VIVUS Inc. (NASDAQ: VVUS) is getting yet one more sign of life for its Qnexa drug aimed at treating obesity. The emerging drug outfit has reached an agreement with the FDA on resubmitting its new drug application as an obesity treatment.
Here is the plan: “VIVUS intends to resubmit the QNEXA NDA by the end of October 2011, prior to completion of the FORTRESS study. Top-line results from FORTRESS are expected in December 2011, with validation of FORTRESS expected in the third quarter of 2012. The FDA also stated that an Advisory Committee meeting for QNEXA will be held in the first quarter of 2012.”
It was also just earlier this week that its Avanafil phase III study results were shown again to be positive in its REVIVE study in diabetes.
What helps VIVUS here is that treating obesity also in effect treats diabetes, heart and respiratory conditions, hypertension, dyslipidemia, allows for more active lifestyles, and more. It also needs to be noted that the FDA has treated most obesity treatments as taboo due to side-effects and and due to a lack of results in many instances. The history of obesity drugs is a marred one.
Orexigen Therapeutics, Inc. (NASDAQ: OREX) and Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) are also both up a limited amount as they are “the other obesity drug contenders” by Wall Street’s eyes. Those are not as close, not by a mile, if you note the share prices. Orexigen is up 2.5% at $1.41 and Arena is up 3% at $1.43.
VIVUS stock is up almost 8% at $9.14 but the stock was up in the double-digits at $9.62 earlier. As of 11:15 AM EST there have also been more than 2.7 million shares traded when the average volume is only 1.5 million shares.
Before the effects of this news pop, Thomson Reuters had a consensus price target objective of $11.69 on VIVUS and the 52-week trading range has been $5.28 to $11.48.
JON C. OGG
We have a new report sizing up obesity drugs this morning from Bank of America Merrill Lynch. The long and short of the three ratings is that Orexigen Therapeutics, Inc. (NASDAQ: OREX) and Vivus, Inc. (NASDAQ: VVUS) are both rated ‘Buy’ at Bank of America Merrill Lynch, but Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) is ‘Underperform’ rated. As always, it is the devil in the details that offers the most insight.
Vivus, Inc. (NASDAQ: VVUS) is finalizing its study design and the company’s President said efforts to finalize the trial design is assessing the risk of fetal malformations from Qnexa use in pregnant women. The company will complete its retrospective analysis and re-file the Qnexa application by year-end. If the fetal malformation results are bad, then Vivus will re-file for a limited indication that excludes excluding women of child-bearing age. BofA believes this will boost the chance of commercially available in 2012 and it has a discounted cash flow model price of $10.00 ($7 of which is based upon Qnexa). An earlier than expected approval or securing a commercial partner could offer upside.
Orexigen Therapeutics, Inc. (NASDAQ: OREX) is getting ready for an FDA meeting this quarter and its CFO focus is on that meeting. The company hopes for FDA approval on cutting the time required for pre-approval. It so far is assuming 0.5% per year in major cardiac event risk. The company indicated that Takeda would participate in the upcoming FDA meeting for Contrave. BofA sees a relatively low downside risk for Orexigen with a discounted cash flow price target of $5.00. It is using a 50% chance of success in its model but noted that upside could be seen if the FDA approves trials faster, if it secures an international sales partner, or if managed care organizations add weight loss drugs to formularies.
Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) will conduct a three month “rat carcinogenicity trial” of Lorcaserin to satisfy the requirements in FDA’s complete response letter. Arena will conduct several non-human studies to assess the potential role of elevated prolactin levels. The company submitted results from its BLOOM-DM trial on obese patients with diabetes showing a statistically significant reduction in A1c and fasting glucose levels from lorcaserin. Bank of America remains cautious and has a $1.00 discounted cash flow target on Arena. The risks to its $1 target are an FDA request for long-term trials, a rejection of the lorcaserin NDA, an approval with restricted use, and a slower than expected sales ramp after approval. Some upside could be there if lorcaserin gets approval before expectations, if production costs are lower, and if lorcaserin can gain market share faster than is expected.
For whatever this is worth, BioHealthInvestor’s take is that the most likely of these three to get approval is Vivus for Qnexa and then Orexigen for Contrave. Our take is that Vivus will get approval but it will exclude pregnant women and those who may wish to become pregnant. Most doctors already monitor pregnant womens’ medications as is and it seems that a doctor would not want at all for a pregnant woman on a weight loss drug during pregnancy going in. Many doctors are even against most basic vitamins and supplements during pregnancy, let alone most prescription drugs.
