Does This Company Have a Clear Path to European Anti-Obesity Approval?

For the most part, it's as if the biotech sector can do no wrong these days. The SPDR Biotech ETF is up a ridiculous 37% over the trailing 12 months, as merger and acquisition activity is driving valuations higher and experimental drugs are being reviewed by the Food and Drug Administration at a faster rate than ever before.

But, I did say "for the most part." If you take a good, hard look at the weight control management sector it's been one disappointment after another in the United States despite indisputable evidence that the target audience is growing:



Source: Nolan O'Brien, Flickr. C/O Centers for Disease Control and Prevention. 

VIVUS' (NASDAQ: VVUS  ) Qsymia was approved just weeks after Arena Pharmaceuticals' (NASDAQ: ARNA  ) Belviq last year, but because of Belviq's lengthy delay in getting scheduled by the Drug Enforcement Agency, Qsymia beat it to market by roughly three-quarters of a year. Ultimately, that advantage proved almost useless for Qsymia, which ran into delays in getting insurers to cover the drug from the get-go. Through the first six months of the year, Qsymia sales have totaled just a paltry $9.6 million in the United States.

Arena hasn't done much better, but at least it gets some benefit of the doubt, since it's been marketing its anti-obesity drug in the states since only the middle of June. Through a partial second-quarter Arena and marketing partner Eisai (NASDAQOTH: ESALY  ) sold $4.1 million worth of Belviq. It's been my stance all along that Arena would likely hold the advantage over Qsymia because of its favorable safety profile in clinical trials and its partnership with a global pharmaceutical company with decades of marketing experience.

Europe: the path to a dead end
What neither drug developer can boast, though, is that they have an inside track to European approval. The path to Europe has been a dead end for both Qsymia (which is known as Qsiva in the EU) and Belviq thus far.

VIVUS was also the first anti-obesity drugmaker to get its therapy before the Committee for Medicinal Products for Human Use, or CHMP (essentially the FDA panel of the European Commission). In October 2012, the CHMP sent Qsiva packing because of numerous (and I mean numerous) concerns about the possible long-term effects of the drug. Specifically, the CHMP worried about the active ingredients phentermine and topiramate. Phentermine is one of the active ingredients from the recalled drug fen-Phen of the late 1990s, which was associated with causing heart valve disease. Topiramate usage, on the other hand, is associated with birth defects. In other words, the CHMP has a laundry list of concerns about Qsiva's effect on the heart and blood vessels over the long run and wants a long, drawn-out study on safety before it'll even consider recommending Qsiva for marketing authorization. And just in case VIVUS thought there was a ray of hope, the CHMP shot down its appeal back in February.

In the case of Arena's Belviq, although it was never rejected by the CHMP, it was well on its way to piling up a laundry list of safety concerns similar to VIVUS' Qsiva. Rather than risk the rejection and the potential delays associated with that rejection, Arena chose to pull its marketing application for Belviq in May.

The next stop for VIVUS was outlined yesterday, when it announced that it had submitted a request to the European Medicines Agency for scientific advice regarding the use of a pre-specified interim analysis from its Aqclaim cardiovascular outcomes trial. Or, in English, it asked the EMA, "What do we have to do to satisfy your safety concerns?"

Despite the move by VIVUS on this its third attempt to get Qsiva approved, another anti-obesity drug looks to have a clearer path to success in Europe -- and it's not Belviq or Qsiva!

Three's a crowd
The often forgotten name in the battle against obesity is Orexigen Therapeutics (NASDAQ: OREX  ) and its experimental drug Contrave. It's not hard to understand why Orexigen was thrown onto the back burner in investors' minds, since it was going to be a clean one to two full years behind Qsymia and Belviq in making it to market. However, the lack of adequate long-term safety studies in Europe, compounded with abysmal sales for Qsymia and Belviq thus far, could give Contrave the perfect opportunity to steal the show.

Contrave was tested in four separate late-stage studies, of which the primary endpoint of achieving a 5% weight-loss in a pre-specified percentage of patients was reached each time. On efficacy alone, there doesn't seem to be an issue here.

From a safety standpoint, having been rejected by the FDA once before, Contrave is being required to take every step necessary to ensure the long-term safety of its drug. The Light Study, a clinical trial of more than 10,000 patients studying the effects of Contrave on obese individuals with a high risk for cardiovascular disease, is currently under way, and an interim analysis of the results could be out late this year, just in time for the FDA and EMA to make their decision on Contrave.

Given the length of time needed for VIVUS to re-run its study and Arena still in the dark as to what the EMA would be looking for from a safety perspective for Belviq, Orexigen's ongoing long-term study could play right into the hands of what European regulators are looking for in an anti-obesity pill and put it in line to hurdle its peers.

But keep your expectations reasonable!
Although Orexigen's peers have stumbled out of the gate, there's always a chance that it, too, may struggle to get Contrave approved in Europe. The reason is that Contrave is a mixture of two drugs: the antidepressant bupropion and abuse-resistance drug naltrexone. Bupropion, in particular, comes with a black-box warning label from the FDA in that it can increase the risk of suicide in patients. It's unlikely that the FDA or the EMA will simply glance over that fact without at least some level of concern.

Ultimately, Orexigen's Contrave has a good shot at approval from the FDA this time around, and it certainly appears to have a much clearer path to approval in Europe than does VIVUS or Arena. It will, however, not be a cakewalk. The EMA is notoriously tough on experimental therapies when it comes to long-term safety, and if it thinks Contrave presents a risk, it'll be sent back to the drawing board like its peers. There's obviously a moat of potential in the anti-obesity space, with so few competitors and such a broad target population, but I would still keep your expectations in check until these companies give you a reason to really believe in the value of their anti-obesity therapies.

