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Tuesday, April 30, 2013

腸道菌 催化 卵磷脂/肉鹼 (carnitine) 增加 中風風險


肠道细菌副产物可预测心脏病与卒中风险 发布时间:2013-4-28 来源:药品资讯网信息中心2013425发表在《The New England Journal of Medicine》的一项研究显示,肠道细菌的一种微生物副产物可导致心脏病,并且可在通过传统危险因素和血液检测无法识别的人群中作为预测将来心脏病发作、卒中和死亡风险的一种准确筛查工具。该研究团队由Stanley Hazen博士和W.H. Wilson Tang博士牵头并对对Hazen博士之前的研究进行扩展,在之前研究中,Hazen博士发现肠道细菌消化营养物卵磷脂(常称为磷脂酰胆碱)时,产生一种叫做氧化三甲胺(TMAO)的副产物。既往研究显示,血中的TMAO水平与心脏病相关。Hazen博士和同事现已证实肠道菌群在人类形成TMAO过程中是必不可少的,并且证明了TMAO水平与将来心脏事件(如心脏病发作、卒中和死亡)之间存在相关性,即使在既往无心脏病风险证据者中依然如此。为了证明肠道菌群在TMAO形成中的作用,受试者被要求进食2个煮熟的鸡蛋(磷脂酰胆碱的一种常见膳食来源)和一个标记的磷脂酰胆碱胶囊(作为示踪物)。摄入鸡蛋后,血中的TMAO水平增加。然而,当这些相同的受试者被给予短期广谱抗生素抑制肠道菌群时,他们的TMAO水平被抑制,并且没有更多的TMAO形成,即使在摄入磷脂酰胆碱后仍然如此。这些结果表明,肠道细菌为TMAO形成所必需。在研究的第二阶段,研究者在对一个大型、单独、临床队列(包括4000多名在克利夫兰医院进行心脏评估的成人)随访3年后测定了受试者的TMAO水平后发现,血TMAO水平较高与随后3年死亡和非致死性心脏病发作或卒中风险较高相关。这些结果佐证了Hazen博士最近另一项研究的结果:肠道菌群对一种见于动物产品的结构相似营养物(肉碱)的代谢与TMAO产生及心脏病发作风险相关联。"心脏病仍是人类头号杀手,虽然我们知道如何通过饮食与其他干预降低胆固醇、治疗高血压以及降低心脏风险,但是仍存在很多其他风险。"Hazon博士说。"我们需要寻找对抗心脏病的新方法,这些研究结果提示,对肠道微生物组参与心血管疾病发生的进一步研究有可能产生新的心脏病干预及治疗方法。"测定血TMAO水平可作为预测将来心血管风险的有力方法,即使是对那些没有已知风险的人群。需要更多研究以证实TMAO检测与胆固醇、甘油三酯或血糖水平一样可能有助于指导临床医师提供个体化营养建议以预防心血管疾病。

 

年產四億支安全針筒 (惟莘國際)


惟莘國際有限公司安全針筒技術/投資說明會4/30 April 23rd, 2013自美國總統柯林頓於200011月簽署通過「注射針筒安全及預防法案」及世界衛生組織WHOUNICEF UNFPA決議會員國自2003年起開始使用自毀式安全注射針筒,防止重複使用,其後安全注射針筒市場逐年增長,未來商機龐大,預計全球注射針筒每年有6百億支需求量。20121月我國亦通過立法,規定醫院至2015年全部採用安全針,因此市場可期,我國每年的注射器使用總量約為1.2億支。目前安全注射針筒的成長已逐步達到年用量55億支,取代傳統針筒已是趨勢。 經濟部生技醫藥產業發展推動小組(以下簡稱經濟部生醫推動小組)為推動生技產業之三業四化,強化醫材產業研發以改變產品生命週期,經由惟莘國際有限公司親自介紹所開發的「回拉式安全注射器」、發展規劃,改善目前台灣廠商在生產技術、產品良率或產品設計等問題,應可期待。該團隊擁有多年經驗技術,所開發的安全針筒結構最接近傳統針筒的操作,成本又低在安全注射器的市場中應可脫穎而出。在年產四億支的規劃下,五年投資報酬率將達300%。目前尋求策略聯盟機會進而帶動我國安全針產業發展。歡迎各位先進蒞臨指導!主辦單位:經濟部生技醫藥產業發展推動小組 / 惟莘國際有限公司 日期: 102430日(週二)14:O0~15:00 地點:台北市南港軟體工業園區3F17A(生醫推動小組會議室) 報名聯絡人:王芸 (電話: 02-26558133 ext 112)

 

虧損越多…市場越熱? (生技股王??)


財報醜媳見公婆 生技股漲勢歇 2013-4-29 〔記者陳永吉/台北報導〕上週生技股利空頻傳,一方面是大盤由電子股重返主流,生技資金失血,另一方面是生技股首季財報即將陸續公告,恐怕無法承受高本益比的期望,因此部分資金撤出,預期至少要整理到5月中旬財報公告完畢後,才有反彈空間。上週台灣雖然出現首例的H7N9禽流感病患,生技股在國光(4142)的領軍下,大漲表態,但卻僅有一日行情,其他防疫概念股上週五只剩生產口罩的恆大(1325)及美德醫(9103)股價持續有表現,其他多數開高走低收黑,在疫情沒有出現重大變化下,防疫概念股投資人介入需謹慎小心。事實上,影響生技股最大的是資金移轉,上週電子股資金比重提高至6成以上,這是今年以來少見的情況,尤其台積電(2330)大漲後,緊接著DRAM接棒,然後是封測,還有大立光(3008)法說會也放出好消息,讓市場資金重新關注電子股,且因首季台幣貶值,電子股有匯兌收益,因此預期電子股首季財報不會太難看,相較沒有獲利而高本益比的生技股,電子股反而是安全的標的。另要關注的就是生技的財報陸續出爐,尤其興櫃生技股,去年財報的公告截止日是430,上週已有部分公司陸續公告,但虧損連連居多,興櫃生技股王─安成(4180),上週五股價收在224.5元,但上週五公告的去年財報,稅後虧損5.67億元,每股稅後虧損6.26元,相信部分投資人不能忍受這種虧損數字,還有這麼高的股價,週一安成興櫃開盤壓力恐沈重。另上週傳出產品瑕疵的合世(1781),股價在週四及週五也連續2天重挫,不過公司週五澄清,有瑕疵的16件產品其生產序號皆為去年早期出貨的產品,合世於去年11月改版後的出貨都已無此問題,今年以來發生的案例都是改版前所生產的,由於已經銷售給消費者,當消費者使用後發現有噴孔片鬆動的情形時,公司將在1年的保固期間內,主動更換新品予客戶。由於合世出面澄清,加上市場預期公司首季每股獲利在1.5元左右,是少數首季財報較優的生技股,股價經過2天重挫後,週一開盤若能帶量反彈,投資人可酌量佈局。

鐿鈦 微創 到 手術器械 (台微醫)


鐿鈦科技上季獲利創歷史新高【聯合晚報╱記者徐睦鈞/即時報導】 2013.04.30 12:18 pm 上櫃生技股鐿鈦科技 (4163)今天公布自結第一季財報,營收達3.29億元,毛利率達36.7%,稅前獲利逾6700萬元,年增率達150%,毛利率與獲利都創下歷史單季新高,每股稅前純益1.65元。法人預估,鐿鈦與美商嬌生 (Johnson &Johnson)於去年共同開發之新型微波微創手術器械,已進入量產階段且客戶端取貨暢旺,以第一季表現來看,全年獲利也有機會創歷史新高,每股獲利上看6元以上。鐿鈦表示,多年來與嬌生 (Johnson & Johnson)等國際醫療大廠的緊密合作,建立堅強醫療器材開發與製造體系,隨新興市場對醫材需求快速成長,以及人口高齡化帶動,讓鐿鈦在跨足醫療器械產業上取得先機,而美國醫療改革對於醫療器材的價格敏感度會愈來愈高,因此對亞洲的委外代工釋單,可預期會愈來愈多。由於微創手術傷口小、復原快,已成今日歐美國家醫界手術方式主流,也讓微創手術器械用零組件研發,成為國際醫材廠商必爭之地。目前鐿鈦科技配合客戶共同開發多款微創手術器械,其主要銷售地區為歐美等醫療消費支出較高的國家,預計今年第二季可通過認證正式量產,勢必為營收成長再注入新動能。鐿鈦科技於去年底已相繼取得骨科、牙科植入物的國內銷售許可認證。當今在人口高齡化、肥胖人口增加、腰背痛脊椎手術需求快速增加及骨質疏鬆年輕化的趨勢之下,骨科器材市場一直呈現穩定成長。除了鞏固國際醫療大廠代工外,鐿鈦於98年更進一步與工研院合作,合資成立「台灣微創醫療器材股份有限公司 (簡稱:台微醫公司)」,主營脊椎釘、骨釘、骨板、骨粉等產品之研發、銷售。已開發成功之微創腰椎椎間融合器與無螺紋脊椎內固定器與週邊手術器械,目前已經開始於國內各大醫療院所銷售。由於是第三類醫材,該公司表示,該類產品毛利較高,獲利將會優於以往;已自代工領域作為往OM、自有品牌的醫材產品發展。一旦自有品牌的產品開花結果,未來的成長動能,無可限量。【2013/04/30 聯合晚報】

 

兒童藥市場 是商機或殤機??


药企加速调整策略应对市场 儿童药市场是热点 2013-04-28 制药机械行业网在降价、控费、提质政策频出的市场环境下,企业亟需加速提升产品竞争力,构建合理的品种策略。随着大范围的医保药品的降价和某些药品单独定价的取消,企业原有的赢利产品正在逐渐失去优势,产品结构的调整已经成为必然趋势。业内认为人士,企业必须盯紧政策导向鼓励的方向和品种,如专利药及创新药、获得国家奖项的药品、药监局批准认定的单独质量标准高,或一致性评价质量好的药品;出口国际主流市场的药品、首仿及二三名仿制的药品。

儿童药市场是热点 参加正在武汉举行的第69届全国药品交易会的悦康药业集团董事长于伟仕告诉记者,面对今后高度不确定的市场环境,企业都在思考如何充分发展企业的核心产品,充分利用各种环境优势,谋划企业的发展战略,从而实现从低利润、低附加值产品向高利润、高附加值产品转化,从同类竞争品种多向竞争品种少的市场转型。国家对儿童用药的支持正在逐步加大,新版基药目录中有近200个品种,是在说明书里明确标明可以用于儿童的,远远高于2009版的5个品种。记者在药交会展馆内看到,专注儿童药的康芝药业,此次带来了针对儿童常见病多发病的多种剂型产品。据统计,目前,在我国3500多个药物制剂品种中,儿童药物剂型仅有60种(含中成药),全国仅有十余家专门生产儿童用药的企业,产品中涵盖儿童用药的仅30多家。业内人士指出,儿童药目前缺的不是品种,而是剂型。口服的药品,要注意口感让儿童易于接受,主要是颗粒剂、糖浆剂等,还可开发针对婴幼儿的滴剂。还要根据儿童疾病目前的用药情况来分析市场方向。中国医药工业信息中心市场副总监范淮平建议,企业如果看好儿童药领域,必须搞清楚不同年龄段分别到哪些科室就诊,分析不同年龄之间门诊、急诊、住院不同金额的差异,集中在哪些疾病,找到自己产品的市场定位。出席本届药交会论坛的国药控股高级研究员干荣富强调,企业的产品策略要围绕着药物开发思考,从药品专利、生产企业自身优势出发,在药品技术中寻找新的品种,结合企业策略和市场的发展。新医改向两端延伸,老年用药、儿童用药有政策倾斜,市场潜力大但竞争激烈,可谓千军万马过独木桥,企业既要抓住政策机遇,也要另辟蹊径,比如老药新用、孤儿药的研发。

零售市场机会多 随着自我药疗意识的提高,零售市场潜力巨大。不久前英国快消品巨头利洁时收购了传统中成药企业安徽桂龙药业,并保留原有全部团队继续经营咽喉药慢严舒柠,同时利用桂龙药业作为销售平台,在中国销售西方的医疗保健产品。艾美仕中国市场资深分析师王璐认为,跨国企业主要是看重本土企业的明星产品和销售网络,通过这样的一个取长补短,来增加对二、三线城市零售市场的开拓。齐鲁制药在2009年成立了OTC事业部,去年总部进行战略调整,大力拓展OTC市场。本次展会上他们带来了完全自主研发的一个治疗局部微循环障碍造成的皮肤闭合性损伤的独家品种"齐征"。齐鲁万和医药营销公司OTC事业部市场总监吕传会告诉记者,这个产品完全针对药店渠道开发,计划今后每年推出3-5OTC产品,而且剂型多样化。中成药也是未来零售市场的重要推力。根据艾美仕对2012年全国27个地级重点城市OTC药品零售市场的监测,中成药的市场增速达到10.1%,远远高于西药。中成药不但增速快,而且市场份额占到60%。在27个地级市零售药店OTC品种前20名中,中成药占到一半以上的品种和份额。治疗领域主要集中在泌尿生殖系统、骨骼肌肉系统、心脑血管系统及呼吸系统等领域。

新药研发要盯紧临床 范淮平建议,企业除了关注国内疾病发病率变化动态,监测国内新药申报和新药批准动态,密切关注国内药品价格动向,基药目录和医保目录变化等,还应研究临床医师处方行为习惯,建立以临床需求为导向的处方药新品的研发和市场策略。一是基于临床用药开发复方制剂。例如骨关节退化疾病的临床用药主要有5类,统计发现有22%的患者,医生给他们开处方时会采取两类药物联合使用。如果开发这两类药物的复方制剂,市场就比较容易接受。复方制剂不但增加新疗效,而且服药方便,企业既可创自己的品牌,又可满足市场需求。二是针对目标人群做产品储备,比如儿科、老年病、妇科的中成药的处方分析。新产品的销售要"靶向定位"到终端临床,制订在不同科室的销售策略。对成熟品种除了了解市场份额、科室分布等情况,要更多考虑自己产品跟竞争对手的差异,开发重点科室和新的领域。

 

幾大類疫苗介紹


疫情發燒 H7N9疫苗勝於治療2013/04/29 【聯合報╱本報記者林思宇】醫界認為,疫苗是預防各類流感包括禽流感在內,最有效的方法。 疫苗大部分是利用雞胚培養病毒,加以去活化後製成疫苗。早期的流感疫苗內含完整的病毒顆粒成分,稱為全病毒疫苗,此類疫苗為兒童接種時,會產生較大的副作用。後來發展出利用乙醚裂解病毒顆粒,但保留所有蛋白與膜蛋白的裂解疫苗,副作用較少,現在市售絕大多數是此類疫苗。第三種為成分疫苗或純化疫苗,成分更單純,主要含血球凝集素(HA)和神經氨酸酵素(NA),但仍有少數的病毒內部蛋白,如核蛋白。第四類為減毒活性疫苗,這類疫苗的病毒株比較適合低溫繁殖,所以是以鼻噴方式給予。台大醫院兒童感染科主任黃立民說,此種病毒只能在鼻腔內繁殖,不會到肺部。疫苗效果與裂解疫苗相當,但價格較貴。非活性疫苗的保護力大約只能維持一年,加上流感病毒經常發生變異,所以必須每年接種。每年二月,世界上衛生組織會召集全球的流感專家都會根據前年度流行資料和各地所收集到的病毒株,預測北半球下一季可能流行的病毒株,近而決定該年度所使用的疫苗病毒株。南半球則是剛好顛倒,每年十月宣布下一年的疫苗株。目前世界上同時有三種亞型的流感病毒流行,所製造的流感疫苗含有兩種A型流感病毒(H1和H3)和一種B型病毒,在A型H1和B型往往預測準確,出錯的機率為一成左右,但A型的H3較常常猜錯。黃立民說,不論從社會安全或個人保護,他都鼓勵接種疫苗。不過,六個月以下的嬰兒施打不易產生會有抗體,正在發燒或對雞蛋嚴重過敏的人,都不建議施打。

 

環保署紫外線監測App


環署氣象局 整合推出紫外線資訊【中央社╱台北30日電】 2013.04.30 12:24 pm 環保署今天表示,即日起與中央氣象局整合紫外線監測服務,提供全國紫外線「即時測報、今日最大值、歷史資料」等訊息。因應行政院組織改造計畫,行政院環境保護署將與經濟部水利署、交通部中央氣象局等單位,未來合併升格成環境資源部,如今環保署與氣象局推出首次資源整合計畫。為了讓民眾掌握更完整的紫外線資訊,行政院環境保護署環境監測及資訊處指出,環保署與中央氣象局考量行政區幅員、山區觀測及重複設站等因素,整併全國計34站監測站(其中氣象局20站,環保署14站)。環保署環境監測及資訊處說,台灣紫外線監測從民國86年間起,由環保署與中央氣象局分別設站觀測,並各自對外發布測值。為考量資源整合,雙方在去年著手研商,逐步規劃相關業務整合。現階段紫外線預報、儀器校驗等作業,仍由環保署提供服務。但整合後的紫外線監測資訊,在氣象局網站(http://www.cwb.gov.tw/)及環保署空氣品質監測網(http://taqm.epa.gov.tw/)都會提供,民眾可多加利用。此外,環保署有推出「台灣紫外線指數」、「環境即時通」手機App,也有提供這次整合後的紫外線資訊,民眾可下載了解紫外線即時資訊,做好防曬準備。【2013/04/30 中央社】

 

Companion Diagnostics布局! 普生& Genetics Development Corporation 發展 HER2分子診斷 !!


普生攜手美國GDC 進軍全球癌症分子診斷市場2013/04/29 15:04 記者楊伶雯/台北報導        專業體外診斷試劑(IVD)大廠普生公司(櫃買代碼:411729日宣佈,與美國生技大廠GDC分子診斷公司(Genetics Development Corporation)展開進一步合作,雙方已正式簽署生技合作發展及技術移轉合約,正式進軍全球產值規模達上億美元的癌症分子診斷市場。普生指出,這次受邀參加由行政院政務委員張善政所率領的「台灣生技產業代表團」,出席在美國芝加哥舉行的「2013國際生技大會」,與當地生技業者進行一對一商業洽談會。23日晚間,由董事長林宗慶與美國GDC分子診斷公司總裁K. Y. Chiu共同簽署生技合作發展及技術移轉移合約,聯手進軍全球癌症分子診斷市場。董事長林宗慶表示,相較於傳统癌症診斷所採用的组織切片方法,採取分子診斷技術,不僅能協助早期的癌症診斷,更可以與研發抗癌藥物的國際新藥大廠配合,以提供更有效率的檢測方法。目前癌症分子診斷技術已獲臨床證實有效的主要為乳癌與大腸直腸癌,且這些應用都已獲美國FDA(美國食品藥物管理局)核准,透過癌症分子診斷技術,不只可以做為預測癌症可能復發和轉移之依據,並且讓醫師決定是否採取額外的治療。普生表示,與美國GDC分子診斷公司的密切合作,已成功開發出HER2乳癌分子診斷指標,此項成果較傳统组織切片的方法,更快速靈敏;在全球乳癌患者當中,有約四分之一屬於HER2型乳癌,由於這類腫瘤的生長速度較快且生物行為較為惡性,使得其手術後復發率遠高於其他類型的乳癌。普生說,與美國GDC分子診斷公司合作開發出HER2乳癌分子診斷指標,未來將可以協助早期的乳癌診斷,由於國內健保局已將標靶藥物「賀癌平」(Herceptin)治療HER2型乳癌納入給付範圍,且「賀癌平」標靶藥物已證實可有效減緩癌細胞擴散惡化,預估此分子診斷技術將會被廣泛使用。根據知名市調機構Frost & Sullivan預估,全球體外診斷試劑(IVD)市場於2014年可達50.38億美元,較今年成長6.7%,當中分子診斷技術平台則是全球體外診斷試劑市場中成長性最大的市場,預估2014年可達6.21億美元,年成長率達11.5%林宗慶表示,未來普生除提供全方位的傳统肝病預防體外診斷試劑(IVD)外,更將積極走向伴隨式診斷(Companion Diagnostics)的開發,也就是結合檢測與新藥開發的二位一體。目前由工研院技轉的肝纖維化血液分子診斷技術,已獲國外大藥廠重視表達合作的意願。普生深耕專業體外診斷試劑(IVD)暨自動化診斷儀器的研發製造領域已近30年,為國內唯一肝全方位專業診斷生物科技公司,從抗體、抗原與PCR主反應物等原料開發、體外診斷試劑與定點照護產品生產銷售、自動化診斷儀器生產銷售,到肝纖維化檢測服務業務一應俱全。普生所有廠房設計、儀器設備及生產流程等均依照最高等級-第三等級(Class 3)醫療器材優良製造規範之標準設定,現有體外診斷試劑、定點照護產品與自動化儀器產品總計超過80種,銷往全球超過50個國家,且90%以上的銷售皆採用普生的自有品牌。

 

 

減肥藥Qsymia案例 ! 有趣的是IP & sales/ 原料供應 其次…


The combination of the drugs phentermine and topiramate (trade name Qsymia, formerly Qnexa) is a medication for the treatment of obesity and potentially related conditions such as type 2 diabetes and has been found to lower blood pressure and cholesterol. Qsymia was developed by Vivus, a California pharmaceutical company. Phentermine is an appetite suppressant and stimulant of the amphetamine and phenethylamine class. Topiramate is an anticonvulsant that has weight loss side effects.

Qsymia獲准在零售藥局銷售,神隆長期受惠 精實新聞 2013-04-29 09:46:55 記者 蕭燕翔 報導 美國FDA本月中旬通過VIVUS減肥藥Qsymia可擴大銷售通路,新銷售通路擴及一般獲許可的零售通路,該公司高層也對外公開表示,將確保未來三個月內該藥品得在全國數以千計的零售藥局取得。法人圈預期,此舉的最大受惠者將為原料藥供應商神隆(1789),長期減肥藥對其營收貢獻仍將持續成長。 神隆則回應,FDA核准該藥在零售藥局銷售,代表安全性進一步獲得認可,雖短期考量前期製程排程及客戶端仍有安全庫存,營收貢獻不會馬上反映,但預期對長期營運正面。 FDA本月16日宣布,核准VIVUS減肥藥Qsymia通過REMSRisk Evaluation and Mitigation Strategy),未來銷售通路將可新增至零售藥局。VIVUS也在新聞稿中公開表示,將在未來90天內確保銷售者得以在全國幾千家的零售藥局買得該藥品。該消息也激勵VIVUS近二週股價強勢表態。事實上,Qsymia上市後,一直就被認為是原料藥主要供應商神隆未來三到五年的營收成長來源之一;原因包括FDA在去年以前已連超過12年沒有核准新的減肥藥上市,目前獲FDA核准的減肥藥僅存羅氏鮮(Xenical),市場對減肥藥需求孔急。而去年雖FDA核准兩種減肥藥上市,但截至今年首季為止,僅Qsymia已上市,另一家Arena的減肥新藥Belviq則還在補全藥證獲取後的臨床數據,力拼今年底前有機會上市。不過,先前也曾一度傳出,Qsymia銷售不如預期,主要是根據VIVUS財報顯示,該藥品對該公司的營收貢獻僅數百萬元,惟對此神隆回應,主要是初期Free Sample的佔比較高,但就醫生開立的處方箋數量已倍增,今年預期出貨量也將優於去年。 而神隆首季合併營收11.86億元,年增22%,優於預期,法人預估,因癌症藥出貨比重較高,加上台幣兌美元貶值,毛利率有機會同步走揚。台灣工銀證券預估,該公司首季稅後盈餘3.35億元,年增36%,每股稅後盈餘0.52元,今年營收將成長19%54.5億元,每股稅後盈餘2.23元,再創歷史新高。

Intellectual Property Diligence for Vivus' Obesity Drug Qsymia

by bobbydiggs (Source: http://vivuspatent.wordpress.com)

 

I'm posting this anonymously because I want the analysis to be viewed on its merits – not through a prism of perceived intentions.  This is my interpretation of the available public facts.  They are open to any number of different interpretations, especially as new facts become publicly available.  You should understand I'm not a patent attorney, although I have experience in the biopharma industry including work with patents.  I offer no legal or investment advice, and I believe that Vivus' ultimate position remains uncertain because I do not have all of the facts.  I encourage a thoughtful discussion so that those with an interest in Qsymia can better understand the drug's risks in terms of intellectual property (IP).  At the time of first posting this report I did not hold any equity position in Vivus or its competitors, but I am considering taking a short position on Vivus.

 

Part 1 – Vivus' Qsymia (formerly Qnexa) May Get Shanked

 

Key Takeaways

 

* J&J owns a patent directed to topiramate for treating weight loss

 

* Vivus has not publicly disclosed a plan to license or challenge the J&J patent

 

* Questions surrounding freedom-to-operate may threaten Qsymia commercialization

 

The following report examines the intellectual property landscape surrounding Vivus' (NASDAQ: VVUS) recently approved obesity drug Qsymia – which is the combination of two well-known drugs: phentermine and topiramate.  The recommended daily dose of Qsymia, formerly known as Qnexa, contains 7.5 milligrams (mg) of phentermine and 46 milligrams (mg) of topiramate extended-release and is indicated for chronic weight management. Qsymia is also available at a higher dose (15 mg phentermine and 92 mg of topiramate extended-release) for select patients. Given that the new brand name, Qsymia, is a very recent development many of the documents that I quote in this report refer to the drug by it's originally proposed brand name, Qnexa.

 

The fact both components of Qsymia were known to have weight loss properties before Vivus or Qsymia's inventor contemplated combining the two drugs presents the company with a number of patent-related challenges, including

 

third-party patents that could block Vivus from making or selling Qsymia,

securing valid, non-obvious patents, and

blocking others from offering the drug at generic prices.

It is these challenges, and others, that will be examined in this and subsequent sections of the report with the goal of better understanding Qsymia's position in the potentially lucrative obesity therapeutic market.

 

Qsymia, along with Arena Pharmaceuticals' (NASDAQ: ARNA) recently approved drug, Belviq, represent the first two new obesity drugs approved by the FDA in more than ten years.  Qsymia is likely to be widely prescribed, especially given ever increasing obesity rates worldwide, which according to the World Health Organization, also includes developing countries with previously low rates of obesity.  According to a 2009 healthcare market research report 'Global Weight Loss and Gain Market (2009 – 2014)', published by MarketsandMarkets, the total global weight loss market is expected to be worth almost $600 billion by 2014 with a compound annual growth rate (CAGR) of over 10% during the period.  The portion of the weight loss market that includes obesity treating medications is conservatively estimated to be from $5 to $10 billion dollars per year by 2017.  Estimates for Qsymia alone are roughly $5 billion in annual sales, just in the developed world, according to analysts at Rodman & Renshaw.

 

The last major regulatory hurdle for Qsymia came on July 17th when the FDA granted Vivus market authorization for its weight loss drug.  Based on the company's swelling $2.8 billion market cap – most investors expected  the favorable outcome for the Mountain View, California-based biopharmaceutical company.  An earlier endorsement by an FDA advisory panel in February certainly helped – and shortly thereafter the company used the momentum to raise money during a public offering.  It has also been speculated, most recently by Simos Simeonidis, an analyst at Cowen, that the company is a likely takeover candidate with big pharma salivating over the prospects of supplementing their ailing drug pipelines with two potential Vivus blockbusters, which also includes recently-approved erectile dysfunction drug, Stendra.

 

Qsymia represents an interesting case study for examining the intellectual property surrounding a lead therapeutic product for a number of reasons:

 

Vivus does not yet have substantial revenues (2011 net loss from continuing operations was $47.0 million), therefore, the company's success or failure is tied almost exclusively to its two lead pharmaceutical candidates: Stendra and Qsymia.

A favorable Advisory Committee vote for Qsymia in February started a rally among obesity drug makers (that also includes Arena Pharmaceuticals (ARNA) and Orexigen Therapeutics (OREX)) that has seen share prices in the niche sector increase 3-5X and Vivus' market cap approach $3 billion – an increase, in the case of Vivus, that appears to price-in an expectation of FDA approval and near perfect execution by management during Qsymia's launch and early stage commercialization.

Perhaps more than any other industry, the pharmaceutical and biotech industries rely on strong intellectual property (IP) to safeguard their products, which take years and sometimes billions of dollars to develop and commercialize.

Qsymia did not stem from a traditional in-house drug discovery and development program resulting in a new chemical entity that serves as the active ingredient in their drug; rather, it is the combination of two known drugs – both of which were known to have weight-loss properties.

The rights to the drug combination were licensed from a third-party individual – not a company or institution.

Vivus is considered by some to be a takeover candidate, so analysts are likely working to determine the potential value of Qsymia based on, among other things, estimated market uptake and pricing that assumes Qsymia will enjoy the market exclusivity seen by other newly approved drugs with strong IP.

Together, these factors make Qsymia an ideal case study to demonstrate how intellectual property can affect a product's commercialization strategy and ultimately the value assigned to the product.  Like any due diligence process, not every question can be answered or risk quantified.  Rather, the aim of this report is to lay out a process whereby the intellectual property protecting a drug can be evaluated, and when necessary pose questions that perhaps have not been answered in a public forum that might otherwise be required to properly value a drug.

 

Freedom-to-operate

 

The first step in the due diligence process is an examination of Qsymia's freedom-to-operate position:

 

 Does Vivus require a license to make or sell phentermine, topiramate , or the combined formulation that is Qsymia?

 

Phentermine has been around for over fifty years as a weight loss agent sold by various pharmaceutical companies, including GATE Pharmaceuticals which currently manufactures and sells phentermine under the brand name, Adipex.  GATE Pharmaceuticals is a division of TEVA Pharmaceuticals USA (NYSE: TEVA).  Basic patents directed to phentermine compositions and methods for making phentermine have long expired, so phentermine can be made and sold, for example as an obesity drug, as it was some fifty years ago without the need for a license.

 

Topiramate was developed and marketed exclusively by Johnson & Johnson ("J&J" NYSE: JNJ) as an anticonvulsant and migraine prophylaxis under the brand name Topamax.  However upon the expiration of the final topiramate composition and epilepsy-related patents in 2008 (see, for example, U.S. Patent No. 4,513,006), generic topiramate entered the market and could be sold, for example, as an anticonvulsant.  Vivus mentions the topiramate patents on page 36 of its 2007 Form 10-K:

 

 One of the active ingredients in Qnexa [Qsymia], phentermine is available as a generic. The other, topiramate, is subject to several patents, the first of which is set to expire in 2008.

 

The first topiramate patent (directed to compositions and epilepsy-related indications) did in fact expire in 2008; however, another J&J patent (inventor Shank) that covers topiramate for the treatment of obesity is still active and is not scheduled to expire until 2017.  Topiramate's clinical utility as a weight loss agent became evident during several preclinical studies by Ortho (now part of the Ortho-McNeil-Janssen group within Johnson & Johnson), when it was found that patients with epilepsy taking topiramate experienced significant weight loss as a side effect.  This discovery became the subject of U.S. Patent No. 6,071,537, which was originally filed as provisional patent application 60/022,004 by Shank on June 28, 1996 – three years before the first Qsymia patent application was filed.  The issued claims are directed to methods for treating obesity in a mammal comprising administering a small group of structurally related compounds including topiramate.  Dependent claims are directed specifically to topiramate – and to specific dose ranges of about 50 to 400 mg and about 25 to 200 mg.

 

Although the validity of the '537 patent (also referred to herein as 'the Shank patent') is not analyzed for the purposes of this discussion, an issued U.S. patent is presumed valid.  To date, there is no evidence the validity of the '537 patent has been challenged by any third parties – either at the USPTO or in Europe (corresponding issued EP Patent EP0915697) – and it does not appear any third parties have taken a license to the patent, including Vivus.

 

A review of Vivus 10-K's since 2007 does not show a specific mention of the Shank patent (e.g., by name or number) or a strategy for dealing with the patent (e.g., the possession of an invalidity opinion). However, Vivus' 10-K for 2008 does include the following language that makes mention of a topiramate patent related to obesity in a rather confusing passage that interchangeably discusses the company's ability to exclude others while also mentioning third-party patents (see page 46 of Vivus' 2008 10-K):

 

 The primary focus of the patent applications is on combination therapy using a sympathomimetic agent (such as phentermine) and an anticonvulsant (such as topiramate) for the treatment of obesity and other related disorders. We are aware of an issued patent for the use of topiramate for obesity. We have worked closely with our patent counsel to put together a cogent patent strategy and are building a strong patent portfolio in an attempt to obtain exclusivity over the life of the patents. [emphasis added]

 

The Shank patent (not to be confused with the Stark patent cited by others) was also cited against their own seminal Qsymia patent during prosecution – see U.S. Patent 7,056,890.  In subsequent Vivus 10-K's, the language from the above section has changed to read as follows (taken from page 84 of Vivus' 2011 Form 10-K):

 

 The primary focus of the patent applications is on combination therapy using a sympathomimetic agent (such as phentermine) and an anticonvulsant (such as topiramate) for the treatment of obesity and other related disorders, and on compositions and dosage forms employed in the therapy. We are aware of issued patents for the use of topiramate alone [emphasis added] or in combination with other specific agents (zonisamide and mirtazapine) for treatment of obesity and related indications, e.g., prevention of weight gain [emphasis added]. We have worked closely with our patent counsel to put together a cogent patent strategy and are building a strong patent portfolio in an attempt to obtain exclusivity over the life of the patents.

 

While "building a strong patent portfolio" may improve Vivus' ability to block others from making or selling Qsymia, it does not resolve outstanding freedom-to-operate issues (i.e., can Vivus sell topiramate for weight loss?) – unless part of the "strong patent portfolio" includes a license to blocking third-party patents.

 

The 10-K also mentions issued third-party patents to topiramate alone or in combination with other specific agents (zonisamide and mirtazapine) for treatment of obesity, which appears to be a reference to Orexigen patents (see for example, claim 9 from U.S. Patent No. 7,425,571, inventors Gadde and Krishnan).  Given the Orexigen priority date (May 2002) and that the claims require the use of the anticonvulsant zonisamide in combination with topiramate and phentermine, the Orexigen patents do not appear to present the same kind of freedom-to-operate problem as the Shank patent.  In fact, the Orexigen patents are irrelevant (because Qsymia contains no zonisamide) and it seems their inclusion in the 10-K is again off-point and distracting from the real issue – how does Vivus overcome the Shank patent to sell topiramate for weight loss?

 

 What does this mean for Vivus now that Qsymia is approved?

 

It is possible that Vivus could assert a theory under which Qsymia doesn't infringe the Shank patent, but it is hard to imagine what the theory could be.  However, for now, Vivus' apparent lack of freedom-to-operate in light of Shank is a substantial risk factor for the commercialization of Qsymia.  It does not appear the company has yet to publicly share a strategy for dealing with the Shank patent, which leaves one to guess how the company intends to move forward.  For example, does Vivus believe the patent is valid and plans to approach J&J now that Qsymia is approved, in which case J&J gets a slice of Qsymia – either through a royalty, partnership or potential buyout; or does the company believe the patent is invalid and plans to challenge the patent in court if or when J&J asserts it against them?

 

Either strategy has ramifications for Vivus going forward as it prepares to launch Qsymia.  (For example, a deal with J&J could offer additional patent protection until 2017, which – as will be discussed in a subsequent section of the report – may represent an additional 2-3 years of market exclusivity under certain scenarios).  However, it's important to note that J&J is a behemoth (with a current market cap near $180 billion) and is well equipped for the long, expensive battles that often accompany pharmaceutical patent disputes. Vivus has not presented a strategy for dealing with the Shank patent and is at a severe tactical  disadvantage in terms of time and money: J&J has a market cap 60 times bigger and a long history of navigating sophisticated, multi jurisdictional litigation.  Vivus operates at a net loss, and if the company's market cap shrinks amid commercialization worries, how do they get money to fight a long battle while trying to build their commercial capacity to generate revenue?  Vivus doesn't just need to win, it needs to win quickly and decisively – against a strong foe.

 

The Shank patent may also make it difficult to source topiramate – one of the two active pharmaceutical ingredients (API) in Qsymia.  A third-party manufacturer may be held liable for contributory infringement (see 35 USC § 271) for supplying an API for a drug known to infringe a patent.  See subsection (c) below:

 

 (c) Whoever offers to sell or sells within the United States or imports into the United States…a material… for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent … shall be liable as a contributory infringer….

 

Based on the language from Vivus' most recent 10-K (see page 79), it seems the company had a difficult time arranging a supply agreement with an API provider, and until recently the company left open the possibility they may not be able to enter into such an agreement:

 

 We currently do not have supply agreements in place for phentermine or topiramate, the APIs used in our investigational drug candidate, Qnexa [Qsymia], nor do we have a supply agreement for the commercial manufacture of Qnexa [Qsymia], if approved. There can be no guarantees that we will be able to enter into such agreements under reasonable terms, if at all.

 

Finally, after approval, Vivus announced the company is using contract drug manufacturer, ScinoPharm, based in Taiwan.

 

 Was this last minute announcement an effort to protect ScinoPharm from potential patent infringement liability?

 

As discussed above, under 35 USC § 271, whoever imports a material for use in practicing a patented process is liable as a contributory infringer.  Perhaps, ScinoPharm falls outside this statute if, for instance, Vivus were to take ownership of the API at ScinoPharm's loading dock in Taiwan.  However, the importer of the API into the U.S. may have exposure.

 

President Peter Tam still feels the drug will be launched by the end of the year. "It is expected that Qsymia will be available in the fourth quarter of 2012."  Vivus may well have a strategy for sourcing the components of Qsymia, formulating and marketing the drug without infringing any third-party patents.  However, this strategy has not been shared with the public, other than announcing the API supplier for only of the two active pharmaceutical ingredients, ScinoPharm to produce topiramate.  It remains unclear who will be providing the other active ingredient or manufacturing the finished drug product.  Therefore, one has to assume the Shank patent is a hurdle that Vivus will need to overcome – either in the form of litigation or as part of negotiations with a potential partner or a potential adversary.  At this point, the lack of freedom-to-operate remains a risk factor for the successful commercialization of Qsymia – which the company may be acknowledging in its most recent 10-K (see page 87 – italics and bold added by Vivus):

 

 We may be unable to in-license intellectual property rights or technology necessary to develop and commercialize our investigational drug candidates.

