Reviewers found 9 to 5 that benefits did not trump potential risks.

An FDA advisory committee voted 9 to 5 against approval of Arena Pharmaceuticals and Eisai’s obesity drug, lorcaserin. The Endocrinologic and Metabolic Drugs Advisory Committee said the available data did not sufficiently demonstrate that the potential benefits of lorcaserin outweigh the potential risks when used long-term in overweight and obese individuals to allow marketing approval. The FDA has assigned a PDUFA date of October 22.

Lorcaserin, discovered and developed by Arena, is intended for weight management including weight loss and maintenance of weight loss in patients who are obese (BMI > 30) or patients who are overweight (BMI > 27) and have at least one weight-related co-morbid condition.

Today’s decision marks the third time this year the FDA has doled out a negative decision on an obesity therapy. Abbott’s approved medication Meridia and Vivus Pharmaceuticals’ investigational candidate Qnexa have both come under fire. The only one left standing is Orexigen’s Contrave, but the advisory committee has yet to review the NDA; the vote is scheduled for December.

FDA’s stance thus far with obesity treatments signals its cautionary stance on approving treatments for what was once considered a lifestyle choice but is now increasingly viewed as a medical condition. “We are revising our valuation to $2–3 per share in light of the likely upcoming complete response letter, no product sales likely until 2013, and the increased uncertainty on the regulatory path and financing concerns,” say Steve Y. Yoo and Joshua Schimmer, M.D., both biotechnology equity research analysts at Leerink Swann, with regard to Arena.

“The statistics around valvulopathy risk worried some but not all panelists. One panelist asked for a preclinical co-administration study with phentermine. The cognitive adverse event and suicidality did not appear to be a major concern,” Yoo and Dr. Schimmer detail.

“However, the unknown mechanism of action for the preclinical mammary tumor signal led to several panelists asking for additional animal and mechanism studies to better assess risk,” Yoo and Dr. Schimmer add. Lorcaserin is believed to act as a selective serotonin 2C receptor agonist. This receptor is expressed in the brain including the hypothalamus.

Lorcaserin’s NDA included 18 clinical trials covering 8,576 patients. The pivotal Phase III trial program, BLOOM and BLOSSOM, evaluated nearly 7,200 patients treated for up to two years. The trials showed an average weight loss among those taking the drug of 5.8% compared with 2.5% among those taking a placebo.

“Many panelists felt that the patient population in the Phase III trials was enriched to improve efficacy and reduce safety signals,” according to Yoo and Dr. Schimmer. “They also felt the ongoing BLOOM-DM trial (lorcaserin in diabetics), which is expected to report by end 2010, is too small at 600 patients. This may mean Arena may have to re-run a large portion of its Phase III trials in a patient population more reflective of the real world.

“We expect the company to cut costs to lower its quarterly cash burn of about $30 million, seek to raise additional capital, and work to restructure the outstanding debt,” Yoo and Dr. Schimmer continue.

Arena has $90 million in debt; 20 million is due in mid-2011, $30 million in mid-2012, and $40 million in mid-2013. “And we expect the company to end the third quarter with about $140 million in cash,” Yoo and Dr. Schimmer predict. “Note that due to its partnership with Eisai, Arena is responsible for only 50% of preapproval trial costs.”

Arena has patents that cover lorcaserin in the U.S. and other jurisdictions, which in most cases are capable of continuing into 2023 without taking into account any patent-term extensions or other exclusivity Arena might obtain. In July Eisai paid $50 million up front for exclusive U.S. rights to the drug. Arena would receive up to another $90 million in milestones related to regulatory approval and delivery of the product for launch.

Earlier this week the FDA Endocrinologic and Metabolic Drugs Advisory Committee were split on whether to remove Abbott’s Meridia from the market. “Two panel members voted to allow continued marketing, though with a revised label including a boxed warning, and six members voted for continued marketing with a revised label combined with restricted distribution,” report Adam Cutler and Manisha Narasimhan, Ph.D., equity research analysts at Canaccord Genuity. “Eight panel members voted for withdrawal of the drug.”

“The panel’s opinion for why the drug should be withdrawn can be distilled into three reasons,” they continue. “It is not clear which patient subgroup patently benefits from this drug, the drug is detrimental in some patient subgroups with risks outweighing the benefits, and weight loss was accompanied by unconvincing effects in associated co-morbidities.” These sentiments mirror those related to Arena’s drug.

Additionally, in July the same FDA committee recommended against approval of Vivus’ Qnexa because of the possibility of psychiatric side effects and other potential safety concerns. The treatment contains the amphetamine phentermine and the anticonvulsant topiramate and works by suppressing hunger.

A decision on Orexigen’s Contrave has yet to come. The drug candidate combines two existing medications: the antidepressant bupropion and the addiction drug naltrexone. It works by helping to curb appetite and food cravings. “We think Orexigen’s Contrave offers good weight loss with an improvement in metabolic and psychiatric parameters and thus a good risk/benefit profile,” Cutler and Dr. Narasimhan note.

Besides Meridia, the only other prescription obesity drug on the market is GlaxoSmithKline’s Xenical, which is also sold over-the-counter as Alli.

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