1 Weight-Loss Drug That Investors Forgot

You know Belviq and Qsymia and Contrave and Empatic, but do you recall the still most widely used weight-loss drug of all? It seems almost like ancient history now, but back in 1999 the Food and Drug Administration approved Roche's (NASDAQOTH: RHHBY  ) Xenical. 

Fast-forward to 2013. Many investors are excited about the prospects for a new weight-loss drug on the market from Arena Pharmaceuticals  (NASDAQ: ARNA  ) . Many are disappointed by the sluggish start for VIVUS' (NASDAQ: VVUS  ) Qsymia. And some are hopeful for potential drugs on the way from Orexigen Therapeutics (NASDAQ: OREX  ) .

Meanwhile, Xenical still reigns as the most-used obesity drug. Are there lessons to be learned from this weight-loss drug that investors likely forgot? Let's take a look.

The tortoise and the hare
Xenical quickly became one of Roche's top-selling drugs and "exceeded expectations by a substantial margin" in the U.S. after its launch. In 2001, sales for Xenical reached $600 million -- not bad, but not blockbuster status. Unfortunately, that also marked the peak for the drug. By 2004, sales were down to $464 million, and GlaxoSmithKline  (NYSE: GSK  ) bought the rights to sell the drug over-the-counter in the U.S. under the brand name Alli.

The lesson for today's investors is that of the old story about the tortoise and the hare. A quick start doesn't always win the race. That could be comforting for VIVUS investors. Qsymia sales in the first quarter totaled $4.1 million, well below analysts' expectations. This slow start added fuel to the fire for efforts by activist investor First Manhattan to replace VIVUS' management team.

Arena investors were excited about initial sales results for Belviq. That quick start is good news, but the real key for Arena will be to sustain solid sales. Remember: Xenical started out as a hare and morphed into a tortoise.

The real tortoise of today could be Orexigen. While Arena and VIVUS battle with their drugs already on the market, Orexigen's Contrave has yet to gain FDA approval. The company hopes to secure that go-ahead in 2014. If its large cardiovascular study goes well, Orexigen could be in position to succeed over the long run -- especially with its partnership with Takeda for commercialization of Contrave.

Market potential is still just potential
The number of obese individuals was high in the early years for Xenical. GlaxoSmithKline and Roche touted the market potential of 129 million Americans at risk for serious health concerns due to being obese or overweight. In 1999, analyst Rene Nordmann said that Xenical "will reach peak sales of up to $1 billion worldwide after five years." It didn't happen. 

GlaxoSmithKline put Alli (its non-prescription version of Xenical) up for sale in 2011 along with a block of other over-the-counter drugs, although the company delayed the sale due to manufacturing problems. Despite a big marketing push, sales disappointed to the point where Glaxo didn't even break out Alli sales beginning in 2010.

When Belviq gained FDA approval last year, some analysts pegged peak annual sales for the drug at $1 billion. In August, analyst Thomas Wei projected peak sales for Qsymia at $1.2 billion (although that estimate was well below Wei's initial projection of $3.6 billion in peak sales for the drug.)Analysts also think that Orexigen's Contrave could hit peak sales around $1 billion.

Deja vu? Maybe not. Times are different -- and so are the newer weight-loss drugs. However, the lesson from Xenical is still one to keep in mind: Market potential is still just potential.

Negatives add up
Perhaps the most important thing to learn from Xenical is that negatives add up. While the drug was proven to be effective in helping individuals lose weight, the side effects were and are absolutely yucky. 

Xenical works by preventing absorption of fat by the body. Unfortunately, that non-absorbed fat has to go somewhere. The drug's side effects include gas, diarrhea, intestinal cramping, and oily stools. These unpleasant aspects of taking Xenical contributed to its lack of sustained commercial success.

Today's group of weight-loss drugs have their own side effects. Patients taking Qsymia, for example, commonly experience numbness or tingling in parts of the body, dizziness, loss of taste or change in the way foods taste, insomnia, constipation, and dry mouth. Belviq's common side effects include headache, dizziness, fatigue, nausea, dry mouth, and constipation. Patients with diabetes also can experience low blood sugar, back pain, and cough. The biggest concern for Contrave is potential cardiovascular issues, which necessitated the study the company has under way.  

