Orexigen's (Nasdaq: OREX ) Contrave has the distinction of being the only obesity drug in recent history to get a positive recommendation from a Food and Drug Administration advisory panel. Both Arena Pharmaceuticals' (Nasdaq: ARNA ) lorcaserin and VIVUS' (Nasdaq: VVUS ) Qnexa failed to gain a recommendation and were turned down by the FDA.
But don't jump in ahead of next Monday's decision just yet. While a negative panel vote almost always leads to the FDA turning down a drug, a positive panel doesn't guarantee a thumbs up from the agency. It says so right on the FDA's website: "Although the committees provide advice to the Agency, final decisions are made by FDA."
InterMune's (Nasdaq: ITMN ) pirfenidone and Dendreon's (Nasdaq: DNDN ) Provenge, the first time, are just some of the many examples of the FDA blowing off its advisors' opinions. And the 13-to-7 vote isn't exactly a ringing endorsement for Contrave.
Obesity isn't as life threatening as idiopathic pulmonary fibrosis or cancer, which pirfenidone and Provenge treat. Diet and exercise work pretty well at helping shed the pounds, and the FDA seems predisposed to be hard on any drug that treats obesity. Just because the advisory panel let Contrave slip by doesn't mean the agency will.
The problem is intensified by the side effects observed in weight-loss drugs that have been pulled from the market after the agency has approved them: Wyeth's fen-phen and Abbott Labs' (NYSE: ABT ) Meridia. The agency doesn't need another repeat.
While I'm inclined to guess that the FDA will send Contrave back to the drawing board, it's just that -- a guess. Handicapping the FDA's decision on Contrave is more difficult than it was with lorcaserin and Qnexa, where a negative panel was a death sentence for the drug.
In the long run, Contrave -- and lorcaserin and Qnexa -- may be approvable, but investors need to be prepared for a wait.
That's my opinion. What's yours? Take our Foolish poll below and fill in your reasoning in the comments below.