It has been a long-time since I posted on this blog so I thought I'd take this opportunity to provide an update on the progess of the Belviq + Phentermine opportunity. In the Seeking Alpha article I published last week for Arena Pharmaceuticals (ARNA,) I listed the key catalysts for their lead drug Belviq to become a blockbuster. A key component of the overall thesis is the potential for Belviq to be used in combination with phentermine to create a new “Bel-Phen” therapy that is as effective as the fen-phen phenomenon of the mid 1990’s but without the associated heart valve problems. On September 12th at the American Society of Bariatric Physician’s Symposium in Austin, TX, a medical weight loss specialist in Missiouri, Dr. Robert Huster, delivered a Poster Session on his results using this combination in his practice. In this article, I’ll discuss why Dr. Huster’s results should foreshadow what investors should expect from the release of the clinical trial to test these two drugs together.
Arena Pharmaceuticals was founded in 1997, the same year that fenflurimine was pulled from the market, the “fen” in the potent “fen-phen” weight loss therapy. At the peak of the fen-phen craze, between 16-18M scripts a year of the combination was being filled at its peak. Arena’s specialty is creating highly-selective GPRC drugs and their lead compound lorcaserin (Belviq,) is the first highly selective 5-HT2c agonist available. A “safe” replacement for fenflurimine that was selective to the 5-HT2c receptor in the brain, associated with satiety and a reduction of cravings, could create a combination therapy that is as efficacious as fen-phen but without impacting the 5-HT2b receptors in heart valves and resulting in valvulopathy or pulmonary arterial hypertension (PPH.) This market possibility was the key component of my original investment thesis for Arena. Although this isn’t the only reason while I remain an ARNA-bull, it is the catalyst by which a parabolic growth of prescriptions could occur.
Obesity specialists have long recognized that combination therapy is the most effective solution for treating this complex disease. In the investor world, the market has long compared the efficacy of Vivus’ Qsymia (fixed-dose topirimate and phentermine combination) compared to the novel, single-agent Belviq. With Qsymia, patients could expect a 52-week weight loss of 6.7% at the recommended mid-dose or 8.9% for the high-dose, which almost no patients progress to due to the tolerability of this dosage. Belviq on the other hand, results in a mean 5.8% 52-week weight loss. As these are pooled results, it is important to note that there are clearly responders and non-responders to each drug and why the FDA recommends that a physician track a patient’s progress and in the case of Belviq, discontinue the drug after 12-weeks if they haven’t achieved 5% weight loss.
Given the average efficacy for Belivq is described as modest, many physicians are reluctant to prescribe weight loss medication. The weight loss also isn’t eye-popping enough to result in mass consumer demand. The holy grail of average weight loss that physicians want to see is 10%. That is obviously not a moderate amount of weight loss. Even though the literature is clear that a 5-10% reduction in weight is clinically meaningful, many physicians are still reluctant. This is why the results of the Belviq + phentermine combination therapy is so important to ignite the weight loss drug market. If Bel-Phen can provide similar efficacy as Fen-Phen, then there is your vanity market and there is no longer a conversation of modest efficacy. In a segment on the Today show discussing combination weight loss therapy, a patient was interviewed who took Fen-Phen, had great success, and then describes her experience with the topirimate-phentermine combination which is now marketed by Vivus (VVUS) as Qsymia. Dr. Louis Aronne of Weill-Cornell Medical College and a though-leader in the medical management of obesity is interviewed in this segment states that it is “very clear you have to use the right medications together,” for treating obesity.
As the author of the linked article states: “The phen side of fen-phen is still available, but to be a real diet aid, it needs a dance partner. For one thing, the use of phentermine, a chemical cousin of amphetamine and a controlled substance, is approved only for a few weeks. It does make hunger fade, but over time, weight loss tends to peter out. What fen did was keep phen going in an exciting quickstep—a Fred Astaire sweeping his Ginger Rogers to magical heights. Ever since fenfluramine was taken off the market, physicians have been looking for a replacement.”
