Arena Pharmaceuticals Inc. (ARNA)’s weight- loss pill, the first cleared in the U.S. in 13 years, and an expected rival are potential breakthroughs in the treatment of obesity that may spur major drugmakers into the market.
Data showing an estimated 42 percent of the U.S. population will be obese by 2030 has increased interest in finding therapies that can win approval even with long-term cardiovascular side effects that have raised regulatory concerns. Companies will be watching sales of Arena’s Belviq and Vivus Inc. (VVUS)’s Qnexa, slated for a Food and Drug Administration decision by July 17, as barometers for potential deals.
Insurers probably won’t cover Arena’s pill until they see greater benefits than the modest weight loss shown in clinical trials, said Edward Tenthoff, an analyst with Piper Jaffray & Co. in New York. Still, at a cost of $4 a day for the twice- daily therapy, sales may hit $2 billion by 2020, he estimates.
“In every single board room, you have instructions from the chairmen and chairwomen to the chief scientific officers to ‘Find me something like Arena with freedom to operate and without the licensing agreements,’” Stephen Brozak, president of WBB Securities in Clark, New Jersey, said in a telephone interview.
Arena, based in San Diego, licensed its obesity medicine to Tokyo-based Eisai Co. (4523) to sell in the U.S., potentially hampering the company’s takeover prospects, Brozak said. Eisai’s so-called standstill agreement with Arena in July 2010 prevents the Japanese drugmaker from purchasing the biotechnology company, unless someone else tries to first, said David Schull, president of Russo Partners in New York, a public relations agency working with Arena.
Mountain View, California-based Vivus plans to sell Qnexa itself in the U.S., using 150 representatives to reach 25,000 doctors, Chief Financial Officer Timothy Morris said during a presentation last week. Still, moving from drug development to sales is a difficult transition and the biotechnology company should look to be acquired, Simos Simeonidis, an analyst with Cowen & Co., wrote yesterday.
“Qnexa is a drug with tangible blockbuster potential that should be in the hands of big pharma,” Simeonidis wrote in a note to clients. “With all its problems and issues, this is the one thing big pharma has always done better than anyone: get primary care docs to prescribe its products.”
Arena increased 29 percent to $11.39 at yesterday’s close in New York. Vivus gained 7.4 percent to $28.33. Eisai gained 2.4 percent to 3,450 yen as of 10:55 a.m. Tokyo time, set for the highest close since March 26, 2010.
More than 78 million U.S. adults are obese, according to the Centers for Disease Control and Prevention in Atlanta. Globally, about 500 million people are obese, as levels doubled in every region of the world from 1980 to 2008, according to a World Health Organization report last month. Obesity raises the risks of diabetes, heart attacks and stroke, and costs the U.S. economy an estimated $147 billion a year in medical expenses and lost productivity, according to the CDC.
The last prescription weight-loss drug approved by the FDA was Roche Holding AG’s Xenical in 1999. New therapies have been stymied by safety issues, including Abbott Laboratories’ diet pill Meridia, which was removed from U.S. shelves in October 2010 on concern about potential links to heart attacks and strokes.
Arena’s drug, previously called lorcaserin, and Vivus’s Qnexa each were rejected by the FDA in 2010. Regulators said lorcaserin raised cancer concerns and Qnexa may have been tied to birth defects and heart risks. In recent panel hearings, advisers to the agency determined the benefits of the drugs outweighed the risks.
Arena’s treatment affects an area of the brain that helps a person eat less and feel full after consuming small amounts of food, the FDA said in a statement yesterday.
Arena and Eisai agreed to conduct six post-market studies to assess the safety and efficacy of Belviq, including a long- term cardiovascular outcomes trial to assess the potential for major cardiac risks such as heart attack and stroke, the FDA said. The pill works in a similar way to fenfluramine, part of Wyeth’s fen-phen appetite-suppression drug combination pulled from pharmacies 15 years ago when it was linked to heart valve abnormalities.
Orexigen Therapeutics Inc. (OREX), which is also developing a weight-loss pill called Contrave with Osaka, Japan-based Takeda Pharmaceutical Co., agreed in September to conduct a two-year study of the medicine’s heart risks.
Once the pills are approved, they may be slowed getting to the market for a Drug Enforcement Agency review based on their potential for abuse.
The drug agency’s decision on Belviq may take four to six months, Arena’s management said yesterday on a conference call.
Obesity is defined as having a body mass index of more than 30. A 6-foot-tall adult man weighing 221 pounds (100 kilograms) or more is considered obese, as is an adult woman standing 5 feet, 6 inches tall weighing 186 pounds or more, according to the U.S. National Institutes of Health.
Patients who tested Arena’s pill in three studies lost about 3 percent more of their body weight than those who took a placebo, FDA staff said in a May 8 report. People who took part in trials on Vivus’s Qnexa lost 6.7 percent and 8.9 percent more of their body weight on mid and high doses compared to those who used a placebo, FDA staff said in a Feb. 20 report on the drug.
U.S. drugmakers may not be put off by the limited success of the clinical trials. Pharmaceutical companies lost patent protection to products with $34 billion in annual sales last year, including Pfizer Inc.’s best-selling cholesterol drug Lipitor. Revenue at risk from generics will rise to $147 billion by 2015, according to data compiled by Bloomberg.
“What will draw the pharmaceutical moths to the flame is the revenue numbers,” Brozak said.
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