Have Anti-Obesity Drug Prospects Finally Gone Belly-Up?

A number of factors are holding back obesity therapies, but this one glimmer of light has the potential to change that perception.

Mar 4, 2014 at 2:05PM

On paper, it just makes so much sense that physicians and patients would turn to chronic weight control management therapies offered by VIVUS (NASDAQ:VVUS) and Arena Pharmaceuticals (NASDAQ:ARNA) as in addition to proper diet and exercise to lose weight. But paper is where this fairy tale abruptly ends.

It has been nothing short of a nightmare for both VIVUS' Qsymia and Arena Pharmaceuticals' Belviq since they were brought to market -- each with some similar and unique problems.

VIVUS & Arena's nightmarish year
Qsymia made it to market about a year before Arena's Belviq, but it was slower than molasses in winter out of the starting gate. Part of that can be blamed on the fact that VIVUS has chosen to go it alone without a marketing partner. It does allow VIVUS to reap the rewards of Qsymia's full sales potential, but it also means bearing all of Qsymia's marketing expenses and relying on a less experienced sales staff.

Another problem VIVUS ran into was that insurers were slow to add the fat-fighting drug to their covered medications list. This meant a number of patients were paying for Qsymia out of their own pockets early on, with some choosing to leave their prescriptions sitting on pharmacy shelves rather than pay.

Lastly, Qsymia's less favorable safety profile in relation to Belviq has partially held it back. Based on the phase 3 comparisons, Qsymia delivered more impressive overall weight-loss results, but Belviq had the preferential safety profile that would likely make it the dominant weight control management choice among physicians. To add insult to injury, Qsiva (the brand name for Qsymia in the EU) was turned away in Europe because of long-term safety concerns, which the Committee for Medicinal Products for Human Use, or CHMP, felt VIVUS had not addressed in its studies.

The problem is that if you thought Arena Pharmaceuticals was going to be in much better shape, then you'd have been equally as wrong!

Arena's Belviq was delayed by a year because of scheduling by the Drug Enforcement Agency, and only made it to pharmacy shelves toward the end of Arena's second quarter of fiscal 2013. Belviq has suffered a similar fate to Qsymia in that insurers have been slow to adopt coverage, making it a tough sell to the public. In addition, Belviq pulled its marketing authorization application in Europe long before the European Medicines Agency would have been able to render a decision, as it realized its drug was on a similar path as Qsiva if it pursued a marketing authorization.

Is this as good as it gets?
Within the past week, we've received confirmation of just how poor sales of these two purported blockbusters have been. For the full year, Qsymia sales totaled just $23.7 million for VIVUS while Belviq racked up $16.8 million in global sales through two-and-a-half quarters.

Source: Arena Pharmaceuticals, IMS NPA. 

Keep in mind Belviq's sales are split between marketing partner Eisai (NASDAQOTH:ESALY) and Arena, which gets a 31.5% royalty interest on sales of the drug.

Obviously, having a strong marketing partner like Eisai is helping Arena, and the fact that Eisai is doubling its marketing force is only expected to translate into faster sales growth for Belviq; but I have to wonder, is this really as good as it gets?

The way I view it, there are two primary impediments working against both Qsymia and Belviq, beyond just the surface problem that these two therapies need more insurers to jump on the bandwagon.

First, public action on obesity has to change. Currently, more than 35% of all U.S. adults are considered obese (i.e., a body mass index above 30). The American Medication Association even declared obesity to be a disease in 2013. Additionally, respondents to a 2012 poll by the Associated Press (see here) viewed obesity/overweight as the second most serious health problem in the United States. The problem, then, is harnessing that perception and creating better public action.

Cdc Obesity
Source: Centers for Disease Control and Prevention.

You'd think an adjunct therapy that could aid in weight loss and reduce the burden of exercise a bit would be an instant winner, but it simply hasn't, as public action on obesity is still in what I'd consider to be its early stages in the U.S., as evidenced by the tapering, but not lowering, of U.S. obesity rates.

The other factor here is that I believe physicians are extremely leery about prescribing a medication that could be viewed by obese people as a "cure" or "fix-all" for obesity as opposed to proper diet and exercise. To add to that point, I suspect physicians may also be concerned about the long-term side effects of taking these fat-busting drugs, which may be weighing down both drugs' sales potential.

Is there light at the end of the tunnel?
We've certainly been here before, so don't get too excited, but there is an anti-obesity therapy currently under review by the Food and Drug Administration that could walk the line perfectly between weight-loss efficacy and safety, as well as obesity awareness and physician concerns. That therapy is Orexigen Therapeutics' (NASDAQ:OREX) Contrave.

Orexigen's claim to fame thus far is its interim analysis of a study of the cardiovascular effects of its anti-obesity drug, Contrave, known as the Light Study. This approximately 8,900-person study demonstrated no increase in adverse events tied to Contrave, essentially clearing it a path for an approval in the U.S., and perhaps paving the way for approval in the EU despite Qsymia and Belviq beating it to market in the U.S.

What's more, Orexigen has a solid partner in Takeda Pharmaceuticals (NASDAQOTH:TKPYY), which it has been partnered with since Sept. 2010. Like Arena, Orexigen won't realize the full sales potential of Contrave, but it'll also have a highly experienced sales staff marketing this potentially revolutionary drug if it's approved.

Has this sector gone belly-up?
It's probably still a bit too early to call the anti-obesity sector a total failure given that Belviq has less than a year's worth of sales under its belt, and Contrave still has its decision day with the FDA yet to come. But, if Belviq can't eclipse $50 million in global sales in fiscal 2014, or if Contrave stumbles out of the gate like its peers, it may be time to consider that this much-hyped sector just may not be able to deliver on previous expectations.

Anti-obesity stocks may have stumbled recently, but this top stock looks as if it is bulking up for a huge run higher
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Editor's Note: A previous version of this article indicated that the LIGHT study included 9,800 people and has been completed. The study actually enrolled 8,900 people and only an interim analysis of the study has been completed. This has been revised and the Fool regrets the error.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers