Please ensure Javascript is enabled for purposes of website accessibility

Big Demand for (Free) Obesity Drugs

By Brian Orelli, PhD – Updated Apr 7, 2017 at 1:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Orexigen enrolls its Contrave trial early.

Orexigen's (Nasdaq: OREX) Light Study hasn't been light on the enrollment. Yesterday, the company said the safety study for its obesity drug Contrave has recruited more than 4,500 patients and is now on target to close enrollment by the end of the year.

You'll recall that the Food and Drug Administration rejected Contrave in 2011, requesting a cardiovascular outcomes trial to rule out possible heart problems. The agency originally wanted a humongous trial, but later conceded that a smaller trial would suffice. With the quick enrollment, Orexigen is gaining ground on Arena Pharmaceuticals (Nasdaq: ARNA) and VIVUS (Nasdaq: VVUS), which got their obesity drugs approved this year; the biotech expects to be able to conduct an interim analysis of the safety data in 2013, which might be enough to resubmit to the FDA.

As a small conciliation for being behind, Orexigen has effectively taken the patients in the Light Study off the market as potential customers for the currently approved drugs. Vertex Pharmaceuticals (Nasdaq: VRTX) actually blamed the slowing sales of Incivek on hepatitis C patients choosing clinical trials over Incivek. But I don't think it'll be as big of an issue for Belviq or Qsymia; there are substantially more obese people in the U.S. than there are people with known hepatitis C infections.

The faster-than-expected enrollment for the Light Study is a clear sign that there's demand to pop a pill to lose weight, but there's a caveat: In the Light Study, patients get Contrave for free. Patients taking Arena's Belviq and VIVUS' Qsymia will have to pay for the drug. According to CNBC's Ruth Coxeter, the wholesale price of the Qsymia will be $120 per month and more for the higher dose.

That's a lot more than your average gym membership. Sure, popping a pill is less work, but substantial weight loss is going to come from diet and exercise combined with taking the medication. Lazy patients trying to take the easy way aren't likely to stay on the drug for very long if they're paying full price.

It seems to me that the key to getting Belviq and Qsymia to blockbuster status is to convince the insurance companies to cover the drugs. If patients are only paying the cost of their copay to get their medication each month, they might be willing to stay on the drug even if they're only experiencing minor weight loss.

Otherwise, expect light sales.

If you're interested in investing in revolutionary obesity treatments, make sure to check out our in-depth coverage of Arena Pharmaceuticals in this brand new premium research report. Complete with a year's worth of updates, this report will give you the investing edge you need, along with a full year of updates! Click here to get your copy.

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Arena Pharmaceuticals, Inc. Stock Quote
Arena Pharmaceuticals, Inc.
VIVUS, Inc. Stock Quote
Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
$289.54 (-1.11%) $-3.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.