Arena says the magic combo word as reality hits Vivus

The cat is out of the bag. After years of dodging the question, Arena Pharmaceuticals has finally admitted that it plans to study its recently approved obesity drug Belviq in combination with phentermine.

Not only that, but the phentermine combo is now “one of our main priorities”, its CEO, Jack Lief, has stated. A combination would hugely boost Belviq’s efficacy – currently this is at best marginal – and could transform its market potential. On the same day the stock of Vivus plummeted on concerns that launch of its competing drug Qsymia has been a damp squib, and in market cap terms Arena overtook its rival for the first time in two years.

Worries over Qsymia centre on disappointing prescription data since its September 17 US launch and the revelation that 30% of pending scripts are being abandoned by patients owing to concerns about the cash outlay. Vivus crashed 21% to close at $11.82 yesterday, meaning that its market cap has lost $1.1bn over the past four weeks.

After yesterday’s more modest 4% fall Arena is now valued at $1.7bn, while Orexigen Therapeutics – the three obesity companies often trade in tandem – was off 7% and is capitalised at just $345m.

Reticence

There had been mutterings for some time that given Belviq’s lamentably low efficacy only a phentermine combination would unlock its full potential, but Arena had resolutely refused to comment – until now (Arena fends off the big question as lorcaserin delivers, June 28, 2012).

Its reticence was likely due to it wanting to avoid comparisons with the ill-fated Fen-Phen obesity combo that was pulled from the market in 1997 after links to cardiovascular side-effects. Fen-Phen combined phentermine (a widely established drug for short-term treatment of obesity) with fenfluramine or dexfenfluramine, which are related to lorcaserin.

On a call yesterday Arena management said details about the timing and size of Belviq combination studies would only be disclosed after talks with the FDA.

Although Belviq was approved before Qsymia it is not yet marketed while Arena finalises scheduling – and initial data from Qsymia’s launch do not paint a very rosy picture. Vivus is tackling the abandonment of prescriptions as well as criticism that its reps are not targeting general prescribers – although this was always the plan for an unpartnered launch.

The company said: “1,500 reps from day one would not have been the right strategy. We need to start off gradually [targeting] specialists,” adding that primary care would be the domain of a potential big partner. Since launch Qsymia has been shipped to 3,504 patients and 2,614 doctors have prescribed it; reps’ calls are taking “longer than anticipated”.

Across the pond

Another problem for Vivus is Europe, where the CHMP has recommended against Qsymia’s approval based on cardiovascular and CNS concerns in patients in whom the drug is not indicated (Vivus hits bump in obesity road, September 21, 2012).

Belviq is slightly behind Qsymia in Europe, and Arena said the regulator’s 120-day questions related to “similar issues” that it had earlier ironed out with the FDA – namely rat tumours, a high study dropout rate and risk of valvulopathy. An initial shipment to its US partner, Eisai, has been made, and the company also announced a supply deal for South Korea with Il Dong Pharmaceutical.

These developments have managed to draw attention away from Arena’s frustrating situation of having an approved drug that has yet to be launched. In this it is matched by Vivus, whose erectile dysfunction drug Stendra got the US green light in April, but appears unlikely to find itself on pharmacy shelves while it remains unpartnered.

Still, it is obesity that will continue to excite investors, and Vivus, Arena and Orexigen look set to remain favourites with short-term traders. While Vivus stock has clearly suffered from vastly inflated expectations this year and a retracing was bound to happen sooner or later, there is still much to play for.

But for the first time in years Arena has seized the upper hand.

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