Highly attractive market, but marked by epic failures
Obesity is currently recognized by the larger medical community worldwide as a serious health condition, growing in prevalence globally with decreased life expectancy and related comorbidities including type 2 diabetes, heart disease, obstructive sleep apnoea (OSA), liver and pulmonary disease and certain types of cancer. Additional comorbidities include anxiety, depression, chronic pain and substance abuse. A worldwide epidemic, ~150m people in the US alone (more than one-third of adults and 17% of young people in 2012) are classified as medically obese (body mass index or BMI ≥30) and life expectancy in this population is thought to be lowered by up to eight years. Notably, there remain considerable regional differences in the US, with obesity rates forecast to surpass 50% in 39 states by 2030. The World Health Organization estimates that there are more than 500 million obese people worldwide. This comes as an enormous cost to healthcare systems, with obesity and related comorbidity expenses in the US estimated at $210bn.
Exhibit 4: Governing bodies increasingly recognize obesity as disease that is treatable
Organization |
Details |
American Assoc of Clinical Endocronologists (AACE) |
AACE guidelines stress importance of weight loss (including the use of pharmacotherapy) for patients with prediabetes and diabetes. |
American Medical Association (AMA) |
Recognizes obesity as a disease. |
Affordable Care Act (ACA) |
ACA allows corporate wellness programs to address obesity with economic incentives. |
European Association for the study of obesity (EASO) |
Guidelines call for use of pharmacotherapy as part of a comprehensive strategy for disease management. |
European Court |
Ruling that obesity may be considered a disability. |
US Congress |
Treat and Reduce Obesity Act had strong support – reintroduction planned in new Congress. |
Organization |
American Assoc of Clinical Endocronologists (AACE) |
American Medical Association (AMA) |
Affordable Care Act (ACA) |
European Association for the study of obesity (EASO) |
European Court |
US Congress |
Details |
AACE guidelines stress importance of weight loss (including the use of pharmacotherapy) for patients with prediabetes and diabetes. |
Recognizes obesity as a disease. |
ACA allows corporate wellness programs to address obesity with economic incentives. |
Guidelines call for use of pharmacotherapy as part of a comprehensive strategy for disease management. |
Ruling that obesity may be considered a disability. |
Treat and Reduce Obesity Act had strong support – reintroduction planned in new Congress. |
Source: Orexigen, various health organizations
Due to the sheer size of the potential multi-billion dollar market for obesity, there is capacity for multiple market contenders. Although a large and growing market, the development of anti-obesity agents has been fraught with safety issues historically and even very large pivotal programs have resulted in high-profile failures (Sanofi-Aventis’s withdrawal of rimonabant along with three other CB1 antagonists). Also, even large-scale trials have failed to highlight safety issues that have become evident in a real-world setting (sibutramine withdrawal in 2010 due to safety concerns and Fen-Phen and dexfenfluramine withdrawn in 1996). Additionally, the size of the obesity market has been called into question given high patient dropout rates in pivotal trials and a lack of proven high-volume scrip drivers. Correspondingly, the jaded past of obesity treatments has led to a reluctance on the part of big pharma to enter into large-scale commercialization agreements. Currently, Orexigen’s agreement with Takeda is the biggest of two commercial licensing agreements in the segment, the second being the agreement between Eisai and Arena for Belviq.
Despite numerous disappointments in the segment, the landscape for obesity compounds looks to be changing with the advent of four relatively recently approved obesity treatments by the FDA, one oral and one administered through subcutaneous injection. This newer generation of drugs looks to be relatively safe based on data from their respective large Phase III clinical programs. However, numerous large outcome trials, mainly in cardiovascular areas, are ongoing, often on the back of FDA requirements on approval.
