Weight Loss Research and Results and Commentary on Three Pipeline Drugs

Nobody’s Unpredictable December 9, 2010 © 2010 Ipsos• [name of the entity issuing the document]. All rights reserved. Contains Ipsos' Confidential and Proprietary information and may not be disclosed or reproduced without the prior written consent of Ipsos.

Results and Commentary on Three Pipeline Drugs Lorcaserin | Qnexa | Contrave

Ipsos*Vantis Weight Loss Research

Month Day, Year Page 2 © 2010 Ipsos Ipsos Vantis Rx Weight Loss Medications Webinar

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Obesity Analytical Group

Bob Shekhdar - Senior Consultant Office: 203.329.8756 Mobile: 203.559.7620 [email protected]

Tom Young- Vice President, Healthcare Office: 973.658.1686 Mobile: 201.755.6096 [email protected]


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The following presentation has been prepared by analysts at Ipsos Vantis. The information contained herein is based on research data collected by Ipsos Vantis and other secondary, non-company affiliated sources and is believed, but not guaranteed, to be accurate.

The presentation is for informational purposes only and nothing in this presentation constitutes a representation of the accuracy of any forecast or market prediction, nor does it recommend taking any action in regard to the public companies named in the presentation. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein nor is it intended to be a complete statement or summary of the companies, markets or drug developments referred to in the presentation. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results.

Disclaimer


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Ipsos Overview

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Forecasting, modeling and consulting for FMCG & OTC drugs

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Advertising testing and brand health

Ipsos-Public Affairs

Public opinion

Qualitative & Quantitative research for Pharmaceutical industry

Health


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 Vantis Health is a group of specialists who predict the business impact of marketing decisions and market events

 We reliably link research results to ROI to help clients make the right strategic and tactical decisions  …on a global basis and in the context of changing market conditions

 Vantis originated with BASES for the purpose of extending CPG models  Categories  Target audience  Marketing channels (direct, medical, Internet etc)  Influencers (medical professionals, patients on professionals)  Product, pricing and positioning optimization, as well as marketing plan

simulation

About Ipsos*Vantis


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Setting the Stage


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“Corpulence is not only a disease itself, but the harbinger of others” … Hippocrates

 Pharmaceutical companies have made efforts to develop Rx meds for weight loss, but with such limited success then with Meridia’s withdrawal this year, only Xenical remains on the market as an approved drug for long-term use.

 The current market is dominated by generic phentermine, approved only for short-term use, and is a controlled substance.

 Doctors are enthusiastic about the pipeline medications, but frustrated that they currently have so few options.

 Bariatric surgery – currently popular and very effective, but expensive, demonized by payors, and only a solution for a very slim group of obese patients

 OTC Meds (alli – low dose Xenical)  Diet and Exercise - great advice, outcomes good when followed,

seldom followed  Liposuction


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Timeline: FDA and Weight Loss Drugs

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

J&J tests topiramate, an epilepsy / migraine headache

drug, in weight loss trials

FDA forms Obesity Task Force

J&J discontinues Topomax (topiramate)

weight-loss trials

FDA rejects Zimulti (rimonabant) NDA due to psychological side effects

FDA gives OTC approval for low-dose orlistat (alli)

Pfizer and Merck in clinical trials to develop CB-1

blockers

Merck, Pfizer stop CB-1 trials

Vivus submits NDA for Qnexa

FDA asks Abbott to withdraw Meridia

(sibrutamine) from US market

Abbott withdraws

Meridia

Orexigen NDA for

Contrave

FDA says lorcaserin and Qnexa “Not approvable in present form”

Arena NDA for

lorcaserin

Antidepressant Wellbutrin (buproprion), in weight loss

clinical trials.

Sanofi-Aventis withdraws Zimulti (rimonabant) NDA

FDA 12/7 Advisory Committee voted for approval of Contrave

Advisory Panel vote splits 5-5 on Meridia withdrawal

Pharma C

ompanies

FDA


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Wall Street Opinion on Weight Loss Drug Market

“We see a significant market opportunity in obesity, although this remains controversial among investors. We believe the lack of historical commercial success for obesity drugs has been a function of poor efficacy and intolerable side effects, both of which can be addressed by lorcaserin's profile.”

