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Obesity Indication Report
January 24, 2006
Obesity is a widespread health problem, with over 63 million affected adults in the US. It is associated with diabetes and cardiovascular risk factors, and even unexceptional improvements in weight can significantly reduce the health risks. However few patients receive long-term pharmacotherapy. This is due to the limited efficacy of existing drugs, along with problems of side effects and reimbursement issues.
Despite also having only modest effects on weight, a drug in NDA status, Acomplia, has an overall better package to offer regarding cardiovascular risk factor reduction, diabetes control, and side effects compared to current treatment. As a result, we believe Acomplia will expand the market, though its modest efficacy will limit its growth. In addition, approval could be delayed by labeling issues, since it does not have clinical outcomes data to go along with its reduction in risk factors.
APD356 is an appetite suppressant designed to target the same weight loss pathway as the popular fenfluramine (part of the fen-phen combination), while avoiding the side effects that led to the market withdrawal of that drug. APD356 has shown encouraging phase II data, with weight loss on the high side of existing treatment and a good side effect profile. Long-term data and information on its effects on cardiovascular risk factors are not yet available. We believe that it will do better than current drugs, but take market share below Acomplia.
Cetilistat lowers fat absorption apparently with fewer gastrointestinal side effects from excreted fat compared to the existing option, Xenical. This might be a double-edged sword, as the side effects could help patients keep on the restricted fat diet currently recommended. Injected AC162652 and intranasal PYY3-36 target a novel pathway, a naturally occurring hormone that suppresses appetite. While there is some interesting preliminary data, they are still in phase I development, and there has been insufficient data for a good assessment of how efficacious this pathway will be in long-term weight loss.
Finally, if one of the early-stage injectable obesity drugs (AC162652 or Pramlintide) were successful and formulated into a long-acting (e.g. once-weekly) version, it would be quite an exciting development with the potential to change the competitive landscape. Similarly, the long-acting anti-diabetic agent Exenatide LAR should be a strong competitor in obese diabetic patients, and could potentially see expanded use in non-diabetic obese individuals, particularly those with pre-diabetes.
BACKGROUND
Obesity is a serious health problem that has reached epidemic proportions, affecting over 63 million adults in the US. It is associated with an increase in mortality, as well as a higher risk for hypertension, type 2 diabetes, coronary artery disease, stroke, lipid problems, gallbladder disease, osteoporosis, respiratory problems, and certain cancers. Abdominal fat, with a waist circumference of over 40 inches in men and 35 inches in women, makes the risk for diabetes and cardiovascular disease worse. Based on survey data, 15% of obese patients have diabetes, and 40% of diabetics are obese (80% to 90% with type 2 diabetes are overweight).
Obesity is defined by a body mass index (BMI: weight in kilograms divided by the square of one’s height in meters) of over 30. The cause of obesity is multifactorial, and may involve behavioral, metabolic, and genetic factors.
CURRENT TREATMENT
Diet, exercise, and behavioral therapy are recommended initially, with a goal of a 10% weight loss in 6 months to a year. Though modest, a 10% reduction in weight leads to a significant improvement in the severity of obesity-associated risk factors. Even a 5% weight loss leads to some benefit; the FDA uses 5% as a benchmark for efficacy. According to national guidelines, the goal after the initial weight loss is maintenance; further weight loss can be considered but is significantly more difficult. Pharmacotherapy is recommended for patients who fail to meet goals after 6 months and who have a BMI of at least 30 or a BMI of at least 27 when obesity-related risk-factors or medical conditions are present. Surgery is a treatment of last resort for certain patients who have failed medical management.
Current drug treatments have focused on reducing either appetite or absorption of fats from the intestines. Most of the weight loss occurs in the first 6 months with these treatments, and if a patient does not lose at least 4.4 lbs in the first 4 weeks, it is unlikely there will be a long-term response.