 

Depending on its ultimate formulation and method of use, before we can develop, clinically test, make, use, or sell a particular investigational drug candidate, we may need to obtain a license from one or more third parties who have patent or other intellectual property rights covering components of our investigational drug candidate or its method of use. There can be no assurance that such licenses will be available on commercially reasonable terms, or at all. If a third party does not offer us a necessary license or offers a license only on terms that are unattractive or unacceptable to us, we might be unable to develop and commercialize one or more of our investigational drug candidates.

 

Vivus has a $2.5-$3.0 billion market capitalization based largely on the future sales of a drug it is promising to launch in less than six months that – according to its  securities filings – it has no concrete plans to manufacture.  It seems equally strange that if it recognizes its freedom-to-operate problem vis-à-vis Shank, it has chosen to disclose this problem in such a nonspecific manner.

 

 What intellectual property rights or technology might be needed to make, use or sell your drug?  When will the company know whether it needs a license?  And from whom might a license be required?

 

These are just some of the critical questions that need to be answered to properly assess the risk, and ultimately value, assigned to Qsymia.  The next part of the Vivus IP report will continue to identify freedom-to-operate concerns, then I will shift my focus to the validity of the Qsymia patents.

 

Part 2 – More Freedom-to-Operate Challenges for Qsymia

 

Key Takeaways

 

* When Vivus licensed Dr. Najarian's Qsymia invention, the company was concerned about an earlier filed, third-party patent application by inventor McElroy

 

* A condition was introduced to the assignment agreement between Vivus and Dr. Najarian that made future milestone payments contingent on the Najarian patents prevailing over the McElroy's patent in any inventorship disputes or on any other grounds that thereby limited the scope, validity or enforceability of the Najarian patents

 

* Shortly after the assignment was executed, the McElroy patent issued with claims directed to, among other things, methods for treating disorders that include obesity using sulfamates (including topiramate) in combination with psychostimulants (including phentermine)

 

* McElroy represents yet another freedom-to-operate challenge to Qsymia that, like Shank, may be in the hands of Johnson & Johnson

 

In the first section of the report (Vivus About to Get Shanked ), I introduced the concept of freedom-to-operate.  Without clear freedom-to-operate, a company risks being blocked by a third-party that owns a patent directed to making, using or selling its product.  In the previous section's example, I showed how a J&J patent directed to methods for treating obesity with topiramate – one of the two components of Qsymia – appears to require a license if Vivus plans to sell Qsymia in the U.S.  In this section, I introduce another patent that presents a freedom-to-operate problem for Qsymia – although I do not suspect it will be a surprise to Vivus since the company first identified the patent as a potential problem in 2001 when they drafted an assignment agreement with Qsymia's inventor, Dr. Thomas Najarian.

 

The assignment agreement executed between Dr. Najarian and Vivus in October 2001, and submitted to the USPTO as part of the prosecution of US Application No. 09/593,555 shortly thereafter, provides the financial considerations granted to Dr. Najarian in return for rights to the invention.  As is typical in such agreements, payouts are provided that are contingent upon achieving certain patent-related, regulatory and commercial milestones.  Of particular interest in the Najarian Agreement is a specific payout criteria directed to a third-party patent application filed by inventor Susan McElroy (as Provisional Application No. 60/121,339, on Feb. 24, 1999) and assigned to the University of Cincinnati.  The McElroy patent contains claims that cover the treatment of Impulse Control Disorders (ICD's) using a class of sulfamates that includes topiramate.  The McElroy patent, which was still an application at the time, was of such concern to Vivus when the assignment was drafted that Sections 3.2 (i) and 3.2 (ii) were added, which require Dr. Najarian's claims to remain substantially the same as originally filed, and the occurrence of at least one of the following McElroy-related events:

 

3.2 (i)  Any and all U.S. patent applications claiming priority to International Application No. PCT/US00/04187, filed February 18, 2000, listing the inventor as Susan McElroy (the "McElroy Applications"), are either (i) issued by the USPTO with no claims that interfere, overlap or otherwise conflict with the claims in the Issued U.S. Patent above (See Exhibit 1) and/or affect Assignee's freedom to operate with respect to the Invention, or (ii) abandoned.

 

3.2 (ii)  Assignor provides Assignee with evidence that demonstrates to Assignee's satisfaction that Assignor was the original and first inventor of the subject matter claimed in the Issued U.S. Patent above, thereby providing priority to such patent in the USPTO over any other patents or patent applications in the U.S. claiming the subject matter, including the McElroy Applications.

 

Only one month after the Najarian assignment was executed, the McElroy application issued as U.S. Patent No. 6,323,236.  As can be seen in the issued McElroy patent (and discussed in more detail below), the criteria of Section 3.2 (i) do not appear to be satisfied.  As for Section 3.2 (ii), there was an interference in the McElroy case, however, it was with a different party – not Dr. Najarian (as anticipated when the assignment was drafted).  Instead, the interfering application was filed in January 1999 by inventor Hoopes (see International Application Publication No. WO/2000/044374) and assigned to Ortho-McNeil Pharmaceutical with claims directed to, inter alia, methods for treating bulimia nervosa with topiramate.  The interference proceeding between McElroy and Hoopes ended with a favorable settlement for McElroy.

 

It is interesting to speculate who may control the McElroy patent.  A search of the University of Cincinnati Technology Transfer patent database lists the McElroy patent, but it is not listed among the patents or applications available to license.  Also, a review of the McElroy patent annuity schedule shows up-to-date, large entity fees paid for the patent – not the small entity status afforded non-profit organizations such as universities. Together, this strongly suggests a large commercial entity has taken a license to the McElroy patent (and it should be noted that Vivus does not list it among its licensed patents). Also, Vivus has fewer than the 500 employees that would trigger large entity payments – further evidence it is not the licensee.  As is common after many interference settlements, it is likely the losing party took a license to the prevailing patent or application, which in this case would be the employers of both inventors Shank and Hoopes: Johnson & Johnson – who now appears to have a significant stake in Qsymia's development.  Either way, Vivus must overcome two independent freedom-to-operate challenges.  Avoiding one, does not eliminate the other.  If in fact J&J also controls the McElroy patent, that would give the drug giant even more leverage in any dispute with Vivus.  If there are two unrelated parties controlling Shank and McElroy, Vivus must win wars on two fronts before they can commercialize Qsymia in peace, which is again not a great position for Vivus.

 

It is possible, like the Shank patent, that Vivus has a plan for dealing with McElroy.  In fact, despite the McElroy patent appearing to "interfere, overlap or otherwise conflict with" the claims in Dr. Najarian's patents as described in Section 3.2 (i), and there being no clear, publicly disclosed evidence that Dr. Najarian was "the original and first inventor" of the subject matter claimed in his later-filed patents, Dr. Najarian was granted the payouts of Sections 3.1, 3.2 and 3.3 (as evidenced in Vivus' most recently filed Form 10-K, page 33):

 

Pursuant to the Assignment Agreement, we have paid a total of $220,000 to Dr. Najarian through December 31, 2011 and have issued him options to purchase 40,000 shares of our common stock. We are obligated under the terms of the Assignment Agreement to make a milestone payment of $1 million and issue an option to purchase 20,000 shares of our common stock to Dr. Najarian upon marketing approval by the FDA of a product for the treatment of obesity that is based upon the Combination Therapy and Patents.

 

Which leads one to ask:

 

Were the criteria of Sections 3.2 (i) and (ii) satisfied, or was Vivus willing to pay $50,000 and 10,000 Vivus options to Dr. Najarian in order to continue the Qsymia program with the hope that the problems (McElroy) already identified by the company at the time of the Assignment would somehow go away (or appear to go away)?

 

It's not clear Vivus had the necessary information to make a proper determination whether Dr. Najarian was in fact first to invent since that would require information from inventor McElroy and The University of Cincinnati that is not disclosed during the normal course of patent prosecution.  To put it another way, Dr. Najarian can no more prove his first-to-invent position without the McElroy information than he can clap with one hand. While it is possible for two parties to exchange proofs on who is first to invent without an interference or threat of an interference proceeding, it is rare and it is difficult to see how either The University of Cincinnati or any potential licensee stands to gain anything through such a sharing of information.

 

There is also the condition of Section 3.2 (i) relating to freedom-to-operate, and whether this was satisfied according to the terms of the agreement.

 

McElroy: Freedom-to-Operate Analysis

 

The McElroy patent presents a problem for Vivus in that claims 1, 4, 5 and 8 appear to cover methods of administering Qsymia for the treatment of obesity.  The issued claims are paraphrased below:

 

1. A method for treating an Impulse Control Disorder comprising administering to a mammal afflicted with such condition a therapeutically effective amount for treating such condition of a compound of the formula I: ##STR4##

 

wherein [chemical entity limitations] wherein the Impulse Control Disorder is selected from the group consisting of … Binge Eating Disorder, bulimia nervosa, anorexia nervosa with binge eating and substance use disorders. [emphasis added]

 

4. The method of claim 1 wherein the compound of formula I is topiramate. [emphasis added]

 

5. The method of claim 1, wherein the therapeutically effective amount is of from about 15 to about 2000 mg per day. [emphasis added]

 

8. The method of claim 1 wherein the Impulse Control Disorder is an eating disorder and the compound is used in conjunction with one or more other drug compounds selected from the group consisting of serotonin re-uptake inhibitors, antidepressants, psychostimulants, and orlistat. [emphasis added]

 

Claim 8 is perhaps the closest to a Qsymia-related treatment regimen in that it covers a method for treating an eating disorder (with support in the specification for obesity, overeating, and bing eating) with topiramate in conjunction with a psychostimulant (with support in the specification for phentermine).  The originally filed McElroy provisional application contains descriptions, definitions and examples in the specification to support the claims as described above, including data from a small trial made up of obese patients treated with increasing doses of topiramate.  Vivus could argue that they are not necessarily in all cases using Qsymia  to treat an impulse control disorder or an eating disorder, but rather stimulating weight loss regardless of how a weight problem manifests itself.  The problem for Vivus is that with McElroy defining obesity, overeating, and binge eating as a subset of eating disorders and defining eating disorders as a subset of impulse control disorder, Vivus would at best have an argument that they're treating weight loss and not impulse control, not the clearly winning argument it needs to rapidly dispatch an infringement suit with the licensee of McElroy.

 

It leaves one to wonder why Vivus chose to license Dr. Najarian's application, rather than pursuing the McElroy application?  Or waiting until the crowded patent landscape was better sorted out by the Applicants?

 

Oddly, Vivus does not account for the risk presented by McElroy in the patent sections of their 10-K's that allude to Shank.  Instead, as discussed in the first part of the report, the company appears to only account for the freedom-to-operate risk presented by the Shank patent (albeit non-directly and without resolution).

 

We are aware of issued patents for the use of topiramate alone [emphasis added] or in combination with other specific agents (zonisamide and mirtazapine) for treatment of obesity and related indications, e.g., prevention of weight gain [emphasis added].

 

The language also makes reference to non-relevant Orexigen patents that are directed to zonisamide and mirtazapine for the treatment of obesity.  However, this section is even less on point for covering Vivus vis-a-vis McElroy than it is for Shank. The company fails to describe the previously filed McElroy US patent that discloses combinations that include phentermine with topiramate to treat obesity.

 

Is the company unaware of the McElroy patent (which seems unlikely since it is featured prominently in their assignment agreement with Dr. Najarian)?  Or does the company feel its inclusion of the Najarian Assignment Agreement in its 10-K constitutes a sufficient disclosure (in which case, the fact the same 10-K provides notification of Dr. Najarian's payouts would lead one to believe the McElroy patent is not a problem – which, in my opinion, is probably inaccurate)?

 

Either way, it seems the company is not providing investors with a clear picture of their freedom-to-operate problems.  Instead, I expect these problems to manifest as the company moves from FDA approval to early stage commercialization.  In the next section of the report, I evaluate the strength of the Qsymia patents, and identify weaknesses that could be used by litigators to argue the patents are not valid or enforceable.  Part of the analysis includes revisiting the Shank and McElroy patents as references that one could argue make the Najarian invention obvious.

 

Part 3 – Can Vivus' Qsymia patents hold up in court?

