Not What the Obesity Doctor Ordered

Sales of Arena Pharmaceuticals' (ARNA) Belviq through the first six months of the launch have been rather pathetic, coming in at just $17 million. Arena Pharmaceuticals' marketing partner Eisai spilled the beans Monday morning during its quarterly earnings conference call.

A blockbuster would be able to do that level of sales in about six days. It took Eisai six months.

If you're looking for some kind of good news, sales are actually growing.

Source: Arena disclosures. Sales in millions.

The second quarter was mostly stocking since the drug launched in June, so the only real comparison is the 39% quarter-over-quarter increase from the third to fourth quarter. Most biotechs would love that kind of growth, but working off such a small base, it's essentially meaningless.

If Belviq's sales continue at the same growth rate, it'll reach blockbuster levels -- $250 million per quarter -- in the third quarter of 2016. Arena really needs Belviq to see sales triple or quadruple in the coming quarters to get investors excited.

But how?
I don't think Arena or Eisai have done anything wrong launching Belviq. VIVUS (VVUS) hasn't really done any better with its competing obesity drug Qsymia. The biotech hasn't released fourth-quarter sales figures yet, but Qsymia sales were just $6.4 million in the third quarter.

Unfortunately, the companies launched into a market where doctors are understandably a little skeptical of treating obesity with drugs. Having two drugs pulled from the market over safety concerns will do that.

I think the solