Arena’s loss is Zafgen’s gain

Anyone looking at yesterday’s 76% surge in Arena Pharmaceuticals stock might be excused for assuming that the group was no longer an obesity play. Fortunately, however, on the same day Zafgen emerged as a new force in weight loss therapies.

Zafgen is focusing initially on a small pool of patients with weight gain of a specific biological cause, which could offer a fast and relatively cheap way into the market. This contrasts with recent market entrants, like Arena’s Belviq, and perhaps the best that can be said of Arena’s phase I trial of APD334 for autoimmune diseases is that it distracts attention away from Belviq’s disastrous performance.

The companies yesterday revealed data from studies that are extremely early, and thus can only hint at the potential of either company’s projects in larger patient populations. But this is a biotech bull market, so share prices can hardly have done anything but rise strongly; Zafgen closed up 20%.

Recent float

Zafgen is a recent entrant to Nasdaq, having raised $110m in an IPO last June. Since then the stock has risen 96%, and the group is now capitalised at $753m.

Its data came from a placebo-controlled phase II trial of its lead project, beloranib, in 14 patients with obesity associated with hypothalamic injury. This can result from brain trauma, but is most commonly associated with surgical removal of CNS tumours; there are barely 1,000 new cases a year in Western markets, Zafgen says.

The primary endpoint – change in body weight versus placebo – was met, with an impressive 3.4kg lost in just four weeks versus 0.3kg for placebo recipients (p=0.01). Average weight loss was 6.2kg after an additional four weeks’ open-label treatment.

The compound has a novel action, inhibiting MetAP2, an enzyme thought to modulate fat metabolism. It could mark a stark departure from oral drugs like Belviq and Vivus’s Qsymia, which have convenient oral dosing but give placebo-adjusted weight loss of just 3-9kg a year and are aimed at the mass market.

On the basis of Zafgen’s four-week study beloranib’s efficacy is far higher. While the US FDA has mandated huge phase III trials for mass-market obesity drugs, largely to allay fears of side effects and abuse potential, beloranib should be able to avoid these thanks to its subcutaneous delivery and focus on niche populations.

Its lead indication is Prader-Willi syndrome, a rare genetic disorder whose symptoms often include obesity and in which hypothalamus function is also disrupted. A phase III study is due to read out this year.

Of course, this says little about any potential beloranib might have in broader populations. Belviq’s failure to make its mark here caused Arena’s stock to fall 41% last year, but hope for the company has been renewed by the early study of APD334, an S1P1 receptor agonist for autoimmune diseases.

In a trial of 60 volunteers this project showed dose-dependent lowering of blood lymphocyte counts, with mean decreases of 69% from baseline, Arena said yesterday.

The group felt confident enough to state that lymphocyte lowering at this level correlated with phase II and III efficacy of other S1P1 modulators. It plans to begin a phase II study in ulcerative colitis and Crohn’s disease.

Both Arena and Zafgen are flush with money, and the latter looks well placed to press ahead with its stated IPO aim: to advance beloranib for obesity and Prader-Willi syndrome.

Arena’s $188m of third-quarter cash notwithstanding, the company must surely now look to raise more while it has the chance.

To contact the writer of this story email Jacob Plieth in London at [email protected] or follow @JacobEPVantage on Twitter