Nothing to See Here, No Huge Sales Yet

Nothing to See Here, No Huge Sales Yet

Eisai and Arena Pharmaceuticals logged $4.1 million in net sales of their obesity drug Belviq in the second quarter.

I will leave that statement without comment.

Because none is really warranted.

The sales come from less than a month on the market -- the drug launched on June 11 and the quarter closed on June 30 -- and can't tell you anything about the long-term potential for Belviq.

What investors should be paying attention to is management's comments on the plans to accelerate sales from here. Of course, Arena doesn't sell Belviq directly, so most of the information has to flow from Eisai.

From launch through July 19, Arena said that 12,500 prescriptions had been written by 3,900 physicians, which works out to about 3.2 prescriptions per doctor. Only the prescriptions written in the first week and a half would have been up for refills, so it seems safe to assume that doctors are prescribing it to multiple patients. Early adopters don't appear all that worried about safety issues, or they'd only prescribe it to one patient and see how the patient did before pushing it on other patients. Now Eisai just needs to reach the 20,000 to 30,000 patients that the company has identified as the most likely to prescribe the drug.

Eisai plans to run direct-to-consumer advertisements, but not until "sufficient physician education efforts are completed," president and CEO Jack Lief told investors on the call. There's no reason to spend money getting patients to ask their doctors about Belviq if the doctor doesn't know anything about the drug.

Besides getting people to the drug, one of the main roadblocks to converting that into a sale is the price of the drug. For now, Eisai has been giving away a 15-day supply and offering a savings card for up to $75 off the cost of the $200 medication.

Looking at the longer term, though, Eisai and Arena need to gain reimbursement from insurers and pharmacy benefit managers. Arena said Eisai is shooting for coverage of approximately 30% of insured lives, possibly as much as 50%, by the end of next March. VIVUS , which launched a competing drug, Qsymia, last September, has guided for 50% coverage by the end of the year, so Eisai's goal looks reasonable.

Increasing the weight loss
The main knock against Belviq has always been that it produces less weight loss than Qsymia, Orexigen's Contrave, and the newest player, Novo Nordisk's Victoza. My hypothesis is that many patients will start on Belviq because it's the safest, but when they only see minimal weight loss, they'll switch to Qsymia or to Contrave, once it's approved. Because it has to be injected, Victoza, which is approved as a diabetes drug, will mainly be used for overweight diabetics.

To increase weight loss, which should keep patients on the drug longer, Eisai and Arena's plan is to combine Belviq with phentermine, a generic obesity drug that was the phen part of the infamous fen-phen. Belviq works in the same way as fenfluramine, the fen part, but is designed not to hit the receptor that leads fenfluramine to cause heart valve problems.

Eisai plans to start a phase 2 trial with the combination drug near the end of the year or the beginning of next year. If the four-month trial is positive, it isn't clear how much more data -- especially safety data -- the FDA would require Eisai and Arena to generate. My guess is that the FDA would want at least a year of data from patients on the combination product, which would put an expanded approval in 2016 at the very earliest.

For now, VIVUS, Orexigen, and Novo Nordisk don't have too much to worry about.

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