Obesity is one of the fastest-growing health care problems in the world, with one in three U.S. adults now being classified as obese. Moreover, the problem is only expected to get worse going forward, as over half of U.S. adults are estimated to be overweight.
Despite this already large and growing market, obesity drugs have been commercial disappointments. In the first-quarter of this year, Arena Pharmaceuticals (NASDAQ: ARNA ) reported only $8.4 million in sales for its recently approved obesity drug Belviq, and VIVUS' (NASDAQ: VVUS ) Qsymia raked in a mere $9.1 million for the quarter. In short, neither of these once highly touted drugs will likely break even $50 million in sales in 2014.
The problem is that obesity drugs tend to offer only modest weight loss but have been plagued by serious side effects in the past, leading many drugs to be pulled from the market. Probing deeper into this issue, researchers believe the unwanted side-effect problem stems from the fact that obesity drugs often act on portions of the brain that control hunger, but also influence other critical functions such as heart rate and emotional state. Many centrally acting drugs are thus frequently associated with increased risks of heart attacks and emotional disorders. And because of these past problems, doctors appear to be taking a cautious approach with the latest rendition of FDA obesity drugs.
Can this cancer drug hold the key to treating obesity using pharmaceuticals?
Over the past decade, researchers have been experimenting with a potent new class of anticancer agents called fumagillin analogs. A number of fumagillin analogs have the ability to inhibit the production of an enzyme known as "methionine aminopeptidase 2," or MetAP2, that can arrest the cell cycle, leading to a reduction in tumor growth. A couple of years ago, CKD Pharmaceuticals was experimenting with its MetAP2 inhibitor dubbed "Beloranib" as a potential anticancer agent when they noticed something odd: Subjects receiving the treatment lost weight.
Soon thereafter, Zafgen licensed beloranid from CKD Pharmaceuticals to develop the twice-weekly injection as a first-in-class obesity treatment. What's unique about beloranib is that it targets tissues outside the central nervous system in hopes of restoring balance to how the body breaks down and uses fat. To date, the drug has been studied in five clinical trials, reducing body weight by up to 8.1% in only four weeks in severely obese patients. By comparison, patients taking Qsymia typically required nearly a year on the medication to achieve similar levels of weight loss.
With that being said, these trials have been aimed mostly at patients suffering from rare genetic disorders that cause obesity through compulsive eating, such as Prader-Willi Syndrome, or PWS for short. As such, we still don't have a deep understanding of the drug's clinical profile over the long term or if it will be useful as a treatment in the general population.
Zafgen is going public to raise funds for a late-stage trial
Earlier this year, Zafgen announced that it was raising $86.2 million through an IPO to fund a late-stage trial of the drug in PWS patients. Per the terms of the IPO, Zafgen will be listed on the Nasdaq Global Market under the symbol "ZFGN," with the trial set to start recruiting patients later this year.
What's particularly interesting about Zafgen's approach is that the company is targeting rare disorders that qualify for orphan drug status, making them eligible for the numerous marketing benefits that come with it. Moreover, patients suffering from PWS have almost no pharmaceutical options and are constantly in danger of eating to the point where their stomach bursts. As a result, regulators will undoubtedly have to weigh any potential side effects of beloranib against the dearth of treatments for a potentially lethal condition.
Looking ahead, Zafgen also plans to initiate additional trials for beloranib as a treatment for severely obese patients in the general population, where it might be used as an alternative to surgery.
Beloranid could become the first peripherally acting anti-obesity agent to be approved in history. Even so, Arena and VIVUS investors shouldn't worry too much that this drug will replace their approved therapies. My bet is that we'll see doctors and clinicians experimenting with combo treatments if beloranib lives up to its hype. Keeping with this idea, Arena Pharmaceuticals has reportedly stated that it also has an interest in exploring Belviq's potential as a treatment for PWS, which might be the first area to see such a combo treatment. Stay tuned!
Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! You don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.