 

Key Takeaways

 

* The patentability of Vivus' Qsymia appears to hinge on the precarious declaration of the drug's inventor

 

* The Qsymia patents also face (minimally) an obviousness challenge based on earlier filed patents directed to topiramate and phentermine, alone or in combination, for the treatment of obesity

 

* Statements made by the patent practitioner during prosecution of the Najarian applications opens Vivus up to enforceability challenges by third parties

 

In this section of the report, I examine the patents covering Vivus'(NASDAQ: VVUS) Qsymia – the company's once-per-day, obesity drug that combines two already approved drugs, the stimulant phentermine and the anticonvulsant topiramate in a controlled-release formulation. More specifically, we'll take a closer look at some of the arguments made by Qsymia's inventor and their patent counsel during patent prosecution that may be susceptible to attack by third parties challenging the validity and enforceability of these patents in court.

 

What parts of the Qsymia patent files are likely to be scrutinized during litigation?

 

Patents that protect lucrative drug products are often challenged in court by competitors hoping to enter the market prior to patent expiration.  Vivus, as many publicly-traded companies do, accounts for the possibility its intellectual property could be challenged and may not hold up as originally issued.  Here is a passage from the company's 2011 Form 10-K , page 84:

 

We [Vivus] cannot make assurances as to how much protection, if any, will be given to our patents if we attempt to enforce them or they are challenged. It is possible that a competitor or a generic pharmaceutical provider may successfully challenge our patents and those challenges may result in reduction or elimination of our patents' coverage.

 

This is standard language for a 10-K.  However, as part of the process for determining the potential value of a new therapeutic product, one has to determine the likelihood of the above described scenario actually occurring.  In other words,

 

How likely is it that a patent challenge will result in a "reduction or elimination" of Qsymia's coverage?

 

But first, in order to better understand the context for this section's validity and enforceability analysis, I will provide a brief history of Qsymia's development.  A good place to start is a recent New York Times article, "U.S. to Review Diet Treatment Once Rejected", that describes how the inventor of Qsymia, Dr. Thomas Najarian, first thought to combine the two drugs.

 

Dr. Najarian, a Harvard-trained physician, worked in the late 1990s at Interneuron Pharmaceuticals [as medical director and vice president], near Boston, that had developed Redux, one of the fen-phen drugs withdrawn from the market.

 

He chanced upon a study showing that Topamax [topiramate] caused people to lose weight and thought that it might be a good new partner for phentermine, with the stimulant offsetting Topamax's brain-numbing effects. Neither Interneuron nor Johnson & Johnson, the manufacturer of Topamax, wanted to pursue it, he said in a conversation at his home here overlooking Morro Bay. So he patented the combination and licensed it to Vivus.

 

As mentioned in the New York Times article, the weight loss properties of both phentermine and topiramate (brand name Topamax™) were well known, with the former first receiving approval from the FDA as an appetite suppressant in 1959. Phentermine was later prescribed in combination with fenluramine in the popular, but dangerous, fen-phen combination.

 

Topiramate was originally developed and produced by Ortho-McNeil Neurologics and Noramco, both divisions of Johnson & Johnson ("J&J" NYSE: JNJ) for the treatment of epilepsy and later as a migraine prophylactic.  Johnson & Johnson also investigated topiramate and extended-release topiramate as a weight loss drug, but ultimately discontinued the program, for reasons, according to Dr. Najarian, that include high patient drop-out rate due to the drug's unwanted side effects.

 

How does one patent the combination of two known compounds for an indication (obesity) both compounds are known to treat?

 

According to Dr. Najarian – who has a long history in the obesity field as a researcher and clinician – Qsymia is an attractive therapeutic option for weight loss because together phentermine and topiramate offer improved efficacy and fewer side effects. These key features (improved efficacy and fewer side effects), he argues, also makes the drug patentable.  This argument is first presented in a declaration submitted by Dr. Najarian (the sole inventor) during prosecution of the originally-filed Qsymia patent application. (See "Najarian Declaration", filed July 2002 during prosecution of U.S. Application No. 09/593,555). The declaration includes the following passage (see Section 10. A.):

 

Topiramate is currently marketed by Johnson and Johnson Corporation ("J&J") under the tradename Topamax® as an anticonvulsant.  J&J has tried to develop this drug as an obesity treatment, and recently completed several large studies (several hundred people in each trial) to evaluate topiramate as an obesity treatment.  A few months ago after these studies were completed, J&J abandoned the effort because of the high drop-out rate in the topiramate arm of the study. Although patients receiving topiramate achieved a weight loss of about 12% at the one year mark (using doses of 400-800 mg per day), the drop-out rate due to topiramate's side effects was about 25%, which is much too high for a drug that will likely be used by millions of people in the U.S. [emphasis added]. Most of the side effects were dose related and included tingling of the hands and feet, sedation, difficulty concentrating, and memory problems.  These are unacceptable in a population of people who are mostly working members of society [emphasis added]

 

I had also evaluated topiramate with my patients, using even lower doses than in the J&J studies.  My patients experienced similar side effects, even with topiramate doses as low as 100-200 mg per day.  These side effects made the drug unacceptable as a weight loss treatment.  In these same patients, over and over, I surprisingly found that the addition of a sympathomimetic agent such as phentermine greatly diminished the side effects of topiramate.  Further, this allowed patients who, previously, could not tolerate topiramate, to be able to take topiramate in combination with phentermine.  I have also had patients who previously had difficulty tolerating phentermine when administered alone as a weight loss treatment because it was too stimulating and caused insomnia, even when taken in the morning as a single dose.  These same patients could tolerate phentermine when combined with topiramate, since both drugs nicely cancel out each other's side effects. [emphasis added]

 

The preliminary success of this combination prompted me to file the above-identified patent application.

 

Here we have the origins of Qsymia – in the inventor's own words.  Essentially, the stimulant properties of phentermine "cancel out" the psycho active dulling effects of topiramate, which Dr. Najarian later refers to as "mental slowing" during a 2006 conference call (See pages 38-39 of Vivus' 2006 conference call).  Likewise, Dr. Najarian touts the "mental slowing" properties of topiramate as a means to cancel out the psychostimulant effects of phentermine.  During the same 2006 conference call, Dr. Najarian explains, "you don't get the buzz that some people would get with phentermine alone because Topamax mutes it."  He goes on to say, "So you don't have that sort of high feeling, which some people actually find unpleasant, especially if they have a history of an anxiety disorder." (See page 46).

 

What does Dr. Najarian's declaration mean in terms of patent enforceability?

 

The Najarian Declaration provides the key arguments later used to overcome an obviousness rejection introduced by the patent examiner.  Explained in its simplest terms, U.S. patent law requires that an invention be novel and non-obvious.  In the case of Dr. Najarian's patent application, the examiner argues combining two known weight loss drugs to treat obesity is obvious.  However, Dr. Najarian counters in his declaration that the combined drugs, when administered together, have surprisingly fewer side effects than the individual drugs alone.

 

A similar argument is made by Dr. Najarian's patent counsel in a response that accompanied his declaration. (See page 4 of the response dated July 16, 2002):

 

Applicant submits herewith a Declaration under 37 C.F.R. §1.132 (the "Declaration") that shows that the combination of a sympathomimetic agent such as phentermine with an anticonvulsant sulfamate derivative such as topiramate, provides for the desired weight loss.  Further, the Declaration also shows that unpleasant side effects are observed when phentermine and topiramate are administered alone, but not when administered in combination.

 

The unpleasant side effects just vanish.  These safety claims are presumed to be based on the evidence provided in his originally-filed patent application, which consisted of a patient sample size of 13 individuals, and his subsequent clinical work done after the application was filed (which is referenced on page 6 of his declaration).  Even when I give Dr. Najarian the benefit of the doubt, as I should, and assume he believed his original safety and efficacy assertions to be true based on his work prior to submitting the declaration, patent applicants having a duty of candor that continues during the pendency of both the originally-filed and subsequently-filed applications claiming priority.  This duty under 37 CFR §1.56 requires that each individual associated with the filing and prosecution of a patent application disclose to the USPTO all information (e.g., prior art or new data) known to the individual that may be considered material to the patentability of the application.  For example, in the case of Qsymia – a drug that contains topiramate which has side effects its inventor, Dr. Najarian, called "unacceptable in a population of people who are mostly working members of society" – the applicant must disclose material new data that contradicts the applicant's assertion that the combination of phentermine and topiramate together have fewer side effects than the drugs administered individually. This requirement also applies to patents which must be withdrawn from issue because one or more claims are unpatentable under 37 CFR §1.313(c)(1)).  For the purposes of determining the patentability or enforceability of the Qsymia patents, one has to ask:

 

Does Dr. Najarian and those who are involved in prosecuting the Qsymia patents still believe that Qsymia offers the statistically significant diminished side effects for topiramate and phentermine originally claimed by Dr. Najarian even after the larger, more rigorous clinical trials performed pursuant to Vivus' Investigational New Drug (IND) application and under the review of the FDA? If not, have the applicants met their duty of candor with regard to properly disclosing material information to the United States Patent & Trademark Office (USPTO)?

 

In order to attempt to answer this question, one must turn to the data – all of which is not publicly available. However, the most complete description of Qsymia data from the clinical trials appears to be in Vivus' Advisory Committee Briefing Document (February 22, 2012).  In the document, Qsymia's safety profile is often compared to placebo, with most adverse events (AE's) showing a dose-dependent correlation.  When AE's are compared to either phentermine or topiramate alone, the comparisons are general and qualitative.  For example, on page 9, the safety profile for Qsymia is described as follows:

 

The integrated analyses demonstrated that QNEXA [QSYMIA] Low dose, Mid dose, and Top dose were safe and generally well tolerated by subjects and consistent with the known side effects of phentermine and topiramate.

 

In terms of serious laboratory-related AEs, the briefing document offers the following on page 11:

 

These effects were dose related, were consistent with topiramate's inhibitory effects on carbonic anhydrase enzymes, and occurred only in patients who were treated concurrently with non-potassium sparing diuretics.

 

Later, Qsymia's side effects are described in the following terms on page 19:

 

The most commonly observed adverse events, notably paresthesia, dry mouth, dysgeusia, and insomnia, are well known and characterized side effects of one or the other component agent and do not represent novel side effects engendered through the combined pharmacology of the two drugs. Similarly, small increases in the incidence of psychiatric and cognitive effects, primarily observed for the Top dose are known effects of topiramate and were driven predominately by mild to moderate events.

 

These effects appear to be consistent with those experienced by patients administered topiramate alone, rather than the decreased side effects Dr. Najarian emphasized in his declaration.  Based on the available information, it appears the lower doses of each component is responsible for the decreased side effects in a dose-dependent relationship. While this might be interesting clinically, the dosing effect does not provide a basis for patentability (i.e., it's not surprising or unexpected). Vivus even describes this expected dose-dependent effect on pages 72-73:

 

The recommended dose of QNEXA [QSYMIA] contains phentermine 7.5 mg and topiramate 46 mg, which is approximately one-fourth the maximum approved daily dose of phentermine (37.5 mg; 30 mg free base) and one-tenth the maximum approved daily dose of topiramate.  (400 mg). Top dose QNEXA [QSYMIA] (phentermine 15 mg and topiramate 92 mg) contains half of the maximum daily dose of phentermine and approximately one-fourth of the maximum daily dose of topiramate. As such, the side effects of QNEXA [QSYMIA] therapy are expected to be consistent with those described in the approved labeling for phentermine and topiramate, albeit at a severity consistent with lower doses [emphasis added].

 

While not accusing Dr. Najarian or any of Vivus' patent practitioners of deliberate wrong doing, the types of absolute statements made by Dr. Najarian in his declaration are ripe for attack by litigators.  This is especially true for Qsymia, the patentability of which relies on its allegedly improved safety profile – a claim that now must hold up in light of the copious amounts of data generated during subsequent clinical trials.  Further, alleged inequitable conduct is a favorite defense to patent infringement because the consequences are absolute and severe.  Often a patent, and its family, are deemed unenforceable when a patent applicant breaches its duty of candor and good faith to the USPTO.

 

Motivation

 

Next, I focus on Dr. Najarian's relationship with Vivus to better understand the context for which his declaration was submitted during prosecution.  This is an area of patent law that has received a lot of attention because of the 2006 case of Ferring v. Barr, a summary of which is provided here.  As first introduced in the section 2, the Najarian Assignment Agreement provides the financial consideration granted to Dr. Najarian in return for his invention rights, part of which is provided below (Sections 3 and 4):

 

Section 3.1 – $20,000 and 10,000 Vivus options

 

Section 3.2 – $50,000 and 10,000 Vivus options

 

Section 3.3 – $150,000 and 20,000 Vivus options

 

Section 3.4 – $1,000,000 and 20,000 Vivus options

 

Section 4.1 – 1.0% net sales up to $300M

 

Section 4.2 – 1.5% net sales up to $300M-$600M

 

Section 4.3 – 2.0% net sales up to $600M-$900M

 

Section 4.4 – 3.0% net sales greater than $900M

 

Although not unusual for payout requirements to be contingent upon issuance of one or more patents, this is a particularly rich agreement – especially considering it was made with an individual inventor for an early stage therapy consisting of two known drugs with well-documented side effects.  Based on these cash payouts, option grants and royalties, there is clearly a financial incentive for Dr. Najarian to see his patents issue (Section 3.2), and for him to see Qsymia to proceed through clinical trials (Section 3.3) and onto the market (Section 3.4) – not to mention the payday offered by even modest commercial success (see Section 4).