The current revenue leaders in pharmacotherapy are Xenical and Meridia. Xenical has a 33% market share and Meridia a 24% share (in terms of revenue), and both have been approved for long-term use.
Xenical was the first agent approved to interfere with the absorption of fats. It inactivates enzymes that break down fat (lipases), resulting in a 30% reduction in the fats absorbed. In studies that also included dieting, Xenical resulted in a weight loss of 12.4 lbs and 13.4 lbs at 6 months and 1 year, compared to 6.2 and 5.8 lbs for placebo (intention-to-treat [ITT] population). The proportion of patients losing at least 5% and 10% of their weight was 45% and 20% of Xenical patients compared to 23% and 8% of placebo patients. At 2 years, for patients who entered an extension study, the proportion of patients with a 5% and 10% weight loss were 37% and 19% compared with 24% and 8% placebo. After 4 years of treatment, patients on Xenical regain about 45% of the weight they lost at 1 year.
Xenical also has effects on cardiovascular risk factors and diabetes. It modestly reduces low-density lipoprotein (LDL) cholesterol (the primary “bad” cholesterol). Xenical lowers the 4-year cumulative risk of obese patients developing diabetes from 9% to 6.2%. In patients with type 2 diabetes, A1C (a measure of long term diabetes control) was reduced by 0.2% compared to placebo in one analysis of pooled studies.
On the negative side, Xenical can lead to unpleasant gastrointestinal side effects, such as oily spotting (26%), flatulence (24%), and fecal urgency (22%). However 50% last for less than a week, and for patients who continued on the drug, the rate of these side effects in the second year was less than 5%. In controlled trials, 8.8% of patients discontinued due to adverse events versus 5% of patients treated with placebo. Importantly, Xenical also reduces the absorption of fat soluble vitamins, so patients are advised to take vitamin supplements.
An over-the-counter formulation of Xenical (60 mg, 1 to 2 tablets three times a day) is currently in NDA status for short-term use in overweight individuals. An FDA Advisory Committee meeting voted 11 to 3 on January 23 for approval of the drug. We do not expect the drug will greatly expand Xenical’s share in obese patients, who need longer term and more effective treatment. However, we think it will be popular in non-obese dieters who want an extra boost.
Meridia inhibits the reuptake of the neurotransmitters norepinephrine, serotonin and dopamine, which are thought to play a role in regulating appetite. At 6 months, studies have shown weight loss of 6.6 to 12.1 lbs, depending on dosage, compared to 2 lbs for placebo. At 1 year, the weight loss is 9.8 to 14 lbs compared to 3.5 lbs for placebo. One review found that the placebo-subtracted proportion of patients losing 5% and 10% of their body weight at 1 year was 34% and 15%, respectively, though ranges from 19-34% and 12 to 31% have been reported.
Like Xenical, Meridia has been shown to affect lipids and diabetes, though the specific lipids are different, with modest reductions in triglycerides and increases in HDL-cholesterol. In a meta-analysis of patients with type 2 diabetes, Meridia reduced hemoglobin A1C by 0.7% after 26 weeks, but studies have been inconsistent and an effect on diabetic control is not mentioned in its labeling. Meridia has been shown to reduce the incidence of the metabolic syndrome at 1 year by 18% relative to placebo.
A significant disadvantage for Meridia is that it can increase pulse and blood pressure. 15% to 20% of patients have an increase in diastolic blood pressure of 10 mm Hg or more and 16% to 24% have an increase in pulse of 10 beats per minute or more. This is of particular concern for people with obesity: since they are already at an increased risk of hypertension and cardiovascular disease, these pulse and blood pressure changes are potentially dangerous. A long-term study (SCOUT) to evaluate cardiovascular outcomes began enrollment in February 2003 (enrollment is expected to take 5 years). Meridia is also a controlled substance with abuse potential (though low in relative risk).
