Vivus Keeps Lead As Obesity Drug Race Turns Into Homestretch
September 18 2009 - 3:05PM
Dow Jones News
Arena Pharmaceuticals Inc. (ARNA) reported Friday a successful
late-stage trial of its weight-loss drug, but Vivus Inc. (VVUS) is
still considered the leader as three companies conclude an
important lap in the race to deliver a new, viable drug to fight
obesity.
Both companies and Orexigen Therapeutics Inc. (OREX) provided
important updates this summer regarding their lead obesity drugs.
Most observers see Vivus in front, although all three drugs have
their strengths and possible place in the market. Next up: The
companies battle for regulatory approval and pursue a deep-pocketed
partner to help sell their therapies to physicians.
It shouldn't be hard to find potential partners. Treating
obesity is a highly desirable market with multibillion-dollar sales
potential. The Centers for Disease Control estimates 34% of U.S.
adults are obese. However, obesity has been a difficult field for
drug makers because of problems with past drugs.
Under Food and Drug Administration guidelines, clinical trials
for obesity drugs must meet one of two goals. A trial must show
that at least 35% of the drug group lost at least 5% of body
weight, and that group must be approximately double the percentage
of patients with similar weight loss on the placebo. Alternatively,
a study can show that patients had an average weight loss that was
at least five percentage points higher than the placebo group's
loss.
Vivus' Qnexa is the only drug that beat both benchmarks.
Orexigen's Contrave had its three main trials meet the first
guideline, with one meeting the second guideline as well. Arena's
first trial clearly met the first guideline, and it contends that
the second did as well.
Despite the mixed results on effectiveness, each drug has
factors that may make it more attractive to patients, physicians
and potential partners. For example, Arena's lorcaserin didn't show
the effectiveness of the others but it is a new drug with minimal
side effects and ample patent protection, which could be attractive
to a partner when compared with the other two, combinations of
already marketed drugs.
Meanwhile, Vivus' drug has shown strong results in morbidly
obese patients, while Orexigen's includes an antidepressant that
could be attractive for certain patients.
Adam Cutler, analyst at Canaccord Adams, believes there should
be room for all three because grabbing just 1% of the overall
market will translate to more than $1 billion a year in sales for
any one drug.
"There are certainly attributes of each of these drugs that will
get highlighted over time that will help segment the market a
little bit," Cutler said.
Arena and Vivus plan to file for marketing approval by year end,
while Orexigen will do so in the first half of 2010. That means the
first approved drug could hit the market late next year.
But all three drugs have potential drawbacks from a regulatory
point of view, notes Rodman & Renshaw analyst Elemer Piros.
Arena's drug is related to a former Wyeth (WYE) drug that causes
heart-valve damage, which could prompt questions and a rigorous
patient-monitoring plan. Meanwhile, individual components of the
other two drugs have issues with known side effects.
But Wall Street's opinion of the drugs' prospects seems to be
reflected in the stock performance of the companies: Vivus and
Orexigen have more than doubled in value in the last three months,
while Arena has risen 8%.
Furthermore, the market value of Vivus is more than $800
million, almost double the individual values of the other two
companies.
Any future partnership is likely to incorporate the risks of the
drug, as well as the enormous marketing expense. But given the
opportunity, Big Pharma - already suffering from a lack of pipeline
prospects - may be tempted to buy one or all of these companies,
especially because their small size is easily digestible when
compared with the deals totaling more than $100 billion in the
industry this year.
-By Thomas Gryta; Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com