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:
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 (OTC: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.