Combining Xenical and Meridia has only been looked at in several small studies, and does not appear to offer significant benefits to treatment with Meridia alone (in a couple studies, the weight loss with either combination therapy or Meridia alone was better than with Xenical alone). National Heart, Lung, and Blood Institute (NHLBI) guidelines currently do not recommend combination therapy, pending safety studies.
Other Drugs and Need for New Treatment Options
The remainder of the market is divided between a number of formulations of appetite suppressants that have activity similar to amphetamines. These drugs are generally approved for use no longer than for 3 months, and have an abuse potential, though it is low. Phentermine (generically available) is the most common, and surpasses Xenical and Meridia in numbers of prescriptions. Side effects include insomnia, palpitations, and hypertension.
There is also off-label use of some drugs to treat obesity, including the antidepressant bupropion and the anti-diabetic medication metformin. Of particular interest is the diabetes drug Byetta. In an 82-week extension study of type 2 diabetics (patients were not necessarily obese, though the mean BMI was 34 -- in the obese range), it reduced weight by 9.9 lbs, and a plateau had not been reached. Achieving weight loss in diabetics is generally more difficult than in non-diabetics.
There is a great need for improved treatment in the obesity market. Only a small minority of patients with obesity (<5%) are actually treated with prescription drugs. This is due to a number of factors, including modest efficacy, side effects, and reimbursement problems. Reimbursement has been an issue even though Xenical and Meridia have been shown to have a beneficial effect on certain lipids and diabetic parameters.
DRUGS IN DEVELOPMENT
There are a number of drugs in development with novel mechanisms of action. Acomplia is the furthest in development. When looking at the timing for approval of long-term obesity drug treatment, it should be noted that while the current FDA guidance calls for 2-year studies, an FDA Advisory Committee has recommended limiting that to only 1 year, with continued study after approval. Since it is unclear what the new guidance will state (it is expected the second half of this year), our approval estimates for revenue models still presume 2 year phase III studies are required.
DRUGS IN NDA
Acomplia – Sanofi-Aventis (SNY)
Acomplia blocks neuronal cannabinoid CB1 receptors, which have been associated with appetite and other cravings, such as smoking. It may also increase production of adiponectin, a cytokine made in fat cells that potentially reduces insulin resistance. Acomplia is currently under FDA review, with a PDUFA for obesity and smoking cessation expected in February 2006.
Data from the RIO-North America and RIO-Europe trials show that weight loss at 1 year is 6.4 to 7.5 lbs for the 5 mg dose and 13.9 to 14.5 lbs for the 20 mg dose, compared to 3.5 to 4 lbs for placebo. For patients who complete a full year on medication, weight loss is about 10 lbs for the 5 mg dose and 20 lbs for the 20 mg dose, compared to 7 lbs for placebo. The proportion of patients that lose at least 5% and 10% of their weight at 1 year for the 20 mg dose is 50.9% and 27.4% compared to 19.2% and 7.3% of placebo patients. At 2 years, the results for 5% and 10% weight loss are 39.7% and 16.5% compared to 19.3% and 8.3% of placebo.
There is some evidence that Acomplia benefits certain lipids more than would be expected from weight loss alone, though its effects are modest. In the RIO-North America and RIO-Europe trials, Acomplia raised HDL cholesterol (8% relative to placebo) and lowered triglycerides (13% relative to placebo). In the RIO-Diabetes trial of patients with type 2 diabetes on monotherapy metformin or sulfonylureas, Acomplia lowered A1C by 0.7% relative to placebo at 1 year. Acomplia has also reduced the prevalence of the metabolic syndrome by 32% over placebo at 1 year. While we would expect reductions in the metabolic syndrome to improve cardiovascular outcomes, this has not yet been documented in a clinical trial.