Jefferies and Company, 12/09

“Obesity is an epidemic; mortality escalates with weight; the cost-effectiveness argument is easy; the market is enormous. Hence, no one argues a good drug would not be a mega-blockbuster. The FDA remains a formidable hurdle.”

Jefferies and Company, 2/10

“We believe Qnexa would satisfy a significant unmet need -- an extremely effective weight loss medication that does not require behavior modification.”

Jessup & Lamont 2/2010 “The FDA is highly unlikely to approve Qnexa on the heels of the Meridia withdrawal without requesting a thorough cardiovascular safety trial for Qnexa.”

Cowen & Company, 10/10

“While our view that lorcaserin may have the best shot at approval among the late-stage obesity drug candidates – as we described following the Qnexa panel – is unchanged, we are no longer comfortable with the near-term risk/reward. As such, we are downgrading ARNA to Neutral.”

JP Morgan 8/10


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Understanding the obesity market from multiple viewpoints


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One Concern – Is the FDA “out-of-sync?” Stakeholder Quick Facts/Evidence Enthusiasm

for New Rx Meds

Patients/Society  74% of Americans are overweight or obese (Forbes, 2007)  The WHO says that obesity will eclipse undernutrition and

infectious disease as the number one world health problem

High

Physicians  The focus of this presentation – extremely enthusiastic about having something to offer obese patients

Very High

Drug Manufacturers  Many large companies have de-emphasized weight loss, with pipelines oriented around cancer, biologicals, CNS and other drugs that have a high unit cost.

High/Varied

The Investment Community

 Generally aware of massive patient size, but analysts tend to be very enthusiastic, or at the opposite extreme

Varied

Managed Care  We suspect that pharmacoeconomic benefit will eventually sway payors in favor of these drugs, but patient volume suggests that getting on formulary will be an uphill battle initially.

Moderate

Other businesses taking part in the $150 Billion Weight Loss Industry

 No worries for this group. These medications are all taken as part of regimens, which always include diet and exercise. In fact, we note that structured diet program participants are very likely to take prescription pharmaceuticals.

Medium-High

The FDA/Regulatory Community

 FDA action of this week was surprising. We earlier questioned whether “societal need” was being considered.

Medium-low Wait and see


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 Contrary to some opinions major pharmaceutical companies have not walked away from researching drugs for obesity and weight management

Recent and Current Obesity R&D by Major Pharmaceutical Companies

R&D Compound Manufacturer Clinical Trial Stage

BMS-830216 Bristol-Myers Squibb Phase 1, 2

‘2-0453 Novo Nordisk Phase 1,2

GSK-1521498 GlaxoSmithKline Phase 2

PF-04620110 Pfizer/Bristol-Myers Phase 1

Velneperit (S-2367) Shionogi Phase 2

Exenatide Amylin/Eli Lilly Phase 4

Pramlintide+Metreleptin Amylin/Takeda Phase 2


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Physician Obesity Study Findings and Implications


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Obesity Drugs - Study Design

Country  USA

Dates of Fieldwork  Summer, 2010

Data Collection Method  Online

Concept Specs  JPEG  1 pg

Sample Size  N=1500 (> 125 exposures per concept)

Sample Definition

 General Practice Physicians, in practice between 2 and 35 years, Endocrine and Cardiac subspecialties included, geographically dispersed.

 Internet access

Exposure Method  Sequential monadic survey  3 concepts per respondent  Test concept exposure rotated to avoid order bias

Length of Survey  15 minutes


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Profiles: Investigational drugs with proposed indications for treatment of obesity

Lorqess (possible TM

for lorcaserin) Qnexa Contrave

Manufacturer Arena Pharma Vivus Orexigen Therapeutics

U.S. Commercialization Partner

Eisai None announced Takeda

Formula Lorcaserin hydrochloride

Fixed-dose combo of generic phentermine and

topiramate

Fixed-dose combo of generic bupropion

and naltrexone

Dosing Single 10mg tablet, BID

Four dosage strengths for titration. Maximum

maintenance dose - 15 mg phentermine + 92 mg ER

topiramate, Single capsule, QD

Maintenance dose after titration - 8mg naltrexone + 90 mg bupropion , 2 ER

tablets, BID


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 Physicians mention that lorcaserin and Contrave would be appropriate for about one-half of their obesity patients.