Negative effects of taking a drug can hurt its chances of becoming successful. That's not to say that side effects will derail Belviq, Contrave, or Qsymia. It's important, though, to not overlook these hurdles.

History rhymes
I like the old saying attributed to Mark Twain that "history doesn't repeat itself, but it does rhyme." Arena, Orexigen, and VIVUS aren't doomed to experience the same issues encountered by Xenical -- just as Xenical didn't have the same issues as Fen-Phen. However, the general lessons learned from the older drug still apply today. 

At this point, Arena appears to be on the better track to achieve its market potential and avoid missteps from Belviq's negatives. Like with the tortoise and the hare, though, only time will tell which company ultimately wins the race.

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  • Report this Comment On July 03, 2013, at 2:45 PM, AlanPithy wrote:

    Xenical, also known as Orlistat and sold over the counter as Alli, does sell about $800M a year but the most widely prescribed drug for obesity is still Phentermine. Phentermine is effective and was part of the very popular and effective combo FenPhen (Fenfluramine + Phentermine), of which anywhere from 18-30 million prescriptions were written in its peak year.

    Fenfluramine turned out to cause heart valve problems in up to 30% of people who took it, sometimes fatal, and was taken off the market. This put a pall on Phentermine too and usage declined. Phentermine was relabeled by the FDA for short term use only. But the success of FenPhen is actually the impetus for the creation of both Qsymia and Belviq.

    Qsymia replaces the Fenfluramine with Topiramate, an anti-epilepsy medication, and is known as TopoPhen in generic form. It had some significant side effect issues and was given a restrictive REMS label by the FDA. It requires titration of the dose to find the right balance between efficacy and side effects and the higher the dose the less tolerable the drug is. Very few people take the high dose.

    Belviq is a new serotonin molecule that targets the mood receptors in the brain similar to the way Fenfluramine did - but avoids the receptors in the heart. It was approved without a restrictive label for long term use because it doesn't appear to have any major side effects. While Belviq is a decent weight loss agent all by itself (as was Fenfluramine and Topiramate) there is a lot of hope that Belviq + Phentermine, or BelPhen, will be as effective a combo as FenPhen but without the side effects of Qsymia/TopoPhen or danger of Fenfluramine. Since many doctors are averse to prescribing Phentermine long term, Belviq becomes an interesting choice for doctors to sequence Belviq and Phentermine in various doses and durations in the attempt to replicate the FenPhen results.

    All this boils down to, generic Phetermine will probably remain the #1 agent for some time to come either alone, packaged in combo as high-priced brand name Qsymia. or in rotation with or layered over Belviq for long term use. I personally do not see Qysmia doing very well simply because doctors who won't prescribe Phentermine won't prescribe Qsymia, and doctors who do prescribe Phentermine will have a hard time justifying the increase in price from generic to brand name without being convinced of the added efficacy. Belviq on the other hand could be written by doctors who won't write Phentermine, and also for by the doctors who do for added efficacy or for weight loss maintenance without having to put people on Phentermine for long term.

  • Report this Comment On July 03, 2013, at 3:44 PM, AlanPithy wrote:

    Interesting comment you made about Belviq causing "low sugar" among Diabetics. This is because Belviq has an additional benefit of lowering blood sugar levels. Diabetics who take medication, such as metformin, to control their blood sugar levels need to monitor how much additional benefit Belviq will give them.

    But to mention this as a negative is to misinterpret the data. If Belviq helps lower blood sugar levels, that means diabetics can take fewer or lower doses of diabetes medications. That's good!

    More importantly, there are 80 million Americans who are at risk of becoming diabetic, and half of them are expected to become diabetic within 10 years according to the American Diabetes Association. Most of these 80 million are also overweight. Belviq presents an opportunity to help people shed some excess weight which reduces stress on the heart and reduces risk of stroke and cancer, but it may also prevent these people from becoming diabetic at the same time. That is also a good thing.

    Over the long run, Belviq has a lot of potential. A drug that helps people lose weight, reduce food cravings, control appetite, and reduce blood sugar levels is a drug that America badly needs.

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