Bank of America/Merrill Lynch is out with a very positive call for VIVUS, Inc. (NASDAQ: VVUS) after Orexigen Therapeutics, Inc. (NASDAQ: OREX) received an FDA panel backing yesterday for its Contrave diet pill for weight loss. The thesis here is that the path for FDA approval of Qnexa for weight loss will also be set.
BofA/ML raised its rating to BUY and more importantly it raised its price target objective to $12.00 from $6.00 in the call.
The note says, “We previously had low expectations for a near-term approval for VIVUS’ obesity drug Qnexa, due to concerns that the FDA would require a large scale cardiovascular events trial prior to approval, consistent with the agency’s more cautious stance on CV risks for metabolic drugs.
The FDA advisory panel’s vote for Orexigen’s Contrave is expected to provide VIVUS with a more clear path to overcome the FDA objections and requests.
Another issue is better efficacy for Qnexa from VIVUS. BofA noted that Qnexa has a better effect on blood pressure reduction and a better risk/reward profile with better efficacy against Contrave at 9% weight loss versus 5% weight loss.
Orexigen Therapeutics, Inc. (NASDAQ: OREX) is trading up above $11.00 in early pre-market trading after a $4.87 close and against a 52-week range of $3.81 to $8.88. VIVUS, Inc. (NASDAQ: VVUS) is trading up at almost $9.00 in early pre-market indications after a $7.80 close and against a 52-week range of $4.69 to $13.68.
JON C. OGG
What? An FDA panel backing in the diet pill arena? Orexigen Therapeutics Inc. (NASDAQ: OREX) had seen some controversy grow around its Contrave diet drug pill to assist in weight loss, but tonight is good night at the company. An FDA panel voted 13 YES to 7 NO in an advisory panel recommendation before a formal FDA review for approval. If approved, this would mark the first real diet drug in a decade. This news is likely to bolster rivals as well.
Contrave was voted on favorably after its benefits in weight loss in the obese are greater than the risks. Earlier comments voiced concern over heart risks.
While the FDA formal approval or denial is not assured, the general trend is that the FDA follows a panel advisory recommendation when the votes are a large majority in favor of approval.
Orexigen’s news is going to be a win for other speculative emerging pharma companies. VIVUS Inc. (NASDAQ: VVUS) closed up over 10% at $7.80 and the stock rose over 8% to $8.45 in the after-hours trading session. Despite delays at the FDA, this is one we have thought would get approval even if the conditions are great. Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) closed up 2.15% at $1.41 and shares are up over 11% at $1.57 in the after-hours.
Today was not an assured win for the diet pill drug segment. It was the next best thing.
JON C. OGG
As you have grown accustomed to, the FDA is hitting a company before its PDUFA date. Orexigen Therapeutics, Inc. (NASDAQ: OREX) is under pressure after FDA briefing documents ahead of next Tuesday’s FDA panel meeting that is meant to recommend whether the FDA should or should not approve Orexigen’s diet drug called Contrave.
Orexigen shares are down as FDA staff comments question whether or not the diet pill is safe and effective. Contrave has reportedly satisfied only one of two efficacy measures in the FDA studies. The safety profile is also under the microscope as Contrave has been linked to higher blood pressure, dizziness, psychiatric events and kidney dysfunction.
The concerns here seem to be more legitimate concerns than others. It also feels like it is just Orexigen’s turn to be inside the barrel as Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) and VIVUS, Inc. (NASDAQ: VVUS) have both faced some of the same FDA hurdles at the panel reviews.
About 5 minutes after the market open, Orexigen is down 9.9% at $4.93 on more than 800,000 shares versus an average volume of 1.467 million shares and versus a 52-week range of $3.81 to $8.88. Arena shares are up less than 0.7% at $1.40 and VIVUS shares are up 3.3% at $6.95.
Abbott Laboratories (NYSE: ABT) recently withdrew its diet pill Meridia in the U.S. and in Canada due to higher risk profiles of heart attack and stroke.
The diet saga continues. Maybe the reality is that the cure relies more on diets and visits to the gym rather than just in a pill.
JON C. OGG
Biodel Inc. (NASDAQ: BIOD) is the latest biotech to feel the pain of FDA denial. The company is seeings its shares crushed this morning after the FDA issued a Complete Response Letter, which means that an approval was denied.
The FDA Complete Response Letter was for Linjeta as an injection for the treatment of type 1 and type 2 diabetes to improve glycemic control.
What was disclosed is the the FDA has requested additional information, including comments related to clinical trials, as well as statistical analysis, chemistry, manufacturing, and on controls.
The FDA stated that the type 1 trial analysis over efficacy was not sufficient for establishing conclusive evidence of efficacy.
In the type 2 trial analysis, the FDA noted that non-inferiority was established in the complete population. The other side is that the FDA also noted that non-inferiority was not established in the intent-to-treat population, due to FDA’s not considering a modification of the statistical model.