Competitors – three orals and an injectable
The cause of obesity is considered to be a combination of genetic, behavioral and environmental influences and it is therefore not surprising that multi-faceted weight management programs, which consist of medication, together with diet, exercise and behavior modification, have been shown to work best – not only in weight loss but, importantly, in the ability to keep weight off. The human body uses many chemicals and hormones to protect its stores of fat – a defense mechanism likely useful to our ancestors when food was scarce – and a complete circumvention of this natural protection of stored fat must therefore be multi-faceted and complex. Hence, new solutions in the treatment of obesity rely more and more on combination drugs targeting multiple pathways. As such, current obesity drugs on the market take differing approaches to enhance behavior modification through various mechanisms, some with combination-complementary approaches, and are showing reasonably good success.
The brain acts as a regulator to functions controlling weight including decisions about how much, when and what we eat. In the obese, the brain becomes desensitized to signals to stop eating. However, the brain is sensitive to any losses in weight, at which time metabolism slows and hunger signals are communicated. Weight loss treatments therefore need to target the propensity for the body to crave food and gain weight once pounds are shed. Current and potential anti-obesity drugs may operate through various mechanisms, including appetite suppression (such as phentermine and other amphetamine-based drugs and anti-depressants), the increase of metabolism or the interference in the body’s ability to absorb certain components of food (such as orlistat or OTC fibre supplements like glucomannan and guar gum). It is generally thought that the non-CNS approach, which can initially induce weight loss, is susceptible to a weight loss plateau after several months or a year of therapy, in the absence of treating the underlying behavioral mechanisms in the body.
In 2014 the total US market for obesity products was ~$220m and ~9.5 million prescriptions were written as reported by Oregixen. We take the view that there is significant potential for the newer obesity drugs to dramatically grow the market, particularly those that include a targeted approach to CNS pathways. From a safety standpoint, none of the pivotal Phase III programs for the three prominent obesity drugs or their outcome studies to date has raised serious adverse events signals (although all had a relatively high all-cause dropout rate, which was unsurprisingly highest in placebo groups owing to lack of efficacy). Main obesity treatments currently marketed in order of launch are as follows:
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Orlistat (Xenical/Alli, Roche): FDA-approved in 1999, Orlistat acts as a lipase inhibitor, preventing the absorption of fats from the diet. Approved for long-term use, Xenical (as prescription) and Alli (as OTC) have failed to make major inroads, with negligible prescription share more than likely due to infamous side effects including oily stools, fecal incontinence, stomach pain and flatulence. Orlistat has been found to modestly reduce blood pressure and in a large randomized trial reduce the incidence of diabetes by nearly 40% in the obese. Sales of Xenical and Alli were $17m and $107m respectively in 2014.
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Phentermine/Topiramate ER (Qsymia, Vivus): phentermine alone, approved for short-term use in 1959, was the mostly widely prescribed anti-obesity medication up to a few years ago. Phentermine is a sympathomimetic amine that acts as an appetite suppressant and stimulant. Topiramate is an anticonvulsant with weight loss properties (although the exact mechanism is unknown). Launched in September 2012, Qsymia is the only recently approved obesity treatment to show significant blood pressure benefits in Phase III trials but, conversely, was denied approval in Europe in 2013 on cardiovascular and psychiatric side effects. Qsymia sales were $79m in 2014.
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Lorcaserin (Belviq, Arena/Eisai): lorcaserin, an oral pill, is the only new chemical entity (NCE) of the newer oral obesity drugs. It works by promoting satiety through selective activation of 5-HT2C receptors on anorexigenic pro-opiomelanocortin neurons located in the hypothalamus. The compound was approved in June 2012 and launched in June 2013 following the completion of additional studies after an FDA advisory panel recommended against approval in 2010 on cancer-causing concerns (in rats) and marginal efficacy. Lorcaserin has shown a numeric but statistically insignificant benefit on blood pressure. The drug is DEA schedule IV classified due to its hallucinogenic properties at higher than approved doses. Sales of Belviq were ~$56m in 2014.