JON C. OGG
Orexigen Therapeutics, Inc. (NASDAQ: OREX) is beyond ugly after the FDA said that the company must now submit more trial data before its new diet pill Contrave may be cleared for sale. The vote was 13-against versus 7-for votes and now the FDA is asking for another study on the drug’s cardiovascular risks.
Outside FDA advisers said back in early December that the benefits of the weight loss exceed the dangers of a higher pulse and blood pressure, with the indication that a larger study targeted on risks of the heart might until after the final drug approval. That wasn’t so.
Both VIVUS Inc. (NASDAQ: VVUS) and Arena Pharmaceuticals Inc. (NASDAQ: ARNA) have been in a race with Orexigen to introduce the first approved diet pill for weight loss in a about a decade. Now all of these products are on the back-burner and approval will not likely be seen in the near-term on any of these drugs.
Orexigen is down 71% at $2.63 and shares hit a new year low and the new 52-week range is $2.50 to $11.15. VIVUS is down 15% at $7.57 and its 52-week range is $4.69 to $13.68. Arena shares are flat at $1.58 as its hope was already diminished.
Abbott Laboratories (NYSE: ABT) recently pulled its Meridia weight loss pill off of the market due to heart risks. Orexigen was expected to receive royalties from partner Takeda if it was approved. At issue with all these drugs is that they all have the possibility of becoming blockbuster drugs with more than $1 billion in annual sales from America alone. The competing drugs Qnexa from VIVUS have concerns about birth defects tied to one of the ingredients, while lorcaserin from Arena has tumor risks associated with it.
Contrave uses two approved drugs as a cocktail and the target areas are different parts of the brain which influence appetite and influence cravings. One is an antidepressant and one is a treatment for alcohol and opioid addictions. While patients lost generally 5% of their weight after a year, the weight loss group had a higher pulse and higher blood pressure than the placebo.
What just happened is that Orexigen was put in a situation where it has to evaluate what to do with its lead candidate. A new trial will easily run into the millions and millions of dollars and the time frame could easily run well over a year. Just how big the costs and how long the time would be, well that is still up for debate. Orexigen had just over $100 million in cash and short-term investments at the end of September-2010. Chances are that this is not enough cash.
Things went from maybe to awful here. Now it is dire.
JON C. OGG
EnteroMedics Inc. (NASDAQ: ETRM) is raising more capital than had been previously disclosed and its shares are getting hit as a result. The company which focuses on devices using neuroblocking technology now plans to sell more shares and warrants.
The company is raising R&D funds for the commercialization of its obesity treatment. It is selling 14.8 million shares and warrants, higher than the 12 million previously disclosed. The price is at $1.75, with a warrant exercise price of $2.19 per share.
As far as how this compares to the float and dilution, that is rather large because the float was said to be only about 7.5 million shares before this offering.
After the obesity treatment news from Orexigen (NASDAQ: OREX) this week, the hiked offering may be less of a surprise. Here is the problem: shares closed at $2.21 yesterday. The early indications have EnteroMedics shares down over 12% at $1.93 and the 52-week trading range is $1.52 to $8.64. The market cap here was a mere $16.5 million as of yesterday.
JON C. OGG
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
Abbott Laboratories (NYSE: ABT) is the latest casualty in the war on obesity. The company agreed this afternoon to voluntarily withdraw its obesity drug Meridia from the U.S. market. Obesity drugs are just scorned by the FDA as side effects are being put ahead of the key benefits. We are watching shares of VIVUS, Inc. (NASDAQ: VVUS), Arena Pharmaceuticals, Inc. (NASDAQ: ARNA), and Orexigen Therapeutics, Inc. (NASDAQ: OREX) as obesity-related secondary names.
The reason: clinical trial data indicated an increased risk of heart attack and stroke, according to the FDA. Here is the problem though. The FDA approved Meridia all the way back in November 1997. The approval was given for weight loss and maintenance of weight loss in obese people. The problem is that the FDA also approved this for use in certain overweight people with other risks for heart disease.
