS CORRECT...THERE IS INDEED NOTHING,,,TO SEE HERE

  • Report this Comment On August 02, 2013, at 1:15 PM, marp11 wrote:

    4.1 million in 17 days in the summer with no advertising,,,q sympa no sales 12 months in and HF running the company, ill take???

    ILL GO WITH EISAI /ARNA bigtime

  • Report this Comment On August 02, 2013, at 1:38 PM, marp11 wrote:

    PSSST HEY BRIAN

    Brian Orelli, Psssssst! Doctors are all ready prescribing Belviq with Phen as a combo!

    The study is just crossing the T's and dotting the I's!

    The FDA will fast track the Belphen Combo.

    Go back to writing reviews on toilet paper

  • Report this Comment On August 02, 2013, at 2:20 PM, AreaRich wrote:

    You completely forgot to inform your readers about the benefits of Belviq to those who have diabetes. Something that Qsymia, and Contrave can't do and Victoza can provide, but only with injections. Lot easier to just take two pills a day rather than having to travel to get regular injections. Big advantage to Belviq in the market. If you do analysis then you must consider all necessary details.

  • Report this Comment On August 02, 2013, at 5:07 PM, JustPassinThru wrote:

    I would comment on how poorly written this article is, but other readers have already taken care of that. As to the "No Huge Sales Yet" part of this article, the following discussion by "sp500chartdotcom" is re-posted from Yahoo's Arena Message Board:

    "Driving forces behind scripts will change in character at some point."

    "The current driving forces for scripts are currently all constrained to arithmetic growth. Eisai reps can see 'X' number of doctors per week - that is a finite number with an upper limit. MD's who are writing scripts see 'X' number of patients per week - another finite number that is constrained to arithmetic growth.

    We will see mostly arithmetic growth for a while. That will result in a DECREASE in the percent growth per week. We were at about 8% this week. We will probably be around 7% next week. This is not due to any kind of failure in the launch. It is due to what the current driving forces are for a new launch.

    So, what will change this? It will be ORGANIC (power function) growth among both physicians and patients. This will be the result of doctor's conventions, casual conversation, results coming in that meet or exceed expectations and, eventually, when users who have lost enough weight to be NOTICED start to answer people's questions when asked how they did it.

    Even the BEST responders at this point are likely just starting to cross the threshold of 'noticeability'. Give it a few more months and the MD's will see it, the neighbors will see it and the co-workers will see it too.

    When these things start to happen, coupled with possible DTC advertising, exponential growth WILL take place. Until then it crawls up by a few hundred every week."

    If the purpose of the Motley Fool is to "Educate, Amuse, and Enrich", this article can not really be said to do any of those.

    Particularly the "Enrich" part. As Arena's Belviq pile drives through the arithmetic part of the this sales growth cycle, the wise suggestion to investors is to GET IN NOW!!! - while Arena is still cheap. You know: BUY LOW, SELL HIGH? They did teach you that in business school or High School, didn't they Brian?

    Cheers!

  • Report this Comment On August 03, 2013, at 12:21 PM, paxmaker wrote:

    Your article comes up "short" on Belviq (lorcaserin). The responders are doing much better, it seems, than the trial results indicate, as reported by Arena. This is a "novel" drug, not a makeover of existent generics, like Qsymia. It is very safe and has very beneficial effects for folks with Type II diabetes. There has yet to be any "nutrisystem" kinds of ads to promote this remarkable medication, yet it continues to gain patients each week (Qsymia lost patients last week) and repeat...it is very safe. As has been stated above, some docs are prescribing phentermine with Belviq, presumably to very obese patients. This will escalate weight loss "safely." Belviq has all the makings of a blockbuster medication that is being introduced responsibly to the health care system. Again, your article fails on that score as well...(responsible analysis)

  • Report this Comment On August 03, 2013, at 5:10 PM, Geezwad wrote:

    If every fat person in the world would take one little Belviq, what a bright bright world this would be.

  • Report this Comment On August 04, 2013, at 11:01 PM, Foreeverlong wrote:

    Stated simply, you are betting that Belviq will not be the winner! That would be wrong! Many of your assumptions, as pointed out by the posts above, are simply wrong.

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