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Bupropion/Naltrexone (Contrave, Orexigen/Takeda): launched in the US in October 2014 and approved in Europe in March 2015, Contrave is a new formulation of two active ingredients. Bupropion, approved as Wellbutrin since 1985, increases dopamine activity thereby reducing appetite. Naltrexone, first approved in its injectable form in 1984 for addiction, inhibits addictive behavior by blocking opioid receptors. In Q215 market sales of Contrave were $16.0m.
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Liraglutide (Saxenda, Novo Nordisk): a double-dose version of Novo’s blockbuster type 2 diabetes treatment Victoza, Saxenda was launched in April (approval in December 2014) for chronic weight management. The GLP-1 receptor agonist was evaluated in more than 4,800 patients with and without weight-related conditions. We expect Saxenda to be positioned as a niche product (there is considerable overlap between type 2 diabetes and obesity populations) given the drug’s high pricing ($1,068 per month), as well subcutaneous injections.
Exhibit 5: Competitor comparisons
|
Bupropion/natrexone (Contrave) |
Phentermine/topiramate (Qsymia) |
Lorcaserin (Belviq) |
Orlistat ( Xenical/Ali) |
Liraglutide (Saxenda) |
Company |
Orexigen |
Vivus |
Arena/Eisai |
Roche |
Novo Nordisk |
FDA approval date |
Oct-14 |
Jul-12 |
Jun-12 |
1999 |
Dec-14 |
Non-US approvals |
EU approved March 15. |
N/A |
Approved S. Korea 2015 |
EU approved 1999 |
EU March 15 |
Indication |
Obese adults (BMI 30 or greater) and overweight adults (BMI 27 or greater) min 1 comorbidity. |
Obese adults (BMI 30 or greater) and overweight adults (BMI 27 or greater) min one comorbidity. |
Obese adults (BMI 30 or greater) and overweight adults (BMI 27 or greater) min one comorbidity. |
Obese adults (BMI 30 or greater) and overweight adults (BMI 27 or greater) min one comorbidity. |
Obese adults (BMI 30 or greater) and overweight adults (BMI 27 or greater) min one comorbidity. |
Mechanism |
Bupropion increases dopamine activity in the brain reducing appetite, increasing energy expenditure. Naltrexone blocks opioid receptors, inhibits reinforcing aspects of addictive substances. |
Phentermine, a sympathomimetic amine, is an appetite suppressor/stimulant. Mechanism of anticonvulsant topiramate not fully understood but has weight loss properties. |
Believed to decrease food consumption/promote satiety by selectively activating 5_HT2C receptors on anorexigenic pro-opiomelanocortin neurons in the hypothalamus. |
Pancreatic lipase inhibitor, reduces intestinal fat. |
Long-acting analogue of the GLP-1 hormone. Delays gastric emptying promoting a feeling of fullness. |
Administration |
Oral 2x daily. |
Oral 1x daily in the morning. |
Oral 2x daily. |
Oral 3x daily. |
Subcutaneous injection 1x daily. |
# sales reps |
900 |
150 |
320 |
N/A |
500 |
Outcome studies |
9k-patient CVOT to commence end 2015. |
Planned large-scale CVOT AQCLAIM. |
12k patient 5-yr CVOT CAMELLIA to 2019. |
N/A |
Five-year 9k-patient LEADER CVOT to 2015. |
Summary of clinical data |
982-patient PIII COR I study (ITT-LOCF) 48% (16.4% PLA) achieved at least 5% body weight loss at 56 weeks; 1,158 patient COR II study showed 50.5% (PLA 17.1%) 5% or more weight loss over 56 weeks. |
1,230-patient PIII (I) study (ITT-LOCF) 67% high dose 45% low dose (17% PLA) achieved at least 5% body weight loss at 1 year; 2,448 patient PIII (II) study 62% high dose, 70% low dose (PLA 21%) 5% or greater wt loss at one year. |
