Memorandum

Orexigen 2Q14 – Expresses confidence in Contrave receiving US approval and positive EU CHMP opinion – August 27, 2014

Executive Highlights

  • Orexigen expressed confidence in Contrave’s  regulatory processes in both the US and the EU.
  • Orexigen is working closely with Takeda on a launch plan for Contrave this upcoming fall; it includes a large sales force of 900 sales representatives.
  • Management is waiting till Contrave is approved in the US and EU before providing more details on ex-North American partnering conversations or a potential diabetes indication.

Orexigen reported its 2Q14 financial update recently in a call led by CEO Mr. Michael Narachi. Below are our top five highlights from the presentation, followed by Q&A.

1. Management expressed confidence in reaching agreement with the FDA on the post-marketing obligation for Contrave that had delayed the agent’s PDUFA date by three months.

2. Orexigen also felt optimistic in its ability to address the EU’s Day 180 List of Outstanding Issues, commenting that it might have reached the final stage of discussion” prior to a likely oral hearing.”

3. Takeda, Orexigen’s North America commercialization partner for Contrave, has prepared a plan for launching Contrave this upcoming fall, if the agent is approved; it includes 900 sales representatives, and messaging and medical information platforms.

4. Management stated that they will not further the ex-North American partnering process for Contrave until after receiving approval in both the US and Europe.

5. Similarly, Orexigen will not provide more details on the progress of a diabetes indication until the company obtains approval for Contrave.

Top Five Highlights

1. Orexigen expressed confidence in reaching agreement with the FDA on a post-marketing obligation for Contrave (naltrexone/bupropion or NB32), which had delayed the agent’s PDUFA date. As a reminder, the PDUFA date of Contrave was delayed by three months to September 11, as more time was required for Orexigen and the FDA to reach agreement on an undisclosed post-marketing obligation regarding the agent’s cardiovascular outcomes. Orexigen commented that the two groups are making progress on the issue, stating that, “this is the issue we are focused on with the agency in order to complete the review.” Orexigen characterized itself as having “ongoing high level engagement with the FDA” and confidence in agreeing on these “final details.”

2. In addition, management expressed optimism in its Contrave’s EU submission, believing that they are in the “final stage of discussion prior to a likely oral hearing.” Late last month, Orexigen received its Day 180 List of Outstanding Issues from CHMP, which raised two questions: (i) a synthesis of Contrave’s benefit-risk profile and (ii) additional information regarding third party suppliers’ study materials for bupropion. In order to account for time to receive information from suppliers, Orexigen plans to respond to these questions in September. From there, the company expects to hear from CHMP in October either with an approval opinion, notice of an oral explanation, or additional questions.

  • Management emphasized that “the amount of pre-authorization information provided to European regulators is unprecedented for an obesity therapeutic.” Therefore, Orexigen is confident in its ability to present a “compelling case for a positive benefit risk profile” of Contrave. During the call, Orexigen highlighted that Contrave’s weight loss efficacy is as great or greater than any other European-approved weight loss therapeutic (it is our understanding that this includes orlistat) and that the efficacy meets CHMP guidance. Other noted benefits of Contrave include improvements in A1c, lipid profiles, and inflammatory markers. Regarding risk, management stressed that although the agent is associated with small increases in blood pressure and heart rate compared to placebo, the interim results of the Light Study (Contrave’s CVOT) have met the pre-specified criteria for excluding cardiovascular risk in the US. Orexigen expressed confidence that this data should also support interim exclusion of cardiovascular risk for European regulators.

3. Orexigen is working closely with its North America commercialization partner Takeda on preparing to potentially launch Contrave in the US this upcoming fall. As pointed out in Orexigen’s 1Q14 call, Takeda plans to carry out the launch with 900 sales representatives, which management believes is “the type of effort needed to effectively launch a drug in the US primary care market.” Takeda now also has fully developed messaging and medical information platforms, which Orexigen indicated are supported by extensive market research. Additionally, Takeda has a large managed care effort in place for establishing Contrave reimbursement across the payer marketplace. As obesity slowly finds it place on the reimbursement front, we think the success of Takeda’s efforts with payers will be key in Contrave’s launch.

  • During Q&A, management commented that with 900 sales representatives, they will be able to call on a “nice mix” of providers who already prescribe obesity medications, but also to a number of “high-potential non-writers” who Orexigen believes will be key to growing the market. This is the largest sales force we have seen in the obesity marketplace, as Vivus only has 150 representatives for Qsymia and Eisai has 600 representatives for Belviq (up from 400).

4. Orexigen plans to advance the partnering process for an ex-North American partner after obtaining approval in both the US and EU. This is because, as management noted, “deal value will be maximized” with these two approvals. During Q&A, Orexigen commented that partnering has been competitive as Orexigen faces many choices, but that the current decision is to wait for both approvals, since an EU denial would be potentially problematic for some regions.