As far as safety, the response pointed out that unequivocal non-inferiority needs to be achieved to compare the risk of hypoglycemia.
Here is the real problem. The FDA has requested that Biodel conduct two new phase III clinical trials using the commercial formulation, one in patients with type 1 diabetes and the other in patients with type 2 diabetes. The new tests under these guidelines are meant to establish safety efficacy and safety data.
Two new Phase III trials means that the prior data will have to be replaced with new trial data, and that means going back to the drawing board.
The company now has a market cap of roughly $42 million. At the June 30, 2010 cut-off, Biodel was down to $23.85 million in cash and short-term investments. If you go back to the September 30, 2009 annual balance sheet, that figure was over $54 million.
Biodel shares were down over 50% at $1.79 at the open this morning, and that marked a new 52-week low for the stock.
JON C. OGG
VIVUS, Inc. (NASDAQ: VVUS) is doomed. That is what you would think if you just saw the FDA denial to approve Qnexa for weight loss. Most of the headlines on financial aggregation sites are full of negative headlines…. FDA Nixes VIVUS’ Qnexa, FDA Rejects VIVIS ObesityDrug, VIVUS Fails to Win U.S. Approval; US rejects Highly-Anticipated Diet Drug… and on and on. While the FDA did not approve Qnexa and has asked for more data, the underlying belief now appears to be that despite the headlines Qnexa WILL ultimately be able able to secure FDA approval.
VIVIS received a Complete Response Letter from the FDA on its New Drug Application for the investigational new drug QNEXA Controlled-Release Capsules, with the communication that the NDA cannot be approved in its present form. QNEXA is VIVUS’ big hope and is a once-a-day formulation for the treatment of obesity.
The indication includes weight loss and maintenance of weight loss, in patients who are obese or overweight with co-morbidities such as hypertension, type 2 diabetes, dyslipidemia or central adiposity.
In the clinical section of the CRL, the FDA requested a comprehensive assessment of topiramate’s and phentermine/topiramate’s teratogenic potential, including a detailed plan and strategy to evaluate and mitigate the potential teratogenic risks in women of childbearing potential taking the drug for the treatment of obesity. The FDA also asked VIVUS to provide evidence that the elevation in heart rate associated with phentermine/topiramate does not increase the risk for major adverse cardiovascular events. Apparently, the investment community and VIVUS believe this can be overcome.
The FDA requested that VIVUS formally submit the results from the already completed SEQUEL study (OB-305), a 52-week extension study for a subset of 675 patients who completed the previously reported 56-week CONQUER study. Top-line results from the two-year SEQUEL study were announced by VIVUS on September 21, 2010 and a final study report is being prepared for submission to the NDA.
The FDA reserved the right to comment further on proposed labeling. On REMS, the FDA requested that a discussion of an already submitted REMS plan be continued after the written response from VIVUS has been submitted. The agency also requested a safety update of any new adverse events be submitted to the NDA. Finally, the FDA stated that if approved, phentermine/topiramate would be a Schedule IV drug due to the phentermine component. Again, the belief here appears to be that this can be overcome.
VIVUS said that it plans to compile analyses integrating existing nonclinical and clinical data to provide a comprehensive assessment of the teratogenic potential of topiramate. The company also plans to provide several new analyses to demonstrate QNEXA does not increase the risk for major cardiovascular events, which would include data from our OB-305 and OB-204 studies.
More importantly, VIVUS noted that the CRL does not indicate that new clinical studies were requested. The company did still hedge a bit by noting that if any of the FDA concerns are not alleviated, additional clinical studies may be required.
Investors are hanging on the company’s comments as well. The response release noted, “We remain confident in the efficacy and safety profile of QNEXA demonstrated in the clinical development program and look forward to continue working with the FDA towards the approval for the treatment of obesity,” said Leland Wilson, chief executive officer of VIVUS. “We are preparing a comprehensive response to the CRL for submission to the FDA in approximately six weeks.”
If this is only six weeks, then there is hope. If there are no additional trials that need to be conducted, then there is hope. VIVUS shares are up 32% at $8.11 this morning right before the open and the average volume has been hit even without the market yet open. There have been 3.6 million shares traded and the average volume is only about 3.1 million shares. VIVUS has a 52-week range of $4.69 to $13.68.
The FDA has not exactly been receptive to weight loss drugs from many companies. So far hope is prevailing over caution. Stay tuned!
JON C. OGG
Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) is getting pounded this morning. Shares are effectively cut in half after the FDA declined to approve Bydureon as a potential diabetes drug with the request that it and partners need to do more testing..
The FDA requested a thorough QT study to analyze the effect on heart rates. Also requested was the evaluation of the efficacy and the labeling of the safety and effectiveness.