3,182-patient PIII BLOOM study (ITT-LOCF) 48% (20.3% PLA) patients achieved at least 5% body weight loss; 4k patient BLOSSOM study showed 3.6% placebo adjusted weight loss over one year at high dose. |
Pooled data from five clinical trials (ITT-LOCF) 57% (31% PLA) patients achieved at least 5% body weight loss over one year. |
SCALE program. Pivotal PIII (1) showed 62% lost at least 5% of body weight vs 34% on placebo at 56 weeks, PIII (2) 49% of patients lost at least 5% vs 16% placebo. |
Side effect profiles |
Nausea, headache, constipation vomiting. |
Dry mouth, tingling, altered taste, constipation. |
Infrequent depression, anxiety and suicidal ideation. |
Frequent, oily bowel movements, stomach pain, flatulence rare cases of severe liver damage. |
Nausea, diarrhea, constipation, vomiting, low blood sugar. |
Label restrictions |
Black box warning suicidal thoughts/behaviors, neuropsychiatric reactions. |
N/A |
DEA scheduled as may be abused/lead to drug dependence. |
N/A |
Black box warning of thyroid c-cell tumors or some high-risk patients. |
Source: Edison Investment Research
We see little immediate threat to the recent triumvirate of oral obesity drugs currently marketed in the US. There are number of candidates in the pipeline for the treatment of obesity, most of which have yet to start Phase III. The most advanced compound is beloranib (Zafgen), which has shown impressive efficacy vs currently marketed anti-obesity drugs to date. However, the compound is subcutaneous and its lead indication is to treat patients with Prader-Willi Syndrome, a rare disease that causes binge eating due to a non-stop intense craving for food.
Exhibit 6: Select obesity treatments in later stages of development
Company |
Product |
Therapy class |
Status |
Targeted enrolment |
Administration |
Notes |
Zafgen |
Beloranib (ZGN-440) |
Subcutaneous methionine aminopeptidase 2 inhibitor |
Phase III recruiting |
102 |
2x weekly subcutaneous injection |
Prader-Willi syndrome results 2015 primary outcome - change in total body weight and hyperphagia-related behavior as measured by questionnaire at week 29. |
Angio Lab Hanmi Pharma |
ALS-L1023 |
Melissa leaf (Lemon Balm) ethyl acetate dried extract |
Phase III recruiting |
400 |
Oral 2x daily |
Results 2015 primary outcome - % change from baseline to 12 wk in visceral fat area measured by CT. |
Gelesis |
Gelesis100 |
Device: super absorbable hydrogel that expands in the stomach |
Phase III |
168 |
Device: Gelesis 2x daily |
Results July 16 primary outcome - decrease in body weight from baseline and 5% weight loss, to day 171. |
|
|
|
|
|
|
|
Astra Zeneca |
Dapagliflozin & Exenatide (Forxiga & Byetta) |
Glucagon-like peptide 1 receptor agonist |
Phase II recruiting |
48 |
Oral 1x daily and subcutaneous injection 1x weekly |
Results Oct 16 primary outcome - effect on weight loss, energy expenditure and safety in non-diabetic obese people over 24 weeks. |
Janssen |
Canagliflozin/ Phentermine |
Sodium-glucose co-transporter |
Phase II recruiting |
344 |
Oral 1x daily |
Results 2015 primary outcome - % chg from baseline in body weight at week 26. |
Hanmi Pharma |
LAPS CA- Exendin-4 (HM1126OC) |
Glucagon-like peptide 1 receptor agonist |
Phase II (not yet recruiting) |
300 |
1x weekly subcutaneous injection |
Results 2015 primary outcome - % chg from baseline in body weight at week 20. |
Rhythm Metabolic |
RM-493 |
Small peptide melanocortin 4 receptor agonist |
Phase II (not yet recruiting) |
36 |
1x daily subcutaneous injection |
Prader-Willi syndrome results 2015 primary outcome - change in total body weight and hyperphagia-related behavior as measured by questionnaire at week 10. |
Source: clinicaltrials.gov