5. During Q&A, management explained that it will provide more details on the progress of a diabetes indication and a DPP-4 inhibitor fixed-dose combination with Contrave after receiving US and EU approvals. Management confirmed that it is still interested in pursuing a diabetes indication and in putting Contrave into a fixed-dose combination with diabetes medications, particularly a DPP-4 inhibitor. Orexigen commented that these plans have been part of the partnering process dialogue, and will not be further developed until after approval.

Questions and Answers

Q: My question was primarily a look back on the FDA process. I know that you can’t say much about what’s going on now but was there really a change in the communication from a couple of years ago to what you received recently?

A: No, no change. As we outlined, this really is solely focused on what is the appropriate ongoing evaluation of cardiovascular outcomes for the NB32 program. And the topic is complicated by the disclosure requirements regulators often have for a benefit risk assessment vs. the desire of any ongoing blinded study to keep the data confidential. And so that has led to complexities around exactly how and what the choices are for that ongoing evaluation. And we don’t want to pre-empt those discussions. We’re pleased with the discussions that we’re having. We have high-level engagement with the FDA and it’s ongoing.

Q: Any further thoughts on commercial strategy and if it is possible to see increased visibility before the regulatory process completes or would you point to perhaps next year after it’s approved?

A: We’ve been running a structured process for the rest of world rights. As a reminder for everyone on the call, we have a partner for North America and we’re seeking a partner for all other ex-North American territories. So it’s been a competitive process. There’s a lot of choices that we have there and our choice right now is we feel like the deal value will be maximized with both a U.S. and an EU approval. A denial in Europe is problematic for some regions that prefer a European approval. The focus of most people in the process has not been solely on Europe, it’s on lots of territories around the world; particularly some of the emerging markets and where, historically, obesity therapeutic sales have been quite high on a per capita basis and utilization is quite good. So it’s really a focus on our ROW process in total and how to optimize that. And at this moment in time, we feel the optimum deal value would come once we’re through both of those processes, particularly because we’re right at the end of the process in Europe anyway, so we might as well play it out. We’ve fully funded all the programs and we’re just going to let that play out and then complete the process.

Q: Can you provide an update on your life cycle plans for Contrave for diabetes and then the fixed-dose combination with a DPP-4?

A:  We said in the past that we’re very interested in pursuing a diabetes indication for Contrave, as well as the opportunity to put Contrave into a fixed-dose combination with diabetes medications and have done some feasibility work with a DPP-4 plus Contrave. The progress on those ongoing plans, evaluation, and of exactly how to pursue those opportunities are part of the partnering process dialogue, but we will wait on details until after the approvals.

Q: Can you provide an update on the buildup of launch supply and how quickly you guys would be ready to launch if the FDA decision is positive?

A: The increase in operating expenses that we outlined on this call and our 1Q call reflect the preparation for launch load and while we’re not going to disclose the actual amount that Takeda has ordered from us, it’s captured in that and we will have a launch that’s commensurate, in terms of the launch load, with the effort that Takeda intends to put behind it. And so, that’s the extent of the guidance that we’ll provide on that.

Q: You did have some impressive data in, albeit in a small group of patients, on depression. I know that you’ve turned your focus on diabetes, but is it on your radar to potentially pursue this sub-indication as well?

A: I think there’s a variety of life cycle options – it’s one of the exciting things about NB32. Obviously, the individual constituent of bupropion has indications across a number of areas in mood disorders, smoking cessation, etc. And so there are a number of options on the table and we are discussing that as part of the partnering process. It’s also part of the ongoing discussions we have with our existing partner in North America. But at this point, we’re going to wait until after approval to elucidate in any further direction.

Q: For the Light trial, can you provide any color on whether you’re seeing any change in the rate of accruals of events as you approach your November target?

A: We don’t typically talk about the general kind of metrics or ongoing data collection efforts in the study. We’re very pleased. What I can say is that typically, what you see in cardiovascular outcome studies or other large-scale outcome studies is an event rate, particularly when it’s a large patient population like this, the event rate typically is fairly consistent over time.

Q: On partnering, are you more focused now on trying to get a worldwide partnership for Contrave, or are you still thinking of potentially including Empatic? What would be the best package for consideration?

A: As we said in the past, Empatic would only move forward, if it was risk-shared or cost-shared with a partner. And we think the best way to develop Empatic would be keeping in mind that our positioning for Contrave and thinking about ways to develop Empatic that are complementary to that positioning. So maybe I’ll answer your question by saying, yes, it’s included in those dialogues and part of the offering, but the focus is on Contrave. Contrave is near-term – it’s at the very end of the regulatory process in both the US and in the EU. So that’s where all the focus is, and that’s where the value is in the deal.