Even though phentermine isn’t as in-vogue as it was in the mid 90’s, it still is written about 150,000 times per week, less than half the volume it did as part of the fen-phen combination. Most of these prescriptions come out of weight loss clinics. If Bel-Phen is shown to have the clinical efficacy of fen-phen without any new severe adverse events, it could re-invigorate the weight loss clinic market. This is a consumer-driven market and not one created by company sales & marketing teams.
Foreshadowing the Clinical Outcomes
Eisai Pharmaceuticals, Arena’s marketing partner, has completed a Phase II “pilot” study to test the safety of using Belviq combined with phentermine. Arena has guided that results will be out towards the end of 2014. It is important to call-out that the FDA did not require any echocardiograms during this trial. In the pivotal trials for Belviq, over 20,000 echocardiograms were conducted to rule out valvulopathy as much as statistically possible for Belviq. The ongoing cardiovascular outcomes trial will provide the data required to completely rule out an increase in cardiovascular risk and hopefully, show a reduction in risk instead.
This initial Bel-Phen study is intended to test safety of the combination with efficacy as a secondary measure. It consists of three 75-patient arms of Belviq + placebo, Belviq + 15mg phentermine BID and Belviq + 15mg phentermine QD. Arena had guided to releasing the results of this study prior to the end of this calendar year. Based on the outcomes, then Eisai and Arena will consult with the FDA on if this will be enough to request a label change or if a second study will be required.
So what should investors expect with this study? Will there be a synergetic effect with using Belviq and phentermine in combination or will investors be sorely disappointed? As mentioned in my introduction, there was a small independent study presented at last week’s American Society of Bariatric Physicians Symposium that detailed early results of using this combination in practice. Dr. Robert Huster and Dr. Louis Aronne’s study only consisted of a total of 22 patients who completed but demonstrated an amazing 11.8% average 12-week weight loss. In addition to the impressive weight loss, no significant side effects were observed. I should note that Dr. Arrone's university is also listed as a site for the formal Eisai study.
Dr. Huster and Aronne’s treatment of 1 Belviq 10mg per day and 2 15mg tablets of phentermine per day is not consistent with the trial arms of Eisai’s study, but could foreshadow the efficacy that should be seen in that study. We should see the trial arm in Eisai’s study consisting of 2 Belviq 10mg with 2 15mg phentermine per day show at least 12% 12-week weight loss. That is over twice as effective as Belviq’s 52-week mean weight loss and almost twice as good as Qsymia mid-dose 52-week loss, in just 12-weeks for Bel-Phen. If the Eisai trial is consistent with the results from this small study and demonstrates and expected AE profile, then this could be the beginning of Bel-Phen becoming a reality.
The synergistic effect of this combination was seen in pre-clinical animal tests conducted by Arena as noted in the Arena patent covering this combination therapy. Given that animals and humans have the same pathways in play for food cravings and satiety, the Bel-Phen results seen by Dr. Huster and Dr. Aronne are to be expected and consistent or better than results seen with the fen-phen combination. An image of the results of the pre-clinical Belviq + phentermine studies is show below and the Compound B listed is the same chemical formulation as lorcaserin:
Interestingly enough, Arena has additional patents covering other variations of lorcaserin as seen in this patent application from 2005. This updated compound appears to even more selective at the 5-HT2c receptor than Belviq is and the results of combining it with phentermine are even more compelling in this graphic. Will Arena move this compound forward in the years ahead as Belviq gets closer to its 2026 patent expiration?
In summary, I don’t think it is unreasonable to hypothesize that tens of millions of people would want to try Bel-Phen if they found that it is safe and can result in 12% or more in weight loss over 12-weeks. What you can’t anticipate is when will the public become aware there is a safe alternative to fen-phen? What is the mass-media event that brings that awareness? It could be a segment on national TV, article in a prominent magazine or just via social media. What I can say with confidence is that word spreads much faster in today’s social-driven world vs. 1996. It is the consumer that will create the demand for this combination therapy and when that demand comes, nobody knows. The current valuation of Arena in no way builds in much chance of a Bel-Phen craze. Similar peak scripts to fen-phen would generate $1.8B-$2B in net annual sales for Belviq and earnings over $2 a share for Arena. It makes today’s $4 share price for Arena a high risk / high reward value proposition if you believe that the public will want to try a drug to shed 12% of their weight in just 12 weeks.