As we saw from the first meeting on VVUS Qnexa drug, the FDA advisory panel is holding weight loss drugs to higher standard. Unfortunately, ARNA Lorcaserin drug was not recommended for approval and the stock is down over 50% (and well off from $7+ a share to under $2).
I am surprised that OREX is not down more on ARNA rejection. OREX has less longer term data available for its drug Contrave. Since I do not think OREX Contrave will be recommended for approval at its the upcoming meeting December 7, 2010 I have decided to take a short position by selling Orex January 2011 calls.
I have decided to sell calls rather than short the stock outright as the stock is not available to borrow.
Showing posts with label OREX. Show all posts
Showing posts with label OREX. Show all posts
Friday, September 17, 2010
Tuesday, August 24, 2010
Sell ARNA
After reading the linked article below, I am concerned that ARNA's drug might not be recommended for approval.
http://blogs.forbes.com/matthewherper/2010/08/20/the-fdas-new-power/?partner=yahootix
I have sold my ARNA position (at $6.81, 8/24/2010). I currently hold VVUS and am awaiting any new information from the full FDA regarding their Qnexa drug.
http://blogs.forbes.com/matthewherper/2010/08/20/the-fdas-new-power/?partner=yahootix
I have sold my ARNA position (at $6.81, 8/24/2010). I currently hold VVUS and am awaiting any new information from the full FDA regarding their Qnexa drug.
Tuesday, August 3, 2010
Selling OREX, VVUS earnings transcript
Selling OREX off the rally on Monday (current price intraday $5.91). One of the main concerns with VVUS Qnexa drug was the lack of data (2 year results should be out sometime in the next 60 days). Meanwhile the latest OREX study just released is only 56 weeks of data.
The risk/reward profile for OREX is no longer attractive in my opinion. We have learned from the FDA advisory panel that longer term data is needed, especially for sensitive drugs that treat obesity / weight loss.
For more information, please see this article on SeekingAlpha
http://seekingalpha.com/article/217853-orexigen-steps-up-pace-in-obesity-drug-race
VVUS earnings transcript is out, a very quick read and very informative. It is definitely worth reading.
http://seekingalpha.com/article/218153-vivus-inc-q2-2010-earnings-call-transcript?source=email
The 2 year study is now completed and is being reviewed by the FDA. VVUS is working on analyzing all the data. This information should be available sometime in the 3Q to the shareholders.
VVUS is still optimistic that all 3 dosing levels for Qnexa will be approved.
On concerns with depression, "the other one [thing] I would say is that even those patients – and 75% of the patients that had adverse events for depression were able to continue on study, on drug. And if they were able to – and if they needed to go off drug, it resolved rapidly." (Leland Wilson, CEO)
Per my previous post, the risk reward is still favorable in VVUS. Yes, obviously we would have rather sold at $12 in hindsight, but with the stock trading at $5, there is no value for the possibility of Qnexa being approved in some form such as only certain doses or major warnings on the label.
The risk/reward profile for OREX is no longer attractive in my opinion. We have learned from the FDA advisory panel that longer term data is needed, especially for sensitive drugs that treat obesity / weight loss.
For more information, please see this article on SeekingAlpha
http://seekingalpha.com/article/217853-orexigen-steps-up-pace-in-obesity-drug-race
VVUS earnings transcript is out, a very quick read and very informative. It is definitely worth reading.
http://seekingalpha.com/article/218153-vivus-inc-q2-2010-earnings-call-transcript?source=email
The 2 year study is now completed and is being reviewed by the FDA. VVUS is working on analyzing all the data. This information should be available sometime in the 3Q to the shareholders.
VVUS is still optimistic that all 3 dosing levels for Qnexa will be approved.