The FDA was quoted as saying, “Meridia’s continued availability is not justified when you compare the very modest weight loss that people achieve on this drug to their risk of heart attack or stroke. Physicians are advised to stop prescribing Meridia to their patients and patients should stop taking this medication. Patients should talk to their health care provider about alternative weight loss and weight loss maintenance programs.”
Obesity drugs are a huge unmet and under-served sector of biohealth by pharmaceutical companies and biotech companies alike. The FDA is VERY hard on these drug candidates, and sometimes the side effects are about all that is ever discussed despite how well some tests have been. Despite the issues and a lack of interest for the drug, Meridia sales hit $340 million globally in 2008 but fell to $311 million in 2009.
VIVUS, Inc. (NASDAQ: VVUS) has Qnexa, which the FDA has been hard on, under development and more data is expected on the results of its ongoing studies. VIVIS shares are up 1.9% at $6.99 and the 52-week range is $4.69 to $13.68. When the company just this week sold off its MUSE for erectile dysfunction the company said that Qnexa’s commercialization was one of its two top priorities going forward.
Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) and Eisai Inc. have upcoming lorcaserin presentations at Obesity 2010, the 28th Annual Scientific Meeting of The Obesity Society, in San Diego, California. Lorcaserin is intended for weight management, including weight loss and maintenance of weight loss, in patients who are obese with a Body Mass Index of 30 or greater AND in patients who are overweight with a Body Mass Index of 27 or higher and which have at least one weight-related co-morbid condition. Lorcaserin’s has an October 22 PDUFA date at the FDA. Its shares are up 3% at $1.69 and the 52-week trading range is $1.51 to $8.00.
Orexigen Therapeutics, Inc. (NASDAQ: OREX) has Contrave in development and has presentations taking place at the 28th Annual Scientific Meeting of The Obesity Society at the San Diego Convention Center from October 8 to October 12. Its shares are up 15 at $6.32 and the 52-week range is $3.81 to $9.50.
Abbott shares are still up 0.35% at $52.77 versus a 52-week range of $44.59 to $56.79. With an $81+ billion market cap, Abbott does not have any related drug woes where one product wrecks the company.
The big question is whether a pill is the answer. Sustained weight loss will probably never come from a pill or an injection alone. Chances are, even in a hundred years that the answer is going to come down to low fats and low sugars, lots of fiber and vegetables, portion control, less processed foods, and a strict exercise regimen.
JON C. OGG
Is VIVUS Inc. (NASDAQ: VVUS) the next stock that could double in emerging pharma and biotech? It depends upon whom you ask. The stock was started as “Buy” at Wedbush with an price target of $20.00 per share. This follows a long line of positive research initiations from last year and this year, but $20.00 is now the highest target we see from the recognized research outfits in Thomson Reuters. The prior highest target was $18.50, and the average target was roughly $14.00.
Wedbush’s note calls VIVUS as being one of the most attractive in the mid-cap biotech space. The firm noted that the $775 million market cap is well below what it should be and could be for a drug that addresses such a large and virtually unmet need of treatment. The company also still holds all of its own rights, and we’d throw in the note that this puts it among the potential pool of biotech acquisition candidates out there.
After Amgen Inc. (NASDAQ: AMGN) and Sonofi-Aventis (NYSE: SNY) are both reportedly out looking for target acquisitions, it is hard to leave VIVUS entirely off the list of potential buys. The issue is that the FDA decision is still pending.
If you have been a reader of BioHealth Investor for very long, you know what the quest for ten-baggers happens to be. The chase for 1,000% gains is hard to find outside of biotech stocks. In fact, looking for ten-baggers is a very risky business venture because it is no different than a quarterback throwing the long Hail Mary passes every play. There will be touchdowns, but there are going to be many interceptions and probably a lot of injuries. But there are many instances where independent research analysts issue what are deemed as objective research reports which call for gains of 100% or more.
Oxigene Inc. (NASDAQ: OXGN) is an example of one such stock which has been given an exponential upside call in a research note. We decided to back through the rest of our research call history in recent days and weeks to look for the other stocks with exponential or near-exponential calls. Of course these are not your multi-billion stocks which have already risen exponentially. Among these are Inovio Biomedical Corporation (AMEX: INO), Novavax, Inc. (NASDAQ: NVAX), Orexigen Therapeutics, Inc. (NASDAQ: OREX), Sequenom Inc. (NASDAQ: SQNM), and Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA).
We have given a breakdown on each of these for the upside of the time and the upside remaining on individual price targets.