 

McElroy: Patentability & Enforceability Analysis

 

The Qsymia patents may also be susceptible to obviousness challenges based on prior art – of which there is a lot since both components of Qsymia were well known at the time of Dr. Najarian's alleged invention of Qsymia.  For example, both the Shank patent and McElroy patent (introduced as freedom-to-operate problems for Qsymia during the first and second sections of the report, respectively,) could be used as obviousness references and perhaps, in the case of McEoroy, as a 102(e) anticipation references.  The earlier-filed McElroy patent discloses many of the same elements found in the Qsymia claims.  For example, the McElroy specification includes the following (Col. 11, lines 44-60):

 

Specifically, topiramate may be administered in combination with other medications to treat certain symptoms and disorders including: … II. Treatment of overweight/obesity condition with sibutramine (MERIDIA); psychostimulants, (e.g., d-amphetamine, phentermine) and orlistat.

 

Later, in the Example section, Inventor McElroy provides data from a study wherein patients were treated with open-label topiramate, starting at 25 mg and increased in 25 mg increments up to a maximum of 1200 mg.  The topiramate results for six patients suffering from Binge Eating Disorder (BED) are provided in Table 1, and Table 2 provides the results for eight overweight or obese patients.  Although the specification does not provide specific dose ranges for phentermine, the use of phentermine at varying doses to treat obesity was well known at the time of the invention (with a Google Scholar search showing nearly 2,600 articles and patents published between 1959-1999).

 

It is possible that with the proper documentary evidence Dr. Najarian will be able to swear behind the earlier-filed McElroy patent to establish that he invented this phentermine/topiramate combination before she did; however, this still represents a significant unknown for a candidate drug this close to commercial launch and for a company raising money at a huge premium relative to earnings.

 

In Europe and the rest of the world outside of the U.S., the McElroy patent may be a clearer, more imminent problem for Vivus because Dr. Najarian will not have an opportunity to try to swear behind the McElroy patent to establish an earlier date of invention at least in ex-US jurisdictions where McElroy was actually filed.  In jurisdictions outside of the U.S., it is the first inventor to file that is entitled to the right to the grant of a patent.  (The U.S. has also recently adopted a first-to-file model set to go into effect in March 2013).  Since inventor McElroy's priority date is earlier and she filed her application internationally including Europe (see EP Patent No. EP1158973), her patent disclosure is likely to serve as an anticipation reference to Vivus in Europe under Article 54(3) of the European Patent Convention.  Inventor McElroy's patent publication provides the critical elements also seen in the later filed Najarian patents, namely a sulfamate (specifically topiramate) that can be combined with a psychostimulant (specifically phentermine) useful for the treatment of an overweight/obesity condition. It does not appear the European examiner was aware of the McElroy patent during prosecution of the Najarian applications.  In Europe, applicants do not have the same duty to disclose potentially relevant art (as they do before the USPTO).

 

Inequitable Conduct by Patent Practitioner

 

Also, during the U.S. prosecution, the patent practitioner, Diane Reed, prosecuting the Najarian applications on behalf of Dr. Najarian and Vivus makes the following statement on page 18 of 22 of the May 18, 2005 response to an office action in the case of Application No. 10/454,368 that issued as US Patent No. 7,056,890:

 

Even if, hypothetically, there were no warnings regarding phentermine combination therapy, one of ordinary skill in the art would still have been led away from combining phentermine with a second weight loss drug, insofar as the only reference in the 1996-1999 time frame describing the combination of phentermine with a second weight loss drug actually teaches away from the present invention as well.  See the attached publication by Bradley et al. (Appendix B), which summarizes a study on using phentermine in combination with bupropion hydrochloride for weight loss.  Not only did the second drug fail to increase weight loss relative to phentermine alone, it actually reduced phentermine's efficacy! [emphasis added]

 

While Ms. Reed may have believed this statement to be true at the time, she had earlier submitted an information disclosure statement (IDS) on December 13, 2001 that lists the McElroy patent as a reference.  It appears Ms. Reed may have forgotten the contents of the McElroy patent, which is somewhat surprising since it was the only reference included in the IDS, and was submitted immediately after the Najarian Assignment was executed and also submitted to the USPTO.  Based on the timing, it appears the McElroy patent became the subject of concern when Vivus was performing diligence prior to closing its assignment deal with Dr. Najarian.  The contents of the McElroy patent were certainly well known to Vivus and Dr. Najarian, therefore, it seems Ms. Reed should also know McElroy disclosed the use of topiramate for the treatment of "overweight/obesity condition" in combination with psychostimulants such as d-amphetamine or phentermine.  Whether this was an honest oversight on the part of Ms. Reed or an impermissible intentional misstatement, it provides yet another grounds for possibly making the later issued Najarian patents worthless, in this case through unenforceability.

 

In earlier sections I raised concerns about Vivus' ability to launch Qsymia without securing licenses to (or otherwise disarming) Shank and McElroy.  And the validity and enforceability of their own patents appears to be suspect, thereby calling into question their ability to block others from making, using or selling Qsymia.  Next, I examine whether this suspect IP was even Dr. Najarian's to give away in the first place.

 

Part 4 –Trials & Assignments

 

Key Takeaway

 

* Without evidence to the contrary, it appears Dr. Najarian, the inventor of Qsymia, may have had an obligation to assign his invention to one or more of his employers or sponsors

 

An important step of any intellectual property due diligence exercise is matching assignments with patents to determine an invention's chain of title (and thereby verify which party in fact owns the patent rights).  Often these assignments are included in the prosecution history, but sometimes it requires some detective work – like digging through boxes to find old employment records.  In the case of Qsymia, there was an assignment agreement (also discussed in the previous section) executed between Dr. Thomas Najarian, the inventor of Qsymia, and Vivus.  However, it's not clear the patent was solely Dr. Najarian's property to sign away in yet another instance of Qsymia due diligence starting in one place (see the previous three sections) and leading to another set of potential risk factors for Vivus' Qsymia.

 

A good place to start is when Dr. Najarian filed a patent application directed to the phentermine/topiramate combination in June 1999 while serving as the Vice President of Medical Affairs and Medical Director at Interneuron Pharmaceuticals (see Najarian CV, which was submitted as part of a declaration during the prosecution of U.S. Patent Application No. 09/593,555).

 

Typically an employee has a duty to assign all of their work-related inventions to their employer, in this case Interneuron Pharmaceuticals, which changed its name to Indevus Pharmaceuticals in 2002 and was later bought by Endo Pharmaceuticals (NASDAQ: ENDP).  However, it's Dr. Najarian that is listed as the sole applicant on the earliest phentermine/topiramate patent applications (see PCT Patent Application WO/2000/076493) – not Interneuron, nor Vivus (which had not yet entered the picture) and not any of Dr. Najarian's other institutional affiliations (which will be discussed later).

 

It wasn't until October 2001, when the above mentioned assignment agreement was executed, that Vivus was named as the Applicant or Assignee.  In the assignment agreement, which is made between Thomas Najarian, MD, an individual, and Vivus, Inc., a company, the Assignor (Najarian) warrants and represents, among other things, that he has not entered into and will not enter into any assignment, contract or understanding in conflict therewith (See Section 2.3).  This appears to be the end of the story.  The assignment agreement is signed by both parties.  However, no additional evidence is provided, for example in the form of a consultant or employee agreement demonstrating that Dr. Najarian did not have a duty to assign the invention to Interneuron or another third-party.  Thus the question remains:

 

Did Dr. Najarian have a duty to assign the Qsymia invention to a third-party (e.g., his employer) when the invention was made in 1999 – or perhaps earlier?

 

First, it's clear Dr. Najarian was experimenting with weight loss drugs while at Interneuron Pharmaceuticals – both as a consultant and later as Vice President of Medical Affairs and Medical Director.  The company made the widely prescribed weight loss drug Redux (dexfenfluramine), which was recalled in September 1997 due to its well-documented correlation with heart valve problems.  Dexfenfluramine is the dextro isomer of fenfluramine, which together with phentermine made up the now infamous diet drug fen-phen (also recalled in September 1997).  It seems not only was Dr. Najarian focused on developing obesity-related therapeutics – but these new therapeutics likely contained phentermine (or dexfenfluramine) or combinations thereof.  In fact, in the above identified declaration, Dr. Najarian states, "As Medical Director at Interneuron Pharmaceuticals, I designed and conducted one of the critical studies that analyzed the relationship of the weight loss drug Redux to heart valve problems." (See section 3.)

 

Next, it's important to try to understand how and when the Qsymia invention was conceived.  Without lab notebooks or employee contracts, I have to rely on the Example section provided at the end of the originally filed provisional application 60/139,022 as a starting point.  Example 1 begins with what appears to be a prophetic human trial in which patients would be prescribed increasing doses of phentermine and topiramate.  This is followed by a table (not labeled) that includes data (patient weight and blood pressure) from seven individuals.  The reader learns this is not a prophetic example, but rather a description of early clinical experiments designed to show the efficacy of the phentermine/topiramate combination administered to patients at varying doses and on different schedules.  The example states, "patients not previously being treated with an anorexient at the outset of the study experienced an average of about 3.5% weight loss when [sic] after only 2-6 weeks".

 

Additional examples are added in subsequent provisional filings, and the final provisional application (60/181,265) filed February 2000, includes data from more patients (N=13) over a longer period of time (5-9 months).

 

The declaration submitted by Dr. Najarian in July 2002 (and discussed in detail in part 3 of the report) also provides additional insight into the early phentermine/topiramate clinical trials described in the provisional patent applications.  It includes this statement by Dr. Najarian about the increased trial size since the time of his patent application filing, "I have now treated more than 200 patients with the topiramate/phentermine combination, some of whom have been on the treatment for 3 years."

 

However, neither the provisional applications nor the Najarian Declaration disclose where the study was conducted, who paid for it and if the study included other investigators.  It also does not provide any information regarding oversight of the study, for example, by an institutional review board (IRB) or regulatory agency (e.g., FDA), both of which typically oversee drug experiments performed on humans. Typically, best practices for clinical trials would be for the investigator file an Investigational New Drug (IND) Application that references the sponsor's New Drug Application (NDA) – in this case Johnson & Johnson's NDA for topiramate.  It does not appear this practise was followed for the early Qsymia human trials.  Rather, a search of Vivus documents for the Qsymia Investigation New Drug Application (IND) came up empty, and instead only revealed the original New Drug Application (NDA) for Qsymia, which was submitted to the Food and Drug Administration (FDA) on December 28, 2009 – about 10 years after Dr. Najarian's early work.

 

In regards to the patent rights, if the study, or "trial" as it is alternatively called in the patent application, was performed at Interneuron or used their resources, it seems Interneuron should have rights to the invention – unless otherwise carved out in an agreement that does not appear to be publicly available.

 

Given the clinical nature of the trial and reference to "my patients" in the Najarian Declaration, it seems more likely Dr. Najarian was administering topiramate (off-label) and phentermine as part of his medical practice.  According to his CV, Dr. Najarian served as a Staff Physician at Mount Auburn Hospital (which has a weight management center) from 1983-2001, and as a Clinical Instructor in Medicine at Harvard Medical School from 1997-2002.  Both of these time ranges include the period when Dr. Najarian appears to have been experimenting with the topiramate/phentermine dose regimens administered to his patients as described in his patent applications and declaration.  Without documentation to the contrary, it seems one or both of these institutions may have rights to the invention if Dr. Najarian used their resources to make the invention.  More specifically, hospitals and non-profit research institutions often have assignment policies relating to the use of their facilities that doctors and researchers must sign.  These policies relate to any inventions that are made using their facilities or equipment.  Unless Dr. Najarian conducted human clinical trials in his basement, this could be an issue (along with the employment-related issues with what is now Endo Pharmaceuticals).

 

Also, although outside the scope of the present patent discussion, the FDA defines a clinical investigation as any experiment in which a drug is administered or dispensed to, or used on, one or more human subjects. An experiment is any use of a drug except for the use of a marketed drug in the course of medical practice.  Dr. Najarian's early work as casually described in his patent applications and declaration seems to qualify as a clinical investigation in that phentermine and topiramate were administered off-label and at varying doses (the results from which were later used to support his claims that he discovered a novel drug combination), or alternatively it may qualify as the use of one or more approved drugs as indicated in a manner that does not require FDA oversight and is not really inventive.

 

Next, I investigate some challenges I anticipate Vivus may have trying to enforce the Qsymia patents – if in fact they are valid and rightfully belong to the company.