On concerns with depression, "the other one [thing] I would say is that even those patients – and 75% of the patients that had adverse events for depression were able to continue on study, on drug. And if they were able to – and if they needed to go off drug, it resolved rapidly." (Leland Wilson, CEO)
Per my previous post, the risk reward is still favorable in VVUS. Yes, obviously we would have rather sold at $12 in hindsight, but with the stock trading at $5, there is no value for the possibility of Qnexa being approved in some form such as only certain doses or major warnings on the label.
Monday, July 19, 2010
Vivus (VVUS) update
Vivus (VVUS) current market cap 437MM, closed at $5.41 a share on 7/16/2010.
On Thursday, the FDA advisory panel shocked most biotech analysts with a 9-7 vote rejecting recommendation to the FDA for VVUS obesity weight loss drug Qnexa. While the panel agreed that Qnexa demonstrated clear weight loss efficacy, concerns over safety ultimately derailed the drug.
There was some initial confusion over the vote, as one member said they voted no where they voted yes. Unofficially, the vote was 10-6. In the meantime, many of the panel members votes stated that they were close, with some saying they voted borderline yes, but could have voted no and vice-versa.
There were three major safety concerns, memory loss, suicide risk, and possible defects with pregnancy.
In the press release (please see previous post), "VIVUS completed a thorough QT prolongation (TQT) study evaluating subjects taking Qnexa. The study was completed with no signal for QT prolongation. Subjects taking Qnexa also underwent complex and extensive cognitive and psychomotor testing using validated, FDA accepted testing methodologies. There was no clinically significant change in overall cognitive function or effect on psychomotor skills seen in patients taking Qnexa."
Suicide risk was also studied during the Phase III trials.
"Monthly assessments using prospective psychometric instruments in accordance with FDA's guidance showed no signal for suicidality risk. There were no suicide attempts or suicidal behaviors, and there was no signal for suicidal ideation across all treatment groups including placebo. Depression or depressed mood adverse events of a moderate to severe nature were less than 2% and were similar among patients in the Qnexa and placebo groups. Overall, depression scores, quality of life including self esteem and general health significantly improved for patients on Qnexa."
On every doctor visit, the patient group was tested for pregnancy. When a patient became pregnant, the patient was immediately stopped from taking the drug (whether placebo or not). None of the pregnancies had any adverse effects.
Michael G King, Jr. of Wedbush Securities said it best, "On a philosophical level, we do not comprehend the moral relativism as to why obesity drugs are “different”, and why the panel was perfectly fine to subject migraine patients to the supposed evil of topiramate, but the obese must wait."
Instead of at least having the option to try medicine, the obese will continue to elect stomach surgery (such as gastric bypass), which can have complications and could be high risk because of their weight.
What happens now? The FDA, although rare, can overrule the advisory panel. According to company management, there will be new information available, a 2 year follow up study on 650 patients. This information will be available in the next 3 months.
Most likely, the company will need to reapply in 2011 or 2012 with additional safety data. In the meantime, the company does have 200MM in cash to sustain itself and will not need to raise capital. If additional large studies are required, the company may need to raise capital or partner with a larger firm.
Chump1 is currently long all 3 stocks (VVUS, ARNA, and OREX.
On Thursday, the FDA advisory panel shocked most biotech analysts with a 9-7 vote rejecting recommendation to the FDA for VVUS obesity weight loss drug Qnexa. While the panel agreed that Qnexa demonstrated clear weight loss efficacy, concerns over safety ultimately derailed the drug.
There was some initial confusion over the vote, as one member said they voted no where they voted yes. Unofficially, the vote was 10-6. In the meantime, many of the panel members votes stated that they were close, with some saying they voted borderline yes, but could have voted no and vice-versa.
There were three major safety concerns, memory loss, suicide risk, and possible defects with pregnancy.
In the press release (please see previous post), "VIVUS completed a thorough QT prolongation (TQT) study evaluating subjects taking Qnexa. The study was completed with no signal for QT prolongation. Subjects taking Qnexa also underwent complex and extensive cognitive and psychomotor testing using validated, FDA accepted testing methodologies. There was no clinically significant change in overall cognitive function or effect on psychomotor skills seen in patients taking Qnexa."
