Staff Writer

"Premature to speculate" and "need more details" were default answers for Orexigen Therapeutics Inc. CEO Michael Narachi as he attempted to respond to questions during a conference call Tuesday about what's next for the San Diego-based company's new drug application (NDA) for Contrave (naltrexone HCl/bupropion HCl) extended-release tablets for the treatment of obesity.

A surprising FDA complete response letter expressed concern about the long-term cardiovascular safety profile of naltrexone/bupropion and required a new trial. That development made Orexigen the third of three companies – along with Arena Pharmaceuticals Inc.'s lorcaserin and Vivus Inc.'s Qnexa (phentermine/topiramate) – to have NDAs blocked by the FDA.

Orexigen stock (NASDAQ:OREX) plummeted $6.59, or 72.5 percent, to $2.50, at close Tuesday. Vivius (NASDAQ:VVUS) closed down $1.38, or 15.4 percent, to $7.57, while Arena (NASDAQ:ARNA) finished up 10 cents, or 6.3 percent, to $1.68.

The Contrave complete response letter raised more questions among Orexigen executives, investors, analysts and industry watchers than it answered – including whether it made sense to continue on with Contrave.

Narachi did not dismiss the possibility of shutting down the project. "I think we and the board will look at all of the information we have and do what is in the best interest of the shareholders," Narachi said during the call, in response to a question about the possibility of halting Contrave development. "We need to look at all options and act accordingly."

However, there was no doubt about Rodman & Renshaw analyst Elemer Piros' opinion on the matter. "Contrave is worth more dead than alive," he wrote, adding that based on his firm's analysis, "we believe that the continued development of Contrave is likely to erode shareholder value, and we believe a more prudent decision would be to discontinue this program."

Piros' said that he viewed the FDA's new study requirement "as one of the most negative potential responses from the agency. Even if the cardiovascular study is successful, our . . . analysis suggests a negative present value for Contrave, and we believe that the continued development of Contrave is unwarranted."

Of like mind was Cowen Research analyst Phil Nadeau who wrote that Orexigen would need to raise approximately $200 million to complete the study. "As there is a chance that the trial might not succeed in satisfying the FDA's concerns, a reasonable alternative would be for OREX to suspend development, and return cash to shareholders," he added.

Narachi was unable to add much clarity Tuesday to the content of the FDA's letter, explaining that he was seeking clarity himself.

Asked about the design of a new trial, Narachi said it was too early to speculate on specifics. "The first step for us is to learn more about the background for this request," he said. "There are important details to nail down. . . . It would be premature to speculate on details."

Asked what had changed since the FDA's Endocrinologic and Metabolic Drugs Advisory Committee backed approval of Contrave In December, he replied, "We can't tell what changed. . . . There was no new data, nothing based on anything submitted, no new analyses." He added that he and others at Orexigen were "surprised and disappointed. We felt there was a very robust and high-quality discussion on this topic at the advisory committee meeting. . . . We were surprised to read the letter yesterday afternoon."

Orexigen said it has requested a follow-up meeting with the agency this quarter.

Among the few certainties were that marketing partner Takeda Pharmaceutical Co. Ltd., of Osaka, Japan, to whom Orexigen gave North American rights in September, would not be responsible for sharing the cost of a new study because it is considered a pre-approval activity, and that the trial, in Narachi's words, would be "fairly large and take a fair amount of time to conduct. . . . It would be fair to say we'd need additional capital."

The FDA letter said that "before your application can be approved, you must conduct a randomized, double-blind, placebo-controlled trial of sufficient size and duration to demonstrate that the risk of major adverse cardiovascular events in overweight and obese subjects treated with naltrexone/bupropion does not adversely affect the drug's benefit-risk profile," according to Orexigen.

Narachi said he was "surprised and extremely disappointed with the agency's request" given the panel's backing of approval of Contrave – the only drug of the three reviewed late last year to get the committee's support. The committee voted 13 to 7 that Contrave's data adequately demonstrated that the potential benefit of weight loss outweighed any potential risks of adverse events, including heart attacks or seizures, when used long term in a population of overweight and obese patients. Contrave's active ingredients, bupropion and naltrexone, each have been on the U.S. market for more than 25 years with well-accepted benefit-risk profiles. (See BioWorld Today, Dec. 8, 2010.)