Q: I’m wondering if you might be able to give some additional details on what you had talked about regarding a strong and differentiated launch. Clearly, one of the things you’ve talked about is Takeda’s sales force size. I’m wondering if there’s anything else that you might add?

A: First of all, I think, a little perspective is in order. A couple of years ago, there was literally no promotion at all in the obesity market. And with Contrave approval, there will be about close to 1,700 reps in the obesity market covering approximately 100,000 physicians So we certainly believe unmet need is high and just what this market needs is development and resources and that’s going to happen. To get into the specifics of your question, I think there are three things that I point to. First of all, it’s the profile of NB32. All the research that we’ve done points to NB32 being very attractive to large important market segments. We’ve discussed some of those previously but some of the most important ones being the obese diabetic, the obese pre-diabetic, that obese-depressed patient that was mentioned earlier, and female patients. In addition, Contrave is not scheduled so we’re going to have the ability to sample, which we believe is going to be a differentiator. Resourcing is just so important in this market, and Takeda has the resources to effectively establish, launch, and grow Contrave. With the 900 sales representatives, we’re going to be able to call not only on a nice mix of physicians that are already writers of obesity products but also a very nice group of high-potential non-writers that we think will be key to growing the market. The marketing budget is going to be commensurate with the type of sales rep numbers that we gave you and then, a significant managed care effort and reimbursement support gear. And then lastly, I think what we’re excited about is we think our timing’s good. We think we’re coming into this market at the right time. Awareness is up with patients and physicians. The reimbursement landscape has improved significantly. The guidelines that were issued emphasized the importance of weight loss, so hopefully you can see those are some of the reasons we’re confident in a strong and differentiated launch.

Q: As far as you know, Takeda’s launch will be ready to go assuming the approval is on time?

A: Yeah, the launch is completely in the can, ready to go. And we haven’t given a specific date, but we’ve indicated a fall launch.

Q: I was just wondering if you might be able to clarify a couple things about the CHMP process. It sounds like you have not yet heard whether you’ll have an oral hearing and I’m wondering if you can just walk us through the timeline from the September filing?

A: So we’re not going to hear about an oral hearing until after we actually give them our Day 180 responses. So we received that list of issues last month and we elected, as a result of the question to the third-party suppliers, for a one-month extension. So that puts our timeline for the response in September. That restarts the clock and then the regulators have 30 days to get back to us regarding the next steps and as I outlined in my scripted statement, that can be either a CHMP opinion outright. It can be a notice of an oral escalation; that’s when we would hear, “hey, it’s time for an oral hearing.” So we would expect that oral hearing to take place either in the October or potentially November timeframe. They can always, of course, ask additional questions. That’s in their purview. Once the CHMP then provides an opinion, which we believe will be a positive opinion, there are some additional procedural events in order to get to the actual final European approval. But it’s generally predicated on that positive opinion that you receive. And for the partnering process, the opinion is the key component there.

Q: If you are asked to do an oral hearing, when do you think a yes/no recommendation from the CHMP would come?

A: It depends upon the date of the oral hearing itself. We do believe that a positive opinion could still come at the end of this year. There’s a chance it would be early next year. But it just depends upon the scheduling date for when you are asked to go in front of CHMP.

Q: How important is it to have an ex-US partner on board to commence your diabetes life cycle management plans from a harmonization of clinical design standpoint, assuming you license it to somebody other than Takeda?

A: For a diabetes indication, most people pursue a fairly globally harmonized program that would be adequate for global regulators and that’s the kind of development program that we’ve been outlining and discussing. So I don’t think it’s important. I don’t think it would be different in any way between what we would do for a US regulatory process vs. an EU or other regulatory process, so a comprehensive type of program.

Q: How usual or unusual is it for the CHMP to enquire about a supplier of a drug product as part of an MAA?

A: As part of any regulators’ review, there is a section on CMC and GMP quality and so forth. And this is direct dialogue between the agency and the third-party supplier. They maintain in the US what are called DMFs or Drug Master Files, and its equivalent nomenclature in Europe is called an ASMF. And so there’s specific details and follow-up that they’ve asked of those third-party suppliers of bupropion regarding starting materials that are used in a very simple synthesis. Recall also that bupropion has only been approved in Europe since 2007 as opposed to the US where we have US pharmacopeia standard for bupropion that’s been approved for nearly 30 years. I think part of what’s happening here is that this is the first time that bupropion has gone through a centralized procedure. And so the EU is asking information, we assume, with likely lots of other suppliers as well. So it’s just looking further up in the supply chain for quality information on starting materials.

Q: Regarding diabetes, it sounds like if you license it to somebody other than Takeda outside the US, that a partnership is not really a pacing item to putting together and starting a phase program next year?

A: No, we don’t see it as a pacing item.

 

-- by Melissa An, Hannah Deming, and Kelly Close