US regulators have said a eulogy for the current generation of obesity drugs. Saying new clinical trials are necessary, the FDA has sent a complete response letter to Orexigen Therapeutics on its combination therapy Contrave, making it the last of three obesity drugs to get such a notice in the past three months.
Shares in the California group plummeted 71% today to a two-year low of $2.60 following the announcement, dashing expectations that had built following a positive advisory committee vote (Contrave climbs one step higher, December 8, 2010). Suggesting that little faith remains in this space, investors also pushed down the shares of competitor Vivus, which had offered the next best chance of success given that so far it has not been asked to put fat-fighting pill Qnexa through a new clinical programme (Complete response letter revives Vivus, October 29, 2010).
Wrong kind of CRL
In a call with investors today, Orexigen executives did not disclose much beyond the FDA’s request for a placebo-controlled, double-blind study to better judge the risk of major cardiovascular events. The bupropion/naltrexone combination therapy was being watched for its effect on blood pressure and pulse in a population expected to be taking the drug chronically.
While scepticism has reigned over this space throughout the first-to-market derby of the past year, there had been some hope that the adcom’s deliberations over Contrave would push any cardiovascular study into a post-marketing regime, as suggested by an 11-8 adcom vote supporting such a timetable. Thus a demand for a pre-market study likely to last years and cost millions came as a surprise to hopeful investors.
The first step, as is always the case in such situations, is to meet with regulators to flesh out details on what the additional trial will need to show. Although he emphasised that no decisions had been made, chief executive Michael Narachi acknowledged that abandoning the drug may be in the best interest of shareholders.
Although the company was sitting on a $100m cash pile at September 30, 2010, Mr Narachi said it was likely that the company would need to raise funds to pay for new trials as under its partnership with Takeda, Orexigen is responsible for all pre-approval programmes (Obesity race tightens up as Takeda snares Contrave, September 2, 2010).
With today’s drop in share price, Orexigen is trading only slightly above cash levels, so the company desperately needs to do something to increase shareholder value, which would not be helped by a dilutive fundraising to pay for the new trials.
Leerink Swann analysts reckon the FDA requirements will set Contrave back to at least 2014. Meanwhile some analysts have predicted that Orexigen's phase II follow-on obesity treatment, Empatic, could launch in 2014. Empatic is a combination of anti-epileptic agent zonisamide and bupropion, the problematic compound linked to the cardiovascular issues. As such Orexigen has some tough decisions to make on both its pipeline candidates.
Leerink Swann have dropped their Orexigen valuation from mid-teens to cash-per-share levels of $2, one of many downgrades likely on the way. Previous analyst price targets, following the positive adcom vote, included Jefferies at $17, Canaccord at $19 and JP Morgan at $16.
Whither Vivus and Arena?
Taken on its face, the notice of new clinical trials for Contrave would seem to put Vivus’ Qnexa, a combination of toprimate and phentermine, in the driving seat. Vivus’ FDA notice asked for an analysis of already collected cardiovascular data related to elevated heart rates, along with data on cleft lip incidence kept in registries related to topiramate. Vivus executives recently held an end-of-review meeting with FDA officials to discuss these matters.
That no new trials have so far been requested was seen as a positive sign for Qnexa, although the request for additional birth defect data sent Vivus' shares down 16% on Friday. Given the rather emphatic response today – shares are down a further 16% to $7.50 - Vivus investors are clearly much less optimistic on Qnexa's chances. Analysts from Leerink Swann note the similarities between Contrave and Qnexa in the FDA's concerns – elevated heart rate – raising the “spectre” of a pre-approval cardiovascular outcomes trial for Qnexa as well.
For Arena Pharmaceuticals, the third participant in the three-way obesity race, shares were largely unmoved at $1.59, signalling little change in a rapidly waning enthusiasm for the company's candidate, Lorqess. Arena recently sacked 25% of its workforce, or 66 positions, and following its own end-of-review meeting is seeking to clarify the cause of cancer signals in rats seen with Lorqess.
The bloom is off the rose of the obesity space once again. After repeated instances of fat-fighter drugs that have been abandoned in development or withdrawn from the market, the regulator’s safety worries are overshadowing any concerns about the chronic health risks of obesity. There is a slim chance one of these three drugs can be resurrected, but it seems more likely the best hopes for safer and more effective obesity treatments lie in earlier-stage candidates.