Acomplia’s safety will likely come under scrutiny by the FDA due to its novel mechanism of action. Although it has shown a relatively good side effect profile, of some concern are slightly elevated rates of depression and anxiety leading to discontinuation. Elevated rates of depression and anxiety have also been seen for Meridia. Barring any very severe cases, involving suicidality or psychosis, we do not think this will be a major barrier for approval of Acomplia, though it is something that will have to be monitored and is likely to lead to restrictions in its use for some patients. A slightly numerically higher rate of neoplasms has also been seen in some trials; it has not been specified whether these are benign or not.
While the overall effects of Acomplia are still modest, long-term efficacy appears on the order of existing treatment, with better results on some measures and a comparably favorable side effect profile. Unlike Xenical, its effects on lipids are complementary to those of the statins. It avoids effects on blood pressure and pulse seen with Meridia. It has at least as strong support for an effect on A1C in diabetics as either competitor.
As noted, current long-term treatment for obesity is only used in a minority of patients, and to be successful, Acomplia will need to expand the market. Sanofi is likely to position Acomplia as a drug to treat diabetes and cardiovascular risk factors associated with obesity, including abdominal obesity, certain lipids, and the metabolic syndrome. Though other drugs have also shown some benefit in cardiovascular risk factors and diabetes, we believe that Acomplia will have an overall better package to offer. As a result, we think that physicians will be eager to try the medication, particularly for patients with both obesity and diabetes. We project that Acomplia will expand the weight-loss market and do better than existing drugs, but we also think this will be limited by its modest effects, as well as the lack of information on its benefits in combination with other lipid-lowering drugs and multiple anti-diabetic agents. In diabetics, Acomplia is likely to run into competition with Byetta and especially Exenatide LAR, once the latter comes on the market. (While Acomplia’s one year weight loss results are comparable, its weight loss is maximal at 1 year, whereas in 80 week data presented for Byetta, patients were still continuing to lose weight.) It is possible Exenatide LAR could be developed for obesity in nondiabetic patients, as well, particularly those with pre-diabetes.
As noted, the PDUFA for Acomplia is in February. While Sanofi is probably pursuing an indication listing risk factor reduction and control of diabetes (which would help with reimbursement), we think that depending on the wording, some of these, particularly regarding lipids and metabolic syndrome, will be difficult to get without clinical outcomes data. While this could limit Sanofi’s advertising to some extent, they would most likely still be able to mention beneficial trial results for these risk factors. Approval could well be delayed by labeling discussions.
Of note, a study on Acomplia’s effect on the progression of atherosclerosis began in August 2005 and is expected to be completed October 2008. A cardiovascular outcomes trial expected to enroll 17,000 patients began December 2005. These trials involve patients with abdominal obesity. A positive effect on these outcomes will help boost the drug’s usage.
Acomplia has also been developed for smoking cessation. While results have been mixed, and it has not demonstrated better quitting rates than existing treatment, it has the advantage of greatly reducing the weight gain seen with quitting smoking. Hence, we think it will be a relatively valuable addition, particularly for overweight or obese people.
DRUGS IN EARLY DEVELOPMENT
APD356, now in phase IIb testing, was developed to mimic the weight loss effects of the popular drugs fenfluramine and dexfenfluramine, but without the devastating side effects that led to their withdrawal from the market in 1997. APD356 targets 5-HT2C serotonin receptors, which are concentrated in the hypothalamus, an area of the brain thought to play an important role in regulating food intake. It has much less affinity for the serotonin 5-HT2B receptor, which has been implicated in the cardiac valve problems of fenfluramine and dexfenfluramine.
In a phase IIb 12-week trial, APD356 showed dose-dependent weight loss averaging between 3.7 and 6.8 lbs in the intention-to-treat population (ITT) compared to 0.4 lbs for placebo (between 4 and 7.9 lbs vs 0.7 lbs for placebo in completers). The placebo subtracted ITT results are on order of those seen for Meridia and slightly better than Acomplia (longer-term Acomplia data is comparable to that for Meridia). Diet was not included in the current APD356 study, but will be in the phase III trial, and it is unclear how that will affect the net difference between APD356 and placebo. Overall, we think APD356 will have weight-loss on the high side of other treatment, but not dramatically better, and will have a comparably good side effect profile. It is unclear how it will fare in cardiovascular risk factors relative to Acomplia, which has some benefit beyond weight loss alone.