Suicide risk was also studied during the Phase III trials.
"Monthly assessments using prospective psychometric instruments in accordance with FDA's guidance showed no signal for suicidality risk. There were no suicide attempts or suicidal behaviors, and there was no signal for suicidal ideation across all treatment groups including placebo. Depression or depressed mood adverse events of a moderate to severe nature were less than 2% and were similar among patients in the Qnexa and placebo groups. Overall, depression scores, quality of life including self esteem and general health significantly improved for patients on Qnexa."
On every doctor visit, the patient group was tested for pregnancy. When a patient became pregnant, the patient was immediately stopped from taking the drug (whether placebo or not). None of the pregnancies had any adverse effects.
Michael G King, Jr. of Wedbush Securities said it best, "On a philosophical level, we do not comprehend the moral relativism as to why obesity drugs are “different”, and why the panel was perfectly fine to subject migraine patients to the supposed evil of topiramate, but the obese must wait."
Instead of at least having the option to try medicine, the obese will continue to elect stomach surgery (such as gastric bypass), which can have complications and could be high risk because of their weight.
What happens now? The FDA, although rare, can overrule the advisory panel. According to company management, there will be new information available, a 2 year follow up study on 650 patients. This information will be available in the next 3 months.
Most likely, the company will need to reapply in 2011 or 2012 with additional safety data. In the meantime, the company does have 200MM in cash to sustain itself and will not need to raise capital. If additional large studies are required, the company may need to raise capital or partner with a larger firm.
Chump1 is currently long all 3 stocks (VVUS, ARNA, and OREX.
Monday, July 12, 2010
Buy VVUS, ARNA, and OREX
Vivus Inc (VVUS), Arena Pharmaceuticals (ARNA), and Orexigen Therapeutics, Inc (OREX) are all working towards FDA approval of new obesity/weight loss drugs. I believe that all 3 drugs will become blockbusters within the next two years.
VVUS current market cap of 931MM and closed at $11.52 a share on 7/9/2010.
ARNA current market cap of 393MM and closed at $3.88 a share on 7/9/2010.
OREX current market cap of 193MM and closed at $4.17 a share on 7/9/2010.
According to the FDA guidance, obesity drugs should reduce total body weight by at least 5% in one year.
VVUS has first mover advantage, meeting with an FDA advisory committee on July 15th, 2010 for their obesity drug Qnexa. The positive: Qnexa has the highest weight loss of the group at 14.7%. The negative: Qnexa also had the largest drop out rates (did not complete the study). While the completion rate was only 59% for those patients taking the high dose, the patients who completed the placebo was only 47%. While there were some minor side effects, my speculation as for the high drop out rate is from Phentermine. Qnexa is a combination of two drugs, Phentermine and Topiramate, which are both currently on the market as separate drugs.
Phentermine was one part of the now infamous Fen-Phen drug (the other drug was Fenfluramine). Fen-Phen was voluntarily recalled in 1997 due to potentially fatal heart valve problems. Phentermine, which was first FDA approved in 1959, had no safety issues until used as part of Fen-Phen.
During this time, Phentermine (as a stand alone drug) was not asked to be taken off the market. Phentermine did not interact with Fenfluramine in a way that made Fenfluramine more dangerous, Fenfluramine was dangerous by itself. This is why Pentermine was not taken off the market and is still prescribed today.
ARNA will be meeting with an FDA advisory committee on September 16, 2010 for their obesity drug Lorcaserin. The positive: Lorcaserin had the least amount of side effects. The negative: Lorcaserin had the least amount of weight loss at 5.0%, just barely meeting the FDA guidelines of efficiany. On July 1st, ARNA signed a deal with Eisai, a large pharmaceutical company (3.7B in sales in the U.S), believing that Lorcaserin will ultimately be approved. Eisai will be able to help guide ARNA through the FDA approval process.