 

Part 5 – Enforcement Challenges: Najarian v Najarian

 

Key Takeaways

 

* Qsymia may only be entitled to three years of non-patent exclusivity

 

* Some doctors are likely to continue to prescribe phentermine and topiramate off-label, especially since their liability is likely to be reduced with the completion of the Qsymia clinical trials

 

* Vivus faces a tough enforcement strategy since drug makers are unlikely to infringe their patents, and instead the company will be forced to target prescribing doctors

 

Even with questions remaining regarding Vivus' freedom-to-operate position, the validity of the Qsymia patents, and who rightfully owns the rights to the drug invention, the company also faces challenges trying to enforce its Qsymia patents – largely because the drug's two components, phentermine and topiramate, are already widely available as generics.  A clinical summary of Qsymia provided in the company's Advisory Committee Briefing Document offers insight into the two components, but with some key omissions:

 

QNEXA [QSYMIA] is an investigational weight-loss therapy that is a novel combination of low dose immediate-release phentermine (1/8 to 1/2 of currently approved dose) and extended-release topiramate (1/16 to 1/4 of currently approved dose); both drugs are approved and marketed in the United States. The prescription use of these drugs spans more than 52 years for phentermine and more than 15 years for topiramate. Phentermine hydrochloride, at a labeled dose up to 37.5 mg/part (Adipex-P® package insert 2005; Appendix 10), is the most prescribed weight-loss drug in the U.S. with approximately 6.5 million prescriptions written in 2011 (Information Management System [IMS] data). A more recently approved formulation of phentermine, SuprenzaTM, was approved in 2011.  The phentermine label, restricted to short-term management of obesity, limits its clinical application for the chronic treatment of obesity and weight-related comorbidities.

 

Topiramate is approved for treatment of seizure disorders at recommended doses up to 400 mg/day and for migraine headache prophylaxis at recommended doses up to 100 mg/day (Topamax® package insert 2011; Appendix 12). More than 10 million prescriptions were written in 2011 for topiramate (IMS data). The majority of current topiramate use is in migraine prophylaxis.

 

While phentermine and topiramate's long history as approved drugs has been cited by Vivus as evidence that the drugs are safe, the fact both drugs are available as generics makes enforcing the company's patents more challenging (and maybe more difficult for negotiating reimbursement).  When asked during a 2006 conference call about the doses of Qsymia that were being investigated, Vivus CEO Lee Wilson balked at disclosing the doses for fear of generic competition.  However, he went on to describe his company's strategy for taking known drugs, reformulating them and re-launching them sometimes with a modified indication (e.g., short-term use vs. long-term use).

 

First with regard to the dose, Mr. Wilson commented:

 

No, we're not going to disclose the doses. That's part of our strategy to prevent generic competition going forward.

 

When asked to further describe this generics defense strategy, Mr. Wilson offered this look into the Vivus drug development model and corresponding patent strategy:

 

let me just kind of go over a little bit the strategy, if you will, against generic competition.

 

You know, our pedigree at VIVUS comes out of ALZA Corporation, which made its life taking drugs which were generic and bringing them to the market in very successful fashion. And so Ditropan is a very good example of that – of many others that we've had.

 

But at ALZA they were able to develop a very clear strategy for how to prevent the generic competition. And I'll just take a second here to run down a few of these things.

 

The first key to this is that you have to offer patients a superior product over the generic combinations themselves. And in the case of Qnexa [Qsymia], we offer both a delayed release and a sustained release component to this drug delivery technology, which will offer us optimum safety and efficacy results for the program.

 

In addition, the QD dosing is a very convenient approach to it versus what – the complexity of taking the two individual drugs, particularly if you consider that there is a four- week dose escalation or dose titration portion of the study when people go on to begin with.

 

So it becomes very complicated. With the Qnexa [Qsymia] it's a simple card, which is one tablet per day during the four- week dose escalation program. And so it's a very simple, easy way for them to get to their final dose.

 

The second one is that the doses in Qnexa [Qsymia] are different than all doses, including those in the dose titration – are different from what is available generically. And pharmacy laws, many of you know, prohibit the substitution of products at different doses. So that's a second part of the defense against generics here.

 

The third is that we do have a patent, as you all know. It's a very strong patent. It has both composition and matter and methods of use components to it. And any use of this combination of phentermine and topiramate is directly in violation of our patent.

 

The fourth one is that the indication for Qnexa [Qsymia] will be for the long- term treatment of obesity. And as many of you know, pharmacy benefits management groups actually have adopted a principle of not reimbursing for products that are not on- label for – obviously for a risk management basis from their standpoint.

 

So that's not universal but most, if not – most of the PBMs are in that category. So this will be the – Qnexa [Qsymia] will be indicated for the long- term treatment of obesity. Neither of the components are.

 

And then the fifth and last one is one that we're working on – is that phentermine is currently a scheduled product. We believe that Qnexa [Qsymia] will not be a scheduled product.

 

Mr. Wilson's choice of ALZA's Ditropan is an unfortunate one.  One month after making these comments, The Court of Appeals for the Federal Circuit affirmed a lower court's determination that ALZA's patent on Ditropan XL, a controlled-release formulation of oxybutinin, was invalid due to obviousness.  Challenges to ALZA's Ditropan XL patent had been going on for some time, and the district court had already decided against ALZA a full year before Wilson's comment – further highlighting Mr. Wilson's poor choice of an example.  In terms of a financial impact, Ditropan XL, used for the treatment of incontinence, brought in annual sales of $380 million in 2005 prior to the ruling, but that figure fell to $15 million and $13 million in 2009 and 2010, respectively.

 

If you distill Mr. Wilson's strategy of using Ditropan as a model to its most cynical core, you might arrive at the following conclusion: You take somebody else's old drug that is off patent, play hide and go seek with the exact dosage, sprinkle new formulation pixie dust over it, wrap it in an invalid patent and voila – you make a few hundred million dollars a year from an unsuspecting public until a generic drug company and the federal judiciary catch up with you.  Unless of course your product risks being enjoined from the market because it infringes one or more third-party patents, in which case, you might want to take some money off the table in the form of pre-launch insider sales (to be discussed in the next section).

 

Whether Mr. Wilson's strategy is a valid one or not will be determined in the years to come; however, it does seem to place more importance on the exclusivity granted by regulatory agencies (i.e., non-patent exclusivity) than on a strong patent position. Non-patent exclusivity can be five years for a new chemical entity (which does not apply to Qsymia since it contains two already approved drugs) or three years for a new clinical study (which seems to apply to Qsymia because of its new or changed formulation and dosing regimen for the treatment of obesity); whereas a patent offers twenty years of exclusivity from when a utility patent application is first filed, as well as an opportunity to extend the patent term for both USPTO-related and FDA-related delays in the process.

 

Let's examine why Mr. Wilson's strategy may not offer more than three years of partial market exclusivity:

 

Qsymia may lack freedom-to-operate (see Sections 1 and 2) and might be enjoined from the market. Result: 0 years exclusivity.

Qsymia patents may not hold up in court (see Sections 3 and 4) so competitors enter the market after the non-patent exclusivity period expires. Result: 3 years exclusivity.

Doctors, patients or payers opt for generic versions (whether patents are in place or not). Result: 3 years partial exclusivity shared with generics.

The first two points have been previously discussed.  Instead, I'll look at the possible challenges Vivus will have enforcing their patents (again, assuming the patents are valid and enforceable despite the concerns raised in the first four sections of the series) because of the widespread availability of cheaper generics at doses and in formulations that are similar to Qsymia.

 

Does Qsymia really offer patients "a superior product over the generic combinations themselves" as claimed by Mr. Wilson?

 

This is really a value proposition question that requires considerations like Qsymia's efficacy, safety, convenience, availability, cost and reimbursement.  For the purposes of patent analysis, the question might be rephrased as follows:

 

How motivated will doctors and patients be to use generic alternatives?

 

The answer to the above question is probably highly correlated with the price of Qsymia.  However, regardless of the price, the presence of widely available equivalent generics for a relatively low  cost is going to make market exclusivity or a large price differential between Qsymia and the generic alternatives hard for Vivus to maintain.

 

Wide Range of Doses Available

 

Although Mr. Wilson was previously unwilling to provide any doses for Qsymia as part of a generic defense strategy, We now know the recommended daily dose of Qsymia is the mid dose, which contains 7.5 mg of phentermine and 46 mg of topiramate extended-release. Qsymia is also available at a higher dose (15 mg phentermine and 92 mg of topiramate extended-release) for select patients.  While the company likes to point out that the mid dose equals approximately one-fourth the approved daily dose of phentermine (37.5 mg; 30 mg free base) and one-tenth the approved daily dose of topiramate (400 mg), these are the maximum available doses.  There are other approved lower doses of phentermine and topiramate available (or soon to be available in the case of topiramate) in immediate-release and extended-release formulations.  This provides doctors and patients with multiple therapeutic options.

 

Phentermine – the most widely prescribed anti-obesity therapeutic on the market – has been approved by the FDA (based on therapeutic equivalence evaluations) for manufacture and sale by at least ten different drug makers, including Citius Pharms' Suprenza® in 15, 30 and 37.5 mg doses, Sandoz's Adipex-P® in 15 and 30 mg doses, and Lannett Holdings' Ionamin in 15 and 30 mg extended release formulations.  Similarly, more than twelve different generic topiramate products in doses ranging from 15 to 200 mg have been approved by the FDA.  Global drug makers such as Mylan, Sandoz, Watson, Apotex, Cipla and Ranbaxy all offer topiramate products. Most recently, Supernus Pharmaceuticals received tentative approval from the FDA for Tokendi XR, a once-daily extended release formula of topiramate available in 25, 50, 100 and 200mg doses.  The company is also pursuing patent claims to extended release topiramate – independent of indication.

 

Immediate-Release and Extended-Release Formulations Available

 

In terms of formulation, Vivus management likes to highlight the slow or delayed-release component of topiramate.  Whereas the stimulant effects of phentermine are intended to be felt immediately when the drug is taken in the morning, the mental slowing effects associated with topiramate are meant to have an onset later in the day.  Although outside the scope of the present legal discussion, it is interesting to note that the mean plasma elimination half-life for topiramate is 21 hours after single or multiple doses. Steady state is thus reached in about 4 days in patients with normal renal function, so it's not entirely clear extended-release topiramate offers a distinct advantage in terms of clinical pharmacology after a few days dosing.  Ultimately, whether a doctor and his or her patients choose immediate release or extended release, both formulations will be available in generic form (or will be in approximately three years for Supernus' Tokendi).

 

Short-Term Use vs. Long-Term Use

 

Mr. Wilson also points out that phentermine is only approved for short-term use, while Qsymia has been approved for chronic, i.e., long-term use.  This strategy relies on doctors prescribing drugs strictly on-label.  The FDA does not have the legal authority to regulate the practice of medicine with approved drugs, and it is not unlawful for doctors to prescribe drugs off-label. Also, it is legal in the U.S. and in many other countries to use drugs off-label.  In the case of phentermine, with approximately 2 million prescriptions written per year, it's hard to imagine that all of those prescriptions are for short-term use.  It is, however, illegal for a company to promote off-label uses to prescribers, for example, at a weight-loss clinic where one of its part-time employees writes prescriptions.

 

What's to prevent doctors from prescribing the generic components of Qsymia separately?

 

For starters, the generics are cheaper and easier to administer.  As expected, Qysmia was approved by the FDA with a Risk Evaluation and Mitigation Strategy (REMS), which consists of a Medication Guide advising patients about important safety information and elements to assure safe use that include prescriber training and pharmacy certification. More specifically, the Qsymia REMS serves to educate prescribers and their patients about the increased risk of birth defects associated with first trimester exposure to Qsymia, the need for pregnancy prevention, and the need to discontinue therapy if pregnancy occurs. Also, Qsymia will only be dispensed through specially certified pharmacies.

 

According to Attorney Joseph Dedvukaj, who was quoted in a recent Reza Ganjavi blog, "even an extremely restrictive REMS will likely cause the physician and patient to take the path of least resistance and prescribe the ingredients PHEN/TPM because: 1. the ingredients are cheaper, and 2. it is easier for the physician/patient because any REMS, no matter how restrictive, will be too costly and time consuming for patients and physicians to follow."  Or as Mr. Wilson would say, it's a matter of convenience (and cost).

 

With phentermine and topiramate available at doses and formulations very similar to those of Qsymia and Vivus perhaps only benefiting from three years of partial exclusivity, healthcare providers, clinics, and doctors will have the choice to prescribe phentermine, topiramate (off-label) or a combination of the two as they deem most appropriate based on, among other things, efficacy, safety, convenience, price and reimbursement.  The three years of exclusivity awarded for the new clinical study only prevents drug makers from marketing the phentermine/topiramate combination as a weight loss drug,  Otherwise, drug makers can continue to make and sell phentermine and topiramate in a wide range of doses and formulations with doctors and their patients determining their preferred therapeutic regimen.