Arena is currently planning its end of Phase II meeting with the FDA in order to move the drug into Phase III.
Cetilistat is a lipase inhibitor, like Xenical, and while it blocks similar levels of lipid absorption, it has shown a lower incidence of gastrointestinal side effects. The mechanism for the reduced side effects is not clear, but the fat left behind apparently does not coalesce into an oil, as with Xenical. In one 12- week phase IIb trial of obese patients, patients on Cetilistat lost 2.7 to 4.3 lbs compared to placebo for doses ranging from 60 mg to 240 mg. Though similar to some data from Xenical, it is lower than others. However, in another 12-week phase IIb trial of obese diabetics, Cetilistat resulted in placebo subtracted weight loss of 2.2 to 3.2 lbs (for 80 mg and 120 mg doses) compared to 2.0 lbs for Xenical. Cetilistat also resulted in reduction in A1C of 0.5% to 0.6%. Discontinuations due to adverse events were lower for Cetilistat than Xenical (up to 5% versus 11.6%).
Hence Cetilistat is showing data that it may have efficacy on the order of Xenical, but with fewer side effects. This would be a good advantage for disciplined patients. However, for some patients, it is conceivable that the lack of side effects from including more fat in their diet may lead them to eat more fat. Hence the data from long-term trials, especially in “real-world” settings will be important.
Alizyme is currently looking for a partner with whom to continue phase III development of Cetilistat.
Pramlintide is the same drug as Symlin, an injectable drug and analogue of the hormone amylin, currently used to treat diabetes as an adjuvant to insulin. The hormone amylin is thought to act on the brain to regulate appetite. It also slows stomach emptying, which can lead to a feeling of satiety. The dosage of Pramlintide being tested for obesity is twice that of Symlin used for type 2 diabetes, with twice or three-times-a-day dosing.
In a 16-week phase II study of obese patients, 18% of whom had diabetes, Pramlintide led to weight loss of 7.7 lbs, or 3.5% of their body weight compared to placebo. Thirty-one percent lost 5% or more of their weight, compared to 2% for placebo.
Though good, these numbers are not a great deal better than seen in some studies of other treatment. Results from a 16-week dose ranging study (including twice-a-day versus three-times-a-day dosing) in non-diabetic patients are expected the first quarter of 2006. After the results are available, Amylin plans to reformulate Pramlintide to reduce the volume of doses to make it easier to use. Longer term data are also obviously needed. Since Pramlintide must be given as an injection, it will have to demonstrate much better weight loss than oral alternatives to be successful. However, if it is only somewhat better than alternatives and a longer acting version (such as once-weekly) is developed, it could do quite well.
AC162352 - Amylin (AMLN) and Curis (CRIS)
AC162352 is an injectable synthetic version of PYY3-36 (peptide tyrosine tyrosine 3-36), a naturally occurring hormone that increases after meals and influences appetite. PYY3-36 is thought to be formed by the action of the enzyme DPP-IV on PYY1-36, a hormone released from the intestines. Levels of total PYY tend to be low in obese subjects. In 1 study, infusions of the hormone PYY3-36 (not AC162652) in humans reduced caloric intake in 24 hours by 30%. And unlike the hormone leptin, which had been a prior anti-obesity target and which is thought to regulate appetite along the same pathway in the brain, obese subjects have not appeared resistant to PYY3-36. As a result of these factors, the hormone has generated interest as a novel pathway to combat obesity.
AC162352 is currently in phase I development. We are concerned that in spite of completing a phase I trial in 2004, there has been no further word on it. If successfully developed, a major drawback will be that it is injectable, unless as noted above for Pramlintide, a long-acting version can be formulated so it does not have to be given every day.