OREX will be meeting with an FDA advisory committee on December 7, 2010 for their obesity drug Contrave. The positive: Contrave had weight loss of between 5% and 10% and the drug was also studied for the effect on Type II diabetes. The negative: Contrave could be the last drug approved. ARNA has publicly stated that they are now studying the effect on Type 2 diabetes, while VVUS (although not publicly stated) are sure to be studying for Type II diabetes as well.
Ultimately, I recommend buying all 3 stocks in equal portions as I believe all three drugs are approved. I think all 3 drugs can be big winners.
For more information please see the following links
A good overview of all 3 drugs and results
http://finance.yahoo.com/news/FDA-to-review-first-of-3-new-apf-3053966258.html?x=0&.v=1
VVUS press release concerning Phase III studies
http://ir.vivus.com/releasedetail.cfm?ReleaseID=407933
Chump1 is currently long all 3 stocks ahead of the FDA advisory panel for VVUS Qnexa drug.
VVUS current market cap of 931MM and closed at $11.52 a share on 7/9/2010.
ARNA current market cap of 393MM and closed at $3.88 a share on 7/9/2010.
OREX current market cap of 193MM and closed at $4.17 a share on 7/9/2010.
According to the FDA guidance, obesity drugs should reduce total body weight by at least 5% in one year.
VVUS has first mover advantage, meeting with an FDA advisory committee on July 15th, 2010 for their obesity drug Qnexa. The positive: Qnexa has the highest weight loss of the group at 14.7%. The negative: Qnexa also had the largest drop out rates (did not complete the study). While the completion rate was only 59% for those patients taking the high dose, the patients who completed the placebo was only 47%. While there were some minor side effects, my speculation as for the high drop out rate is from Phentermine. Qnexa is a combination of two drugs, Phentermine and Topiramate, which are both currently on the market as separate drugs.
Phentermine was one part of the now infamous Fen-Phen drug (the other drug was Fenfluramine). Fen-Phen was voluntarily recalled in 1997 due to potentially fatal heart valve problems. Phentermine, which was first FDA approved in 1959, had no safety issues until used as part of Fen-Phen.
During this time, Phentermine (as a stand alone drug) was not asked to be taken off the market. Phentermine did not interact with Fenfluramine in a way that made Fenfluramine more dangerous, Fenfluramine was dangerous by itself. This is why Pentermine was not taken off the market and is still prescribed today.
ARNA will be meeting with an FDA advisory committee on September 16, 2010 for their obesity drug Lorcaserin. The positive: Lorcaserin had the least amount of side effects. The negative: Lorcaserin had the least amount of weight loss at 5.0%, just barely meeting the FDA guidelines of efficiany. On July 1st, ARNA signed a deal with Eisai, a large pharmaceutical company (3.7B in sales in the U.S), believing that Lorcaserin will ultimately be approved. Eisai will be able to help guide ARNA through the FDA approval process.
OREX will be meeting with an FDA advisory committee on December 7, 2010 for their obesity drug Contrave. The positive: Contrave had weight loss of between 5% and 10% and the drug was also studied for the effect on Type II diabetes. The negative: Contrave could be the last drug approved. ARNA has publicly stated that they are now studying the effect on Type 2 diabetes, while VVUS (although not publicly stated) are sure to be studying for Type II diabetes as well.
Ultimately, I recommend buying all 3 stocks in equal portions as I believe all three drugs are approved. I think all 3 drugs can be big winners.
For more information please see the following links
A good overview of all 3 drugs and results
http://finance.yahoo.com/news/FDA-to-review-first-of-3-new-apf-3053966258.html?x=0&.v=1
VVUS press release concerning Phase III studies
http://ir.vivus.com/releasedetail.cfm?ReleaseID=407933
Chump1 is currently long all 3 stocks ahead of the FDA advisory panel for VVUS Qnexa drug.
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