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Read/Post Comments (9) | Recommend This Article (6)

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 September 21, 2013, at 5:16 PM, RSRdriver wrote:

    The EU clearly stated at the last Vivus meeting that their concerns were with doctors prescribing the drug for something it was not intended!

    That seems like an easy fix for Vivus.

    Arena on the other hand has dismal efficacy (EU health care is not for profit as it is here!), is a 2C receptor drug (research 2C drugs in Europe, most countries ban them!) and the company has a history of leaving out crucial info ( the rat death issue at the first ADCOM!).

    It is just a matter of time before Arena's PPS falls to a level more realistic to it's viability- sub$4 IMO!

  • Report this Comment On September 21, 2013, at 6:02 PM, AreaRich wrote:

    RSR,

    You are completely delusional. Rat death? How about tumors in rats which was quite common in those particular rats. The incidences which you (mistakenly) site was completely overcome with further FDA investigation. However, in the case of Qsymia the EU was concerned with safety issues which were not overcome. Arena was not able to overcome the EU objections using the same evidence presented to the FDA, so they chose to continue with their launch in the US. Results from the US launch will quite clearly demonstrate Belviq's excellent safety profile so while should they spend more money proving something that will ultimately be overcome. Phentermine a component of Qsymia is still not approved in the EU, its been around since 1957 so I don't see it being approved anytime soon. I don't know where Vivus is going to get the money to do further EU trials to overcome that obstacle.

  • Report this Comment On September 21, 2013, at 7:13 PM, RSRdriver wrote:

    If you believe all that then bet the doublewide on ARNA!

    Thanks for your concern though.

    I will continue shorting ARNA and making the money you thought you were going to make!

  • Report this Comment On September 21, 2013, at 7:26 PM, bhasa04 wrote:

    RSR_moron,

    Qysmia component phentermine is banned in Europe. What part of that you don't understand. There is no chance of European approval for Qysmia.

  • Report this Comment On September 21, 2013, at 7:34 PM, RSRdriver wrote:

    Thanks, I "understand". Outside of Areniac town that must be big news! Will pass it on.

    Your ability to pick winning stocks is only surpassed by you ability to spout truthful and relevant information as it relates (and has been relating) to ARNA's PPS.

    Thanks again,

  • Report this Comment On September 21, 2013, at 8:15 PM, PhillyDan wrote:

    RSR is a proven moronic liar. His parents are ashamed of him for his lying ways. I guess he lied to them all of the time. Now he continues his lies and delusional thinking.

    BTW, he doesn't understand that the drug's name is not Arena but Belviq. Belviq in the real World is starting to light up the boards as many people that are on it have lost a good deal of weight. Several people over 30 pounds and still going.

    Just as important is that many of them that are T2DM are seeing significant improvements in glycemic control. One person that is a type one diabetic in the San Diego area has lost 30 pounds and seen his insulin usage per day cut in half.

    That story is being told time and time again. But RSR is just a lying Fool and is evil as well. Anyone that does not want to see people do well in losing weight is a loser of the highest order and evil on top of that.

    BTW, the writer of the article stating that there is a laundry list of safety concerns really does need to go back to first grade and learn how to read all over again. Obviously he forgot to mention that the few concerns that the CHMP had via reading their Assessment Report were all non-clinical not clinical. In fact, they clearly state that there were no cancer, heart-related or other safety signals in the human studies. Recommend future writers of articles mention that very important set of facts instead of using hyperbole that is not correct nor true.

  • Report this Comment On September 21, 2013, at 9:20 PM, Walsher wrote:

    Rs dribble you say you are shorting arna.......doubtful at this stage unless you are truly clueless. All you do is defend vvus. seems to me you found yourself on the wrong side of the trade with your long vvus position

  • Report this Comment On September 22, 2013, at 4:32 AM, RSRdriver wrote:

    Not one point successfully argued!Just name calling and typical Areniac based flawed research.

    There is a reason you "people" are laughed at both here and elswhere. The above remarks do a lot to reinforce that reasoning.

    Still, thanks for being fools, someone has to take your money, right!

  • Report this Comment On September 22, 2013, at 10:14 AM, gazoo99 wrote:

    RSR, RSDriver, Driver, Dribble, ETC.

    Here are the facts, "DIRRECT" from VVUS.

    Approved by FDA, Obesity Drug Qsymia Rejected in Europe!

    A new obesity drug manufactured by Vivus, Inc., approved by the FDA for sale in the U.S. under the brand name Qsymia, has not received approval from a European drug regulatory agency.

    According to Vivus, the European Medicines Agency chose not to approve the drug, going by the name Qsiva overseas, because it contains the appetite suppressant phentermine, which in combination with other drugs has been linked to dangerous side effects in the past. Specifically, phentermine was combined with fenfluramine in diet drug “fen-phen,” which was recalled from both U.S. and European markets due to a high risk of side effects, including serious heart damage.

    Vivus Inc. (VVUS)’s obesity drug, approved in July in the U.S., failed for a second time to gain the backing of European regulators because of its potential side effects.

    The European Medicines Agency’s Committee for Medicinal Products for Human Use recommended against approving Vivus’s pill in October because of concern about the long-term effects on the heart and nervous system. Vivus appealed, and the Mountain View, California-based company said today in a statement that its request was rejected.

    The agency, called CHMP, said Vivus must conduct a cardiovascular trial to show the drug, which would be called Qsiva in Europe, is safe before it could be approved.

    “We are disappointed with the CHMP decision regarding Qsiva and the position the committee adopted with respect to the need for a pre-approval cardiovascular outcomes trial,” Peter Tam, president of Vivus, said in the statement.

    NOW THAT SHOULD KEEP RSR QUIET.

    The facts "real ones" usually do!

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