Percent of patients treated for obesity for whom the drug is appropriate

52%

39% 47%

0%

20%

40%

60%

80%

100%

Lorcaserin Qnexa Contrave

Patients for whom drug would be appropriate


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 Lorcaserin is most thought of as a break-through treatment.  Qnexa is viewed as most similar to existing medications (phentermine and

topiramate).

Comparisons to currently available medications to treat obesity

6% 18%

7%

52%

66% 71%

41%

15% 22%

0%

20%

40%

60%

80%

100%


Is a breakthrough new treatment

Offers some improvement compared to existing medications

Similar to existing medications and does not offer any meaningful improvement


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 The overwhelming majority of physicians state that they would make any of the drugs a standard therapy within two years.

Time to make drugs a standard therapy

54% 38%

57%

32%

34%

35%

86%

72%

92%

0%

20%

40%

60%

80%

100%


Less than 2 years

Between 1-2 years

Less than 1 year


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Scores compared to Vantis norms for over 500 similar and relevant products

 The product scores in the top 20% of norms on key measures such as prescribing intent, uniqueness and need fulfillment.

Key measures suggest that lorcaserin has a high likelihood of achieving in-market success

Lorcaserin Key Measure Scorecard

Bottom 20 Percentile

Below Average Average

Above Average

Top 20 Percentile

Seek Information (Top Two Box %) 85%

Prescribe Intent (Top Box %) 27%

Prescribe Intent, When Asked (Top Two Box %) 70%

New and Different (Mean 5-Point Scale) 3.9

Need Fulfillment (Top Two Box %) 71%

Believability (Top Box %) 20%


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Scores compared to Vantis database of norms for over 500 similar and relevant products

 Most key measures fall in the middle of the range of normative scores when compared to the Vantis new product data base.

If approved, key measures indicate an average probability of market success for Qnexa

Qnexa Key Measure Scorecard



Above Average

Top 20 Percentile








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  With almost all key measures falling in the top quintile, when compared to Vantis’ norms, we expect that Contrave will achieve market success if approved.

Contrave Key Measure Scorecard



Above Average

Top 20 Percentile







Contrave is very well-placed to enter the market


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 All three drugs have a reasonable chance of success if approved by the FDA.

Key Measures Summary

Summary Key Measure Scorecard



Above Average

Top 20 Percentile

Seek Information (Top Two Box %) Q L C

Prescribe Intent (Top Box %) Q L,C

Prescribe Intent, When Asked (Top Two Box %) Q L,C

New and Different (Mean 5-Point Scale) Q L,C

Need Fulfillment (Top Two Box %) Q L,C

Believability (Top Box %) L Q C


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 Forecasts made during summer of 2010 - before Advisory Committee meetings and FDA review of NDAs

 Assumes that manufacturers partner with large pharma company for U.S, commercialization.

 Our order of entry assumptions have changed.

Ipsos Vantis Forecast Ranges

760

520 590

570

390 440

0

100

200

300

400

500

600

700

800


Mill

ions

of D

olla

rs

Annual U.S. sales (retail) within 5 years of launch


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  Based on our research with doctors, we predict an overall market more accepting of Rx pharmaceutical solutions to weight loss – even in the case where there is a more severe risk profile. This is based on our recent research of physicians.   In the future, all doctors will ask themselves when suggesting diet and exercise if it will be

effective and if it is enough for the patient in question.   It is very possible that some drugs will havel limiting labeling (indication for BMI > 32), or a

very serious co-morbidity.

  But the larger societal/public health issue can only partially be met with such solutions – and as with bariatric surgery, the Rx approach is never going to be a broad solution for a wide percentage of patients.

  The FDA seems to be evaluating the new entrants on merits and meeting the public need halfway with the actions of the last few days

  While we think all marketers and strategists in the Rx industry should be ready to think about obesity agents, the top pharmaceutical companies are not in this category now, have definitely made strategic decisions in this regard, and we won’t see them back for at least five years, based on the pipeline.

  As stated, we see Lorcaserin, Qnexa and Contrave entering the market and in general being quite successful, based on good/superior physician reaction.

What does the future hold?

Weight Loss Research and Results and Commentary on Three Pipeline Drugs

Health & Medicine

key measures

lorcaserin

weight loss

prescribe

dose combo

bariatric

standard therapy

information