Eli Lilly & Co. (NYSEL LLY) and Alkermes Inc. (NASDAQ: ALKS) plan to respond to the FDA request, however the release said “by the end of next year” and that this was pending FDA discussions. The requirement for this additional data will requiring a six month review.
Amlylin’s Bydureon is the once a week injectable treatment of Byetta.
Amylin also gave preliminary data on revenues showing that revenues were approximately $154 million versus $192.9 million in the same quarter a year ago.
Amylin shares are down a whopping 48% at $10.65, under the 52-week trading range before of $11.01 to $24.21. Eli Lilly is down 4.2% and Alkermes is down 23% at $11.05 in pre-market trading.
JON C. OGG
MannKind Corporation (NASDAQ: MNKD) is not without controversy. So what happens when you hear ‘buyout rumors’ driving the stock higher?
Barron’s reported a rumor first being published by TheFlyOnTheWall that MannKind could be a takeout buyout candidate. Eli Lilly & Co. (NYSE: LLY) was noted as the buyer, and $12.50 was the price hinted at.
The problem is that it is still an outstanding issue over whether or not MannKind will get its inhaled insulin approved by the FDA. The company has raised money and it has even gone as far as changing the name for AFREZZA.
To make matters even more complicated, MannKind is a highly-shorted stock. The most recent settlement date of September 15, 2010 showed that the short interest was down to 14.215 million shares. That was actually the lowest short interest since mid-April, but that represented 13 days to cover at the most recent time.
Recent financing has not been without criticism, and share lending arrangements are often hated by shareholders. The big catch here is that the inhalable insulin market will be huge if the safety risks can ever be overcome. Imagine no more needles for diabetics taking insulin. Pfizer Inc. (NYSE: PFE) has gone down this path before. It failed.
Novo Nordisk A/S (NYSE: NVO) has one monster insulin franchise, and it would likely do anything it could to protect its market share and its market cap is a whopping $57+ billion. Not bad for a Danish company, not bad at all. Its shares hit a new 52-week high of $99.75 today.
Options trading has been elevated today as well in MannKind trading, but the options expirations of JAN-2011 are the first month where the options start to price in any FDA event decisions.
In late-day trading, MannKind shares were up over 8% at $6.59, but the 52-week trading range is $4.76 to $11.12. The bet is an obvious one: inhalable insulin, if ever approved, is an easy blockbuster treatment.
Keep in mind that rumors have been out on MannKind before. Of course, most rumors turn out to be nothing more than unfounded rumors. The risks of acquiring a company without FDA approval are often too large for a large for a Big Pharma player. With a sub-$1 billion market cap, anything is possible.
JON C. OGG
September 29, 2010 (3:30 PM EST)
Biodel Inc. (NASDAQ: BIOD) is up $0.68 (13.63%) today to $5.67 in anticipation of the October 30th FDA decision on whether or not to approve VIAject, the company’s diabetes treatment.
Biodel Inc. is a biopharma company that works primarily in the treatment of diabetes.
-Michael B. Sauter
Biodel Inc. (NASDAQ: BIOD) was up $0.32 (7.73%) today to $4.46 despite recent reports of a Q3 net loss of $8.6 million, or $0.36 per share. The company possessed shares valued at almost $20 in the summer of 2008, however investor interest has since waned considerably. Possible FDA approval of the company’s device that device that injects insulin into the bloodstream more rapidly than other methods could possibly could come this year, perhaps, effectively restoring the company’s popularity.
Biodel Inc. is a biopharma company that specializes in treatments for diabetes.
-Michael B. Sauter
MannKind Corporation (NASDAQ: MNKD) is a true cult stock in biotech with FDA communication and many skeptics over how safe or effective its product candidate is. Shares are trading higher this morning on news that the company has re-submitted its new drug application for AFREZZA and classified it as a Class 2 resubmission. The company also noted that the FDA accepted the resubmission.
The FDA has set a new Prescription Drug User Fee Act (PDUFA) action date of December 29, 2010.
The FDA’s Complete Response Letter issued back in March had requested additional information from MannKind regarding AFREZZA. In the re-submission,the company says that it has provided clinical data from a recently completed efficacy study in patients with type 1 diabetes, The company also noted that it has provided an updated pooled safety data related to AFREZZA and information on the comparability of its delivery system used in pivotal clinical studies.
MannKind is not without its share of controversy. The inhaled insulin market is one that has never been fully developed because efficacy and safety issues elsewhere. Some critics blame the poor performance of predecessors while others blame MannKind for its own woes. The short interest below should show just how much controversy there is around MannKind:
- 6/30/2010 had S.I. of 17,236,299 shares.
- 6/15/2010 had S.I. of 16,753,981 shares.
- 5/28/2010 had S.I. of 15,357,935 shares.
- 5/14/2010 had S.I. of 15,107,662 shares.
So far we have shares up almost 9% at $6.76 on almost 700,000 shares as of 9:45 AM EST.
JON C. OGG