The same committee had earlier rejected Arena's lorcaserin and Vivus Inc.'s Qnexa (phentermine/topiramate). Both drugs received complete response letters in October. (See BioWorld Today, July 16, 2010, Sept. 17, 2010, Oct. 26, 2010, and Nov. 1, 2010.)

The FDA letter shattered what had been an optimistic outlook for a Contrave launch. Narachi said earlier this year during his presentation at the J.P. Morgan Healthcare conference that the company and Takeda were getting ready for a U.S. launch this year and that the company had started the process of finding additional partners who can handle marketing in rest of the world. (See BioWorld Today, Jan. 14, 2011.)

Orexigen gave North American rights to Takeda in September for a $50 million up-front payment, with the potential to receive up to $1 billion for regulatory and sales milestones and sales royalties. (See BioWorld Today, Sept. 3, 2010.)

The initial reaction from analysts was surprise, with "worst case" a popular description.

"This is clearly a worst-case scenario for which we were ascribing odds of just 30 percent," said J.P. Morgan's Cory Kasimov. "We believe this trial could take years to conduct, and with no guarantee of success."

He said the outcome is "surprising given that in the December AdCom, the panel voted to conduct this study post approval vs. pre-approval (albeit by a somewhat narrow margin). . . . We were assuming a relatively benign CRL that recommended this study be conducted post-approval, in-line with the EMDAC vote."

Kasimov also raised the question of what Takeda will do now. "We would also not be surprised if Takeda now walks away from the drug's development," he wrote.

Canaccord Genuity's Adam Cutler wrote that "The worst case has occurred. . . . A new study will likely take 3-6 years and the company will need to raise additional capital to fund a new study."

Leerink Swann's Joshua Schimmer noted that "While the CRL was expected, the unwelcome 'surprise' [if a negative update from the FDA Endocrinology Division can ever be considered a surprise] is the requirement for a pre-approval CV outcomes study. . . . Unless OREX can convince the FDA that the trial can wait until post-approval, the company faces a cloudy future, particularly since Takeda does not assist in pre-approval CV study costs."

Orexigen joins Arena and Vivus on the list of companies with obesity drugs who have hit snags with the FDA.

Piper Jaffray analyst Edward Tenthoff noted that "all three new obesity agents seeking FDA approval . . . have received CRLs requesting additional data or studies prior to approval. While the Contrave CRL may be the most surprising following the positive panel vote back in December, the FDA has clearly set a safety high bar for all new weight loss agents."

Last week Arena, of San Diego, said it is furloughing 66 employees – about 25 percent of its U.S. work force – in the wake of an FDA request for new studies that could delay the company's NDA resubmission for weight-loss therapy lorcaserin. (See BioWorld Today, Jan. 31, 2011.)

The company also disclosed that after an end-of-review meeting in December the FDA "expressed concern over the abuse potential of lorcaserin and the available data related to abuse potential, and has recommended that Arena modify and repeat two nonclinical studies to provide additional safety information for labeling and scheduling decisions."

Arena said it is preparing to initiate the studies pending a meeting scheduled with the FDA's controlled substances staff in February.

Vivus, of Mountain View, Calif., during a Jan. 19 end-of-review meeting received an FDA request for more data about the incidence of birth defects in children born to women using topiramate, a component in obesity treatment Qnexa (phentermine/topiramate). The news shook the company's stock and plans for August FDA approval and a late 2011 launch. (See BioWorld Today, Jan. 24, 2011.)

Brean Murray Carret analyst Jonathan Aschoff wrote that the Contrave development is "a bad sign for Vivus" adding that "We view this as problematic for Vivus, due to the fact that Contrave was considered more likely to be approved than Vivus' Qnexa after Contrave's AdCom panel."

Jefferies & Co. analyst Thomas Wei noted that "Investors are currently struggling with implications of this decision today on VVUS' Qnexa, where a heart rate increase has been observed. . . . We note that the Contrave action suggests that the Street may have misjudged how strongly the FDA weighs factors like the urgency to approve an obesity drug, the availability of the individual component drugs on the market, or the fear that pre-approval studies would end obesity drug development, common arguments that we hear in favor of Qnexa."