The Implications of Obesity as a Disability in Europe

If Europe's top court follows the advice of a key advisor, it may soon label severe obesity as a disability. If it does, pressure may increase in the European Union to approve drugs designed to reduce weight, including compounds developed by Arena Pharmaceuticals (NASDAQ: ARNA  ) , Vivus (NASDAQ: VVUS  ) , and Orexigen (NASDAQ: OREX  ) .

Source: European Parliament Flickr.

Treating obesity
Obesity is a major cause of diabetes (almost 90% of diabetics are overweight) and increasingly thicker waistlines have industry watchers predicting that the number of people with diabetes will soar from 366 million to 552 million globally by 2030 and that the number of people living with the disease in Europe will climb from less than 53 million people to more than 64 million people. That significant increase is expected to spike health-care spending on diabetes, which totaled a combined $120 billion in France, Germany, Italy, Spain, and the U.K. in 2012.

That expected spending surge has the drug industry investing billions to develop new diabetes treatments, but it's not just the industry giants that are developing therapies that may have a profound impact on the disease. Small companies like Arena, Vivus, and Orexigen have developed drugs that may help prevent diabetes by controlling patient weight.

Source: Arena Pharmaceuticals.

A new class of weight-loss drugs
The FDA has already approved two new weight-loss drugs, one from Arena Pharmaceuticals and another from Vivus, but neither has been a hit (yet).

Sales of Arena and marketing partner Eisai's Belviq, totaled just $3 million in the first quarter; however, Eisai recently reported that it's bulking up its U.S. sales force by 50%. That increases the number of people calling on doctors to about 600.

Vivus hasn't done much better with its Qsymia. Qysmia won FDA approval in 2012, but its sales totaled just $9 million in the first quarter.

Europe says not yet
Last year, Arena withdrew its application for Belviq's approval in the European Union after it recognized that it wouldn't be able to address a key advisory panel's questions prior to the panel making a recommendation. Those questions surround Arena's potential side effects and risks, including tumors found in rats treated with the drug during trials.

While Arena and Eisai still hope to win over EU regulators someday, it simply might not happen. Arena openly admits this risk in its quarterly 10-Q filing with the SEC: "We expect Eisai to potentially submit for regulatory approval in Europe at a later date, but Belviq may not be submitted for regulatory approval in Europe when expected or ever." (emphasis added)

Vivus' case for Qsymia has similarly hit roadblocks in Europe. EU regulators rejected Vivus' application and the appeal that followed based on worries that long-term use of Qysmia could result in cardiovascular and central nervous system disease. Vivus has since asked EU regulators whether interim analysis from an ongoing long-term use study could be used as part of a resubmission, and the company appears to be advancing in that direction; but no timing has been offered up as to when such a resubmission may happen.

Although both Arena and Vivus have stalled in Europe, Orexigen may still have a shot at approval there. Orexigen's NB32 weight-loss drug got rejected by the FDA in 2011 due to cardiovascular concerns, prompting Orexigen to launch a cardiovascular outcomes trial in 2012 that delivered positive interim results last year.

Based on those results, Orexigen resubmitted NB32 to FDA regulators in January, and the FDA gave the company an expected decision date in June. However, the FDA pushed that date back until September in order to hash out more details with the company. Regardless, Orexigen should get a decision from both EU and U.S. regulators this year.

Fool-worthy final thoughts
Arena's, Vivus', and Orexigen's drugs mark the first wave of anti-obesity compounds; but other drugs may be coming. For example, Zafgen has an orphan drug called beloranib that has also shown some success in weight loss and, while Zafgen is pursuing an approval for the orphan disease Prader-Willi Syndrome, it may someday seek approval for more generalized weight loss, too.

Whether any of these drugs end up having an impact in Europe, however, remains to be seen. There's little question that obesity is a major reason behind rising diabetes prevalence rates throughout the EU -- Germany boasts the EU's highest prevalence of diabetes cases -- but that doesn't guarantee that fear about rising health-care costs will overcome regulators' concerns about the potential adverse effects of these drugs. 

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Read/Post Comments (3) | Recommend This Article (1)

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 July 19, 2014, at 8:11 PM, BrianPan wrote:

    This doesn't sound good at all. I refer you to an episode entitled "King-Size Homer".

  • Report this Comment On July 20, 2014, at 4:16 AM, barbspal wrote:

    since 1 half of qsymia is banned in europe

    and since 1 part of contrave is banned in europe

    belciq will be resubmiited shortly

    eisai knows what to do

    if only for the SMOKING CESSATION

    if i am jack lief

    i make them beg

  • Report this Comment On July 20, 2014, at 4:17 AM, barbspal wrote:

    ps contrave not approved in us

    odds say it never will

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Todd Campbell

Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In 2003, Todd founded E.B. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Todd has provided insight to a variety of publications, including SmartMoney, Barron's, and CNN/fn.

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