PYY3-36 - Nastech (NSTK) and Merck (MRK)
This is an intranasal formulation of the gut-derived hormone PYY3-36 (see AC162352 above for background on the hormone). It has completed 3 phase I trials, showing evidence of reducing caloric intake. We are concerned that in 1 study, after reducing food intake at a low dose, food intake increased with increasing dosages. However, in another study, patients receiving PYY3-36 three times a day had a weight reduction of 1.3 pounds over 6 days. The timing for moving into phase II development has not been released. The nasal formulation of PYY3-36 should make it more popular than Amylin’s injected AC162352, but also means there is more risk in developing a product that is as efficacious.
869682 – GlaxoSmithKline (GSK)
869682 is an inhibitor of the sodium-glucose co-transporter SGLT2 in phase I development for obesity. It is also in development for diabetes. The co-transporter is located in the kidneys (and intestines) and its function is the reuptake of glucose. Inhibition would lead to excreting excess glucose in the urine before it can be turned into fat. This drug has an interesting mechanism of action, and we await clinical data.
REVENUE MODELS
We have added 2 new revenue models for obesity: APD356 and Cetilistat. We have also revised models for Acomplia, Pramlintide, AC162352, and PYY3-36.
Acomplia - Sanofi-Aventis (SNY)
We expect the promotional campaign around Acomplia to expand the market for long-term obesity drug treatment, with Acomplia doing better than existing drugs. However, due to its modest effect, we project its 5- and 10-year US revenue to be limited to $615.8 million and $528.2 million, with corresponding worldwide revenues of $1.0 billion and $912.8 million. (The revenue model covers obesity, and not patients using Acomplia just for smoking cessation.)
We also project APD356 to do better than existing treatments, as it avoids their negative side effects. The fact that APD356 has a similar target to fenfluramine and dexfenfluramine is a double-edged sword. There was a great deal of excitement over those drugs so it may appeal to people as a safer alternative. On the other hand, there may be suspicions that it is not safe even if approved. APD356 will be limited by coming to the market after Acomplia. Our 5- and 10-year US revenue projections are $127.6 million and $655.2 million, with corresponding worldwide revenues of $168.9 million and $1.1 billion.
We expect Cetilistat to take some share from Xenical due to its reduced side effects, and also for it to expand the market. We also expect there to be some combination use with appetite suppressors, though this will be limited by cost for patients paying out-of-pocket. Our 5- and 10-year US projections are $45.3 million and $284.2 million, with corresponding worldwide revenues of $74.8 million and $469.8 million.
We are projecting limited use of Pramlintide because it is an injection, though its share would be greater if it shows very strong phase III numbers. Our 5- and 10-year US projections are $22.2 million and $139 million, with corresponding worldwide revenues of $28.5 million and $224.9 million. If a long-acting version (such as once-weekly) is developed, it could be much more successful.
AC162352 - Amylin (AMLN) and Curis (CRIS)
We are projecting limited use of AC162352 as it is an injection, with the assumption that it will be given at least once daily. Like the case with Pramlintide, if a long-acting version (such as once-weekly) is developed, it could be quite successful, and more popular than the intranasal formulation. Our 10-year US projection is $130.6 million, with corresponding worldwide revenues of $188.2 million.
PYY3-36 - Nastech (NSTK) and Merck (MRK)
If it is as effective as AC162352, intranasal PYY3-36 should be more popular than the injectable drug. As this is a naturally occurring hormone we expect a good safety profile. Our 10-year projection is $311.7 million and $454.5 million.
EVALUATED COMPANY UPDATES
Pramlintide and AC162352 contribute a relatively small amount to Amylin’s valuation. Our 5 and 10-year pipeline valuations for Amylin are $45.21 and $35.39. There is significant potential upside, though, if one of these intravenous drugs achieved better weight loss than competitors and was formulated into a longer-acting (e.g. once-weekly) version.