Will There Ever Be an Obesity Drug Blockbuster?

The obesity drug war is about to begin.

Investors are anxiously waiting for the launch of Arena Pharmaceuticals (NASDAQ: ARNA  ) and Eisai's obesity drug Belviq, which will match up with VIVUS' (NASDAQ: VVUS  ) Qsymia, which hit pharmacies a few months ago. We'll also get safety data for Orexigen's (NASDAQ: OREX  ) Contrave later this year, which could put it on the market a few months after that.

But Belviq, Qsymia, and Contrave aren't the first obesity drugs on the market. We've been to this rodeo before. And it wasn't pretty.

A lean history lesson on obesity treatments
Lesson number one: no obesity drug has ever been a blockbuster because of a combination of minimal efficacy combined with safety issues.

Wyeth's Fen-phen, and Abbott Labs' (NYSE: ABT  ) Meridia, were pulled from the market because of side effect issues. Roche's Xenical is still on the market, but has never racked up monster sales because the drug causes some rather unpleasant side effects. It blocks the uptake of fat, and if patients eat too much fat, let's just say that it isn't pretty when it passes out the other end. GlaxoSmithKline (NYSE: GSK  ) said it plans to sell Alli, the over-the-counter version of Xexical, presumably because it never reached full potential .

There's a startlingly large number of American's that are obese, 78 million adults according to the last count by the CDC . If you charged them all $1,000 per year for an obesity drug, that's a potential $78 billion market. And yet no drug can get to $1 billion. What's the problem?

Let me be blunt
There's one thing some people trying to lose extra weight struggle with: laziness. I speak from experience; I've lost a whopping five pounds since I joined my gym more than a year ago. That extra helping of desert is so tempting. So is the snooze alarm.

The characterization is a generalization, of course. There are reasons that people have trouble losing weight other than laziness. But when it comes to drug sales, generalizing is OK. It's the actions of a large majority that will drive drug sales, not the minority that proves the rule.

Those lazy people are now looking for an easy way to lose weight by taking Belviq and Qsymia, but, unfortunately, there's no easy way to shed substantial pounds. It takes exercise and dieting to lose weight.

But patients lost weight in clinical trials
Yes they did. The drugs help patients lose weight, but it's extra weight loss. Almost half of the weight loss seen in the Belviq trials, for instance, could be attributed to lifestyle changes. Patients in the placebo arms of the combined phase 3 trials lost 2.5% of their body weight, compared to 5.8% for patients taking Belviq .

People willing to enter a clinical trial for an unproven drug are likely a lot more motivated to lose weight than the general public. Remember all those side effect issues from other drugs?

And only some of the patients in the trial were actually motivated to lose the weight. A whopping 50% of patients in one of the Belviq trials withdrew before completing one year of the trial.

The key for the obesity drugmakers to hit $1 billion in sales is not only to convince doctors to prescribe their drugs, but for patients to stay on the drug for an extended period of time. I predict that many lazy patients will take the drug, but not change their lifestyles, because they're looking for an easy fix. After a few months, they won't see any dramatic results, and they'll stop taking the medication.

Saving grace
One of the barriers to staying on the obesity drugs is the price. Even if a patient is only seeing modest weight loss, they'll be more likely to stay on the drug if they're paying the standard co-pay of $20-$50 per month -- that's the cost of a gym membership with a lot less work -- than they would if they're playing the full price of around $160 .

The companies have made some strides into gaining insurance coverage, but they have a long way to go. Gaining history-setting blockbuster status isn't going to be easy for any of the three obesity drugs, but insurers are likely the key to get there.

Who will win the obesity drug market?
Can VIVUS pick up its lagging sales and fend off the competition, or will Arena Pharmaceuticals reign supreme in the obesity space? The Motley Fool's premium research reports on VIVUS and Arena Pharmaceuticals contain the must-know information, including an in-depth look at the obesity market, and reasons to buy and sell both stocks. Click now for an exclusive look at Arena and VIVUS -- complete with a full year of free updates -- today.


Read/Post Comments (17) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 16, 2013, at 9:43 PM, TheStockDoctor wrote:

    The real issue is at the CDC definition of "obese" includes many people who are barely fat, and many more who don't consider themselves fat. Case I point, a man who is 6'5" and 260 pounds, an athlete, with a body fat of only 12% is still considered "obese" based on the BMI calculation.

    They must consider more than just height & weight to be accurate on who is obese.

    It is accurate to say that people want an easy fix, but inaccurate to think that people will only take the most effective drug. Qsymia's side effects are a major hindrance and the next in line is Belviq.

    Being shot out of a cannon, or skydiving to work may be a faster way to get there, but the side effects make it unappealing to most, that's why they drive.

    It isn't always the fastest path to the destination that matters most, sometimes it is the safest.

  • Report this Comment On February 17, 2013, at 10:39 AM, RSRdriver wrote:

    Face it! Belviq barely beat the placebo WHERE IT COUNTS! Vivus Qysimia works twice as well and the safety issue is blown way out of proportion by jealous Areniacs!

    Couple that with the rejection of Arena's re submitting of the same application the EMA rejected (they can do nothing else at this point!) and you begin to see why the street and every THINKING person knows that the ARNA pps will drop to around $4 in the near future!

    The best obesity bet in this sector though is OREX into their decision dates. IMO, it's a gift right now and can only go up . The FDA is bending over backwards to get it to market (documented) and selling just before the approval dates (as the now bag holding Areniacs should have!) make sense.

  • Report this Comment On February 17, 2013, at 1:19 PM, beatlesforever wrote:

    Belviq has the best safety profile of all obesity drugs and its efficacy is excellent. 11-12% weight loss is far better than the 5% doctors believe makes a significant difference in health.

