The attendance, hype and general lightened culture surrounding BioCentury’s NewsMakers in the Biotech Industry suggests a rejuvenated optimism in the healthcare industry – that the strengthened performance of the industry index in the first half of 2012 may be a sign of a more permanent return to form
The publication’s 19th annual one-day conference last Friday in New York City’s Times Square featured over 35 public companies, mostly microcap (with the occasional big-player scattered among the class) with headlines on the front pages throughout the summer. According to conference organizers, this year’s group has raised more than $3.8B since 2011, and $2.6B this year alone. BioCentury co-organized the event with Thomson Reuters.
Particular attention was paid to recent milestones in obesity, which has the biotech world abuzz.
Obesity became an intriguing focal point with the June FDA approval of Arena Pharmaceuticals’ Belviq and Vivus’ Qsymia in July, the first obesity drugs approved in 13 years.
Industry insiders and conference organizers have noted this announcement is a significant step in limiting regulatory risk in the space, and could potentially open the door for a flurry of new weight loss drugs. Obesity may reach $6B annually by 2016.
The NewsMakers conference hosted the major players in obesity, including Arena Pharmaceuticals Inc. [Nasdaq: ARNA], Vivus Inc. [Nasdaq: VVUS] and Orexigen Therapeutics Inc. [Nasdaq: OREX], presenting the morning of the conference. A panel on the subject featuring key opinion leaders followed.
These three companies — with two approved products set to hit market in the near-future — have the potential to dramatically alter an entire industry once left for dead. All three companies are experiencing fantastic market support in a very short time. It is possible that success in the obesity market can indeed have a larger influence, as well, in helping to re-vitalize the entire healthcare sector.
Still, despite positive data and FDA support, these drugs did not reach approval phase without several speed bumps along the way. And more questions are yet to come, before they reach market.
For now, however, investors and insiders view these small victories as a sign of more positive things to come. The question is, will the dramatic returns — ahem — outweigh — the risk?
Belviq
Belviq was approved in June 2012 for chronic weight management in adults with a BMI of 30 or greater, or adults with a BMI of 27 or greater who have at least one weight-related condition.
The FDA recommended Belviq be a Schedule IV controlled drug, which would mean a delay in marketization until the DEA can review, a process which can take four to six months. It is estimated Belviq will reach $1.5B in annual sales in 2016.
The stock, which had a 52-week low of $1.23, reached a peak of $13.50 after spiking between May and July. The company announced an underwritten public offering of 11,000,000 shares of common stock priced to the public at $5.50/share. Following the June approval of Belviq the stock remained high, hovering around $10/share throughout the summer before a modest decline in August. Arena currently trades at about $8.00/share.
Qsymia
In July, the FDA officially approved Vivus Inc.’s Qsymia following a 3-month PDUFA date extension to review further Risk Evaluation 
and Mitigation Strategy (REMS) after it accepted in FDA panel vote in February 2012.
Vivus now has a shorter time-to-market timeframe than Arena. So, perhaps it is Vivus that can claim title of marketing the first obesity-approved drug since Xenical in 1999, despite receiving approval after Belviq.
Shares jumped 98% in one day following the news of the FDA panel’s 20-2 vote in February, peaking to a 52-week high of $31.21/share. Qsymia may generate $1.2B in sales in 2016, with some estimating that Qsymia can outperform Belviq.
Despite potentially being the first commercialized, Qsymia carries a greater risk of side effects as it is more effective than Belviq, which may give Arena Pharmaceutical the advantage.
Qsymia was approved with a Risk Evaluation and Mitigation Strategy with a goal of informing female patients of an increased risk of orofacial clefts in infants exposed to the drug during the first trimester of pregnancy.
Still, Qsymia’s REMS and Belviq’s Schedule IV recommendation are blips rather than tumultuous, and will not hamper what many are calling industry-altering events.
The safety and efficacy of Qsymia were evaluated in two multicenter, Phase III trials that included: severely obese patients (EQUIP); and overweight or obese patients with at least two weight-related co-morbidities, such as hypertension, hypertriglyceridemia, type 2 diabetes, or central adiposity (CONQUER). The average weight loss in the EQUIP trial was 10.9% on Qsymia 15 mg/92 mg and 1.6% for placebo. The average weight loss in CONQUER was 9.8% on Qsymia 15 mg/92 mg, 7.8% on Qsymia 7.5 mg/46 mg and 1.2% for placebo.
Contrave
Orexigen Therapeutics last week announced an updated timeframe for completion of enrollment in a long-term research study in Phase III for the company’s obesity drug Contrave, a fixed dose combination of naltrexone sustained-release and buproprion. Functionally, buproprion – approved for both depression and smoking cessation – is thought to increase the level of dopamine activity, which leads to a reduction in appetite and increase in energy. Naltrexone – approved for the treatment of opiate and alcohol addiction – inhibits various aspects of addictive substances and can negatively alter the taste of sweet foods.
Contrave was originally expected to be approved and brought to market during 2014, however it is possible we will see advancements in 2013.
Orexigen announced more than 4,500 patients have been enrolled as of August 31, 2012, and the company expects to close enrollment in 4Q2012. Shares jumped 16% to $5.73 following the release of the 8-K, a 28% spike since August 31. The stock closed trading on September 10 at $5.19.
Despite a recent Credit Suisse opinion that the obesity market will not see multiple winners and a subsequent underperform rating of Arena, investors have expressed confidence in several leading players in the space. Investor confidence in Orexigen, particularly – which is not yet at marketization – is evidence of sustained optimism in a fiscally opportunistic cure for obesity.
We will soon see whether these drugs can deliver on this optimism.