Staff Writer

The obesity space got thinner Tuesday with a decision by Pfizer Inc. to terminate its Phase III testing of investigational drug (CP-945,598), but it's still too early to tell if it's an opportunity or an omen for biotech companies.

Pfizer's decision came on the heels of one by Merck & Co. Inc. last month to stop its obesity program, and another by the Sanofi-Aventis Group to suspend the marketing of its obesity drug in Europe.

Now that New York-based Pfizer and Merck have folded their obesity programs, perhaps that opens doors for biotech companies looking to compete in the obesity area. On the other hand, it could be a cautionary tale for biotechs with late-stage obesity programs, such as such as Arena Pharmaceuticals Inc.'s lorcaserin, Orexigen Therapeutics Inc.'s Contrave and Empatic, Vivus Inc.'s Qnexa, or Alizyme Therapeutics Ltd.'s cetilistat.

Jason Napodano, a senior drug analyst with Zacks Investment Research who tracks Arena, said he sees the bad news for Pfizer, Merck and Sanofi as "a positive for Arena." Arena's Phase III lorcaserin has a completely different mechanism of action than the CB1 drug class and has not shown any safety issues thus far, he said.

Now that the top drugmakers all have had setbacks in their obesity programs, they could become potential partners for biotechs like Arena, he added. And if the drug does make it to market, Arena could have a significant advantage because of less competition from big pharma, Napodano said. Phase III data for Arena's obesity product lorcaserin is expected in March 2009.

Ken Trbovich, an analyst at RBC Capital Markets who tracks Vivus, said he sees good and bad news for biotech companies. The good news, he said, is that the large obesity market has the interest of major pharmaceutical companies, and there are fewer late-stage compounds to license or acquire.

But the bad news is the seeming low tolerance of FDA for safety concerns, Trbovich said. In addition, he said the setbacks suffered by the major drugmakers may be a sign of risk in the minds of investors.

Adverse events that weren't seen in smaller trials, may show up in larger trials, he said, causing alarm for regulators. Vivus has three Phase III trials for its obesity product, with data from a six-month trial due in December and data from its two yearlong trials expected in 2009.

Merck, of Whitehouse Station, N.J., said last month that it would discontinue Phase III taranabant after studies showed an increased incidence of psychiatric events at higher doses. Taranabant is in the same drug class as Pfizer's discontinued obesity product, a cannabinoid type 1 (CB1)-blocker.

While Pfizer said it is confident in the safety of its compound, it cited "likely new regulatory requirements for approval" as one reason for stopping the program.

Pfizer's decision also was partly influenced by the recent decision of European regulators to call for withdrawal of marketing authorization for Acomplia, an obesity drug by Paris-based Sanofi-Aventis Group. At the request of the European Medicines Agency (EMEA), Sanofi agreed last month to temporarily suspend sales of its weight loss drug, Acomplia (rimonabant).

Sanofi will continue clinical trials but said it remains committed to supporting a re-evaluation of Acomplia's risk-benefit ratio. Acomplia is not approved in the U.S. and was withdrawn from the FDA registration process last year after negative feedback from the agency's advisory panel.

Pfizer had indicated in September that is was planning to exit the area of obesity research, and CP945,598 was its only obesity program at that time.

Pfizer's recent conversations with the FDA coupled with the EMEA decision on Acomplia ultimately led to Pfizer's decision to abandon its obesity program, company spokeswoman Kristen Neese said. Pfizer would have had to perform additional studies for its obesity product, she said.

The company saw that the regulatory hurdles had become "too high," Neese said.

The Merck obesity trials found a greater incidence of depression, aggression and other psychiatric events. Patients were carefully monitored, Merck spokeswoman Michele Rest said, but that regimented setting "may have been difficult to maintain" in the real-world practice of treating obesity, she explained.

"It was after careful consideration that we decided that the overall risk-benefit profile of taranabant is not sufficient to seek regulatory approval for the treatment of obesity, and therefore we decided to stop further development of this medicine for this indication," Rest said.