    Short sellers fell for their own illusion and fiction and no matter how much Cramer and his gang and other scums try to help shorts their end is near.

  • Report this Comment On February 17, 2013, at 1:20 PM, paxmaker wrote:

    Hmmm. Looks like the previous poster joins a long line of shorts who may have gotten burned by previous obesity drugs, or are inFATuated with posting inaccuracies about ARENA. Disclosure: I am long ARENA and have done quite well with that position. Belviq passed the FDA targets with flying colors. Even with the dropouts, as your article clearly indicates, compliance with any disciplined routine is a major problem with medications, diets, and exercise for many.Arena had significant success with responders and a major benefit, in additon was very good results on the Hb1AC test for folks with TYPE II diabetes. Endocrinologists overwhelmingly supported Belviq in the public comment phase of the trials and we are now awaiting what can be characterized as a rather long bureaucratic process to have the DEA publish the final schedule for Belviq, which will be schedule IV. All of that said, this medication which uses a completely new pharmaceutical target approach, looks like the best bet in a very long time to address folks with overweight complications AND to address the major concern for those folks, diabetes. It will hit the market in the USA probably no later than the end of March, perhaps sooner. In Europe, they will need to make a oral presentation to the EMEA before final action is taken, most likely by the end of June. Sout Korea is ready to go with Switzerland not far behind the U.S. launch.

  • Report this Comment On February 17, 2013, at 2:00 PM, RSRdriver wrote:

    I forgot one other factor in ARNA's PPS decline= ARENIACS!

    People like above lie spewers do nothing to help Arena by stating fictitious claims based on the slightest facts and unproven numbers. Convincing bag holding ARNA holders for no other reason than to support their worthless long positions has no effect in the REAL WORLD. There is a reason why a certain well known pumper here will no longer be publishing his ARNA pumps on Motley Fool. Well, at least not under the same name!

  • Report this Comment On February 17, 2013, at 2:02 PM, mrmarkaallen wrote:

    Again the efficacy of ARNA is greatly understated.

    We will soon see that the badgers will again be proven wrong. In a year ARNA will be selling around the world and be nearing blockbuster status. Do all the badgers here agree that when that happens you will give up on your attempts to degrade ARNA's share price?

    I purchased ARNA at $1.50 despite all the BS generated by the paid badgers and short hegies. I will sell in a couple of years when my position will have generated enough profit to retire at an early age.

    Yours truly Mark Araniac Allen

  • Report this Comment On February 17, 2013, at 2:07 PM, RSRdriver wrote:

    Sure you did! Further more, if you held through all of the obvious detrimental facts that have since come to light, you are MORON ARENIAC NUMBER1!

  • Report this Comment On February 17, 2013, at 4:20 PM, bwyatt25 wrote:

    And you RSRdrivel are a blatant ARNA basher, probably one of the hundreds of trapped shorts who got it so wrong way back before FDA approval. Hard luck mate, like so many of we "Areniacs" as you like to call us longs, i'm already 500% up and looking forward to much more when Eisai are able to launch Belviq and the share price of Arena reaches it's true fair value on successful sales of this blockbuster. Go crawl back under that rock you have slithered out from under shortie. LOL.

  • Report this Comment On February 17, 2013, at 4:50 PM, RSRdriver wrote:

    Actually, Iam the only one here telling the truth!

    As for your being up 500% (ha), you should be thanking the manipulators who were the prime reason for this. One of them is right here! It surely had nothing to do with that marginal drug or the way Arena is being run!

  • Report this Comment On February 18, 2013, at 12:35 AM, earthunit wrote:

    Lol. Why don't you MF guys just hire Ackman to do your ARNA bashing for you? He's much better at it - at least temporarily.

  • Report this Comment On February 18, 2013, at 2:50 AM, SamFreedom wrote:

    I think their best basher is the "health bureau chief" what's his name...

    Anyways, do you believe RSRDriver? The guy is going mad. I don't know if it's dementia or what but everyone is in on it, apparently. He's got it skull figured out, right down to the ARENA reply to the EMA and who all the secret pumpers are.

    SomeOne please get that guy a doctor!

  • Report this Comment On February 18, 2013, at 7:21 AM, RSRdriver wrote:

    Once again, Thanks for your help.

  • Report this Comment On February 19, 2013, at 5:03 AM, mrmarkaallen wrote:

    RSRDriver,,

    I have your money and I am not giving it back. Stay short and you will looose it all. You have already lost your mind so what the hay.

  • Report this Comment On February 19, 2013, at 6:13 AM, RSRdriver wrote:

    Why is it when you are confronted with the truth, you have to resort to stupid posts such as this? The answer is obvious isn't it!

    Shorts have not had to cover this stock once in the last 8 months and the the future for Arena and Belviq get's darker by the day.

    This is not a war or a fight! It is your money!

    The ones who played you with the bogus con articles here and on SA have used you and the system!

    Soon it will be too late. WAKE UP!

  • Report this Comment On February 20, 2013, at 12:44 AM, SamFreedom wrote:

    Thank you for caring but you provide no proof, only your warped analysis.

  • Report this Comment On February 20, 2013, at 5:27 AM, RSRdriver wrote:

    "warped analysis"? In your case, that should be more than enough!

    To here Moron Areniac Number 2 complain about "warped analysis" is almost as hilarious as reading Reza's ( or Beatleboy if you will) recent complaint about the

    fairness of Motley Fool!

    Areniacs are if nothing else, very entertaining.

  • Report this Comment On February 20, 2013, at 7:51 AM, beatlesforever wrote:

    Warped analysis is what got the short interest in the hole they're in.

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