 

Personal liability

 

As described above, phentermine and topiramate are available in doses and formulations nearly the same as the preferred mid dose of Qsymia.  But some might argue that doctors risk increased liability prescribing the components of Qsymia off-label (e.g., prescribing the two generic components separately at 50 mg instead of 46 mg for topiramate, and at 15 mg instead of 7.5 mg for phentermine).  However, this seems like a weak argument since doctors routinely (and legally) prescribe medicines off-label and in doses that best suit the needs of their patients. In fact, there are the even tools to enable patients to easily modify their doses (see the, at least, 484 different pill splitter devices and related products offered on Amazon.com).

 

The fact is a doctor's liability will likely be reduced following approval of Qsymia.  The proposed mid dose of Qsymia is well below the maximum approved doses of both phentermine and topiramate.  And it's clear doctors have been prescribing both drugs, alone and in combination, since topiramate first came on the market more than fifteen years ago.  Now with clinical data available and possible approval by the FDA, the liability is arguably reduced.  Even before the first clinical trial, Dr. Najarian was comfortable prescribing the two drugs to his own patients.  In a 2006 conference call he boasted:

 

I worked with VIVUS and Dr. Gadde to help design this trial, basically to mimic what I've been doing in my own practice for the last seven years and exclusively obesity for the last five years. And I have treated now over 6000 patients with the combination in similar doses to what were done in this trial.

 

Clearly, Vivus' own Qsymia collaborator (and former employee), Dr. Najarian, an expert in the field of clinical weight loss management, was comfortable (medically and legally) experimenting in patients with different doses of phentermine and topiramate – even before extended release topiramate was available and for an indication (weight loss) that was not yet approved.  Phentermine and topiramate are already so commonly prescribed off-label for weight loss that the FDA requested that Vivus remove their proposed contraindication in woman of child bearing potential (WOCBP) (see page 3 of the AdCom):

 

FDA asked that VIVUS include less restrictive elements in its REMS program that focus on patient and physician educational measures because it was concerned that more restrictive measures may result in greater off-label use of currently marketed topiramate and phentermine products to treat obesity in WOCBP without the benefit of an appropriate risk mitigation program. [emphasis added]

 

Liability – infringement

 

Since Qsymia is not a new chemical entity (rather a combination of known drugs), Vivus must try to rely on specific features of the drug combination (e.g., dose ratio, drug amounts and formulation) for patent exclusivity. Not surprisingly, the corresponding patent claims covering Qsymia are relatively narrow given the many disclosures by others for the treatment of obesity using topiramate or phentermine or the combination thereof prior to Dr. Najarian's original June 1999 filing date.

 

What is Vivus' enforcement strategy?

 

Vivus will not likely prevail if they try to to sue the generics companies making phentermine or topiramate since their labels will not include obesity as an indication (in the case of topiramate), and neither label will teach combining the two drugs to treat obesity.  Therefore, Vivus will be left trying to sue individual healthcare providers, doctors or their patients, which is an uncommon practice because it's time consuming, expensive and provides for bad public relations.  Vivus will have to rely on its method claims and argue the doctors are using the combination to "effect weight loss".  Vivus arguably could go after payers or PBM's that do not cover Qsymia and argue inducement, but that is unchartered territory and not exactly the enforcement strategy one builds a company around.

 

Why does Vivus believe doctors will suddenly start changing their prescribing practices in light of their patents (and not others)?

 

As discussed above, typically drug companies and not doctors are the one's who are the subject of pharmaceutical patent infringement proceedings, so doctors do not usually prescribe medicine in fear of infringing patent claims.  Also, Dr. Najarian and other doctors prescribing topiramate for weight loss were willing to do so despite the Shank patent that covers methods for treating obesity using topiramate.  Plus, Dr. Najarian may have infringed the McElroy patent, a patent he was very much aware of because it was included in his assignment agreement, while treating patients at his own clinic with topiramate combined with phentermine.  These did not deter Dr. Najarian, nor do I suspect his patents will deter other doctors.

 

This risk is accounted for by the company on page 62 of its most recent 10-K:

 

Our investigational drug candidate, Qnexa [Qsymia], is a combination of drugs approved individually by the FDA that are commercially available and marketed by other companies. As a result, our drug may be subject to substitution with individual drugs contained in the Qnexa [Qsymia] formulation and immediate competition. (bold and italics added by Vivus)

 

Each of the approved drugs that are combined to produce our investigational drug candidate, Qnexa [Qsymia], is commercially available at prices lower than the price at which we would seek to market Qnexa [Qsymia], if approved. We cannot be sure that physicians will view Qnexa [Qsymia] as sufficiently superior to a treatment regime of Qnexa [Qsymia]'s individual active pharmaceutical ingredients as to justify the significantly higher cost we expect to seek for Qnexa [Qsymia], and they may prescribe the individual generic drugs already approved and marketed by other companies instead of our combination drug.

 

Reimbursement

 

In the current environment of healthcare austerity, payers and pharmacy benefit managers (PBM's) may actually steer patients away from using Qsymia by only covering the generic components of the drug combination.  Vivus seems to advocate its position as it relates to their reimbursement vulnerability in their most recent 10-K.  My comments are provided in brackets and bolded.

 

Both of the active ingredients in Qnexa [Qsymia], phentermine and topiramate are available as generics. Based on the research we have completed to date, we are unable to determine whether Qnexa [Qsymia], if approved, will be subject to reimbursement or at what level reimbursement may occur. The exact doses of the active ingredients in the final formulation of Qnexa [Qsymia] will be different than those currently available. [25 and 50 mg topiramate and 15 mg phentermine available] State pharmacy laws prohibit pharmacists from substituting drugs with differing doses and formulations. [pill splitters] The safety and efficacy of Qnexa [Qsymia] is dependent on the titration, dosing and formulation, which we believe could not be easily duplicated, if at all, with the use of generic substitutes. [weak argument] However, there can be no assurance that we will be able to provide for optimal reimbursement of Qnexa [Qsymia] as a treatment for obesity or any other indication, if approved, from third party payers or the U.S. government. Furthermore, there can be no assurance that healthcare providers would not actively seek to provide patients with generic versions of the active ingredients in Qnexa [Qsymia] in order to treat obesity at a potential lower cost. [this seems to be a trend in healthcare these days]

 

Vivus faces significant commercial risks for Qsymia aside from the freedom-to-operate, patentability and assignment challenges described in parts 1-4 of the report.  Namely, the company does not appear to have a clear strategy for enforcing its patents (if found to be valid or enforceable) and must seek reimbursement from payers and PBM's for a drug whose components are widely available in similar doses and formulations at a much lower cost. Anyone of these challenges alone represents a significant risk factor that may severely limit Qsymia's commercial success.  Therefore, it is somewhat surprising that Vivus management has not done more to mitigate these risks, or at least adequately explained them in enough detail so it does not require a team of lawyers and weeks of analysis to uncover and explain them.

 

Part 6 – Money Raised & Inside Shares Sold, But Still No Deal

 

Key Takeaways

 

* Despite the numerous issues raised in Sections 1-5 of the report, Vivus has continued to raise money at a premium while insiders have sold shares

 

* Vivus has also failed to land a commercial partner suggesting those who have taken a close look at the company (i.e., interested potential partners) have not offered a deal acceptable to Vivus executive management or the board

 

"With regard to the IP, we remain and continue to believe very strongly that our IP position is outstanding." – Peter Tam, President and Director (Q3 2009)

 

Perhaps outstanding is a poor choice words.  Without evidence to the contrary (e.g., a publicly disclosed strategy or opinion), the company's newly approved drug, Qsymia, appears it may lack the following:

 

freedom-to-operate,

valid or enforceable patents that are rightfully assigned to them, and

an enforcement strategy for dealing with generics.

Anyone of these risks can be fatal, which is particularly troubling for a company without revenues that is relying heavily on the success of Qsymia (See, Vivus Will Plummet If Qsymia Fails).

 

Surprisingly, the company was able to successfully raise money when it closed a public offering in February – a week after an FDA Advisory Committee recommended approval of Qsymia.  The public offering was priced at $22.50 per share and netted gross proceeds of approximately $202.5 million.  One would think the numerous uncertainties and unknowns surrounding Qsymia would make tasks like raising money difficult – and at heavily discounted prices.  However, this was not the case for Vivus , which leads one to ask:

 

Did Vivus share a freedom-to-operate strategy with the underwriters of its public offering, led by J.P. Morgan, and their counsel (Cahill Gordon & Reindel LLP) during the February raise?

 

Determining freedom-to-operate is a critical step in any due diligence process, so one has to assume the underwriters were comfortable with Vivus' position at the time of the stock offering.  However, at the same time the company was selling stock through its public offering, many Vivus insiders were selling their shares.  According to SEC filings, Vivus insiders have sold more than 20% of their total cumulative shares with ten different Vivus insiders executing more than twenty trades between February 23 and June 27 worth approximately $36 million with net proceeds (after option exercise costs) worth an estimated $27 million.  The majority of these sales were the result of automatic sales – which were presumably set up under SEC Rule 10b5-1, which allows stock to be sold at regular intervals or when pre-specified prices are reached.  Outside of the automatic sales, nearly $3 million worth of transactions were executed in March by Vivus executives and board members.  (Note: the above amounts only include the sales for those insiders with a duty to report stock activity in SEC filings).

 

The topic of insiders selling shares under the protection of SEC Rule 10b5-1 has been in the news lately, including a Pharmalot discussion of Vertex insider sales.  As discussed in the Pharmalot blog, insiders cannot sell shares behind the cover of plans that are set up by executives while in the possession of material, non-public information.  It's not clear what information Vivus insiders had at the time their plans were set up, but some of these problems were clearly known to them for more than a decade as evidenced by inclusion of the McElroy patent in the Najarian Assignment.  Also, it's arguable whether Vivus has provided the necessary information, in a clear, specific enough manner for investors to make investment decisions.

 

Did Vivus meet their duty to disclose the necessary information to the public?

 

The company might argue their 10-K's provide warnings about all of their potential risks related to intellectual property (IP).  However, I would argue this information is buried in a sea of information with little or no explanation as to its relevance.  In other words, it is not readily understandable by the public.  This report required a lot of research and analysis using a set of intellectual property knowledge and expertise that the average investor and arguably the average Wall Street stock analyst doesn't possess.

 

No Deal

 

Finally, with all of these issues is it any wonder Vivus has not survived a big pharma due diligence exercise to close a deal with a marketing partner?

 

While investors and analysts (and dare I say the company's extremely well-compensated underwriters and their counsel) may have missed the many IP risks associated with Vivus' Qsymia, I doubt big pharma has missed the red flags.  So it's not surprising Vivus has yet to procure a commercial partner, and instead is relying on a contract sales organization, PDI Inc. (NASDAQ: PDII), to begin its sales efforts in the US.  Meanwhile, the two other companies with competing, new obesity treatments, Orexigen and Arena, have in fact landed pharma partners, Takeda and Eisai, respectively.  In fact, I suspect one of the biggest of the big pharmas, Johnson & Johnson, is very much aware of the Qsymia situation.  As the innovator for topiramate, who also first investigated the drug's utility as an anti-obesity agent and the holder of the Shank patent and (I strongly suspect) the licensee of the McElroy patent, they likely hold some critical cards that control Qsymia's future.

 

What is Johnson & Johnson's next move?

 

It's unclear if J&J has approached Vivus in the past.  Given what appears to be the hubris of Vivus management (see Mr. Tam's "outstanding" comment above) I would not be surprised if they turned down an early J&J offer.  After all, J&J pursued topiramate as an obesity drug, but willingly abandoned the program, even with the prospects of improved efficacy by combining the drug with phentermine.

 

I suspect now, with Vivus having shouldered the burden of developing Qsymia and getting approval, J&J will try to block their path to the market with the Shank and McElroy patents.  During the course of settlement negotiations, J&J may accept a handsome royalty or choose to buy the company.   Sure a J&J acquisition would eliminate the freedom-to-operate problems, but the purchase price would need to account for the remaining questions surrounding the Qsymia patents.  For example,

 

Were the Qsymia patents, in fact, Dr. Najarian's to license?

 

Are the patents valid and enforceable in light of both the prior art and the statements made by Dr. Najarian and his patent counsel during patent prosecution? 

 

Johnson & Johnson will also likely account for the difficulty it would have trying to enforce the Qsymia patents (and collect reimbursement) in the face of competition from generics.  We're not sure a price that accounts for all of these factors, especially negotiated in circumstance when licenses from J&J are required for clear freedom-to-operate (a la a classic monopsony negotiation), will sit well with a Vivus management that has already tasted the riches of a promising new drug.  But then again, what other option do they have?