Arena fends off the big question as lorcaserin delivers

There are plenty of reasons to celebrate after yesterday’s US approval of Arena Pharmaceuticals’ lorcaserin. The anti-obesity pill could become the first to hit the US market since Roche’s Xenical 13 years ago, it will have a reasonably broad label and, perhaps most importantly, no requirement for a risk-mitigation programme.

But once the hangovers clear, Arena will have to allay several niggling doubts, like whether pent-up patient demand will translate into anything more than a near-term revenue blip. The bar has been set high. Whether a compound that is, at the end of the day, not very good at helping people lose weight can generate lasting blockbuster revenue will surely depend on its use as a combination therapy. This is one point on which the company's executives will – for now – not be drawn.

Meteoric rise

Arena’s stock enjoyed a meteoric rise between lorcaserin’s unexpected positive US advisory panel backing in May and the June 27 PDUFA date. Yesterday’s $11.39 close, up 29%, values Arena at $2.1bn (Lorqess surprises and gets FDA experts’ backing, May 11, 2012).

From such a high valuation the company has more to lose than it has to gain, although much of the latest share price increase will have come from short positions unwinding; over 20% of its shares had been sold short approaching the PDUFA date. Analysts covering Arena have certainly been bullish, with those at Jefferies and JP Morgan expecting in-market lorcaserin sales of over $1bn within five years of a 2013 launch.

But the precedent set by Xenical - hardly recent but the best we have to go on – is not great: an initial surge in revenue as patients clamoured for access, followed by a sharp slump as realisation set in that limited effectiveness did not make taking the drug worthwhile. And this is perhaps the biggest worry now for Arena and its US licensee, Eisai.

Limited efficacy

At the heart of the matter lies lorcaserin’s weight-loss effect – on average just 3.4% of initial body mass after a year’s treatment if adjusted for placebo. This is the lowest of the three late-stage anti-obesity projects, of which the most efficacious, Vivus’s Qnexa, faces an FDA action date of 17 July.

Lorcaserin’s efficacy is not dissimilar to that of two related drugs, fenfluramine and dexfenfluramine, which made up the Fen-Phen combo together with phentermine, an established short-term obesity treatment. Fen-Phen was famously withdrawn in 1997 after its association with cardiovascular side-effects, which lorcaserin has been shown not to cause thanks to its specificity for the 2C subtype of the 5HT2 receptor.

But from an efficacy point of view, Fen-Phen’s strength came from the fact that it was a combination, and this has caused many analysts to ask when Arena would consider studying a lorcaserin/phentermine combo. In a call, Arena management denied that such trials had been done, but admitted that “various other approaches” were being considered, and that combination therapy was “potentially” in the mix.

Avoiding the REMS

For now, the lack of a risk-mitigation requirement is being celebrated, which many had feared would delay approval and could have limited the available market.

There is a restriction against co-administration with other drugs, which could further dampen hopes that lorcaserin and phentermine might be prescribed together off-label, and means that any realistic chance of a combination will not come to fruition until after an extensive clinical study programme.

Concerns about cancer risk, which derailed lorcaserin’s first approval bid, will be addressed through routine pharmacovigilance reporting. Meanwhile, non-responding patients – those who lose less than 5% of their weight within the first 12 weeks of treatment – are to come off lorcaserin, although it is not clear who will enforce this. Arena said that in phase III 42% of non-diabetics met the 12-week weight loss criteria.

A softer FDA?

Hopes that lorcaserin’s approval signalled a long-overdue softening of the FDA’s attitude to obesity drug approvals prompted a 7% increase in Vivus’s share price. Given an expected four to six-month wait before lorcaserin can be launched while its drug enforcement scheduling is now finalised, Vivus’s Qnexa could sneak ahead if the FDA approves it on 17 July.

Orexigen, whose Contrave pill is licensed to Takeda but which is behind in the approval process, surged 20%, and put on a further 14% in early trading today. Certainly, the fact the FDA has put its money where its mouth is should give others confidence, although the ultimate endorsement would come if big pharma jumped back in after all but abandoning obesity five years ago.

Athough this goes a long way to backing up the hype that had surrounded Arena, lorcaserin’s glaring lack of standalone efficacy is the elephant in the room. Whether the drug is remembered as more than a flash in the pan in the history of obesity treatments will likely depend on its use as a combination, most probably with phentermine.

And on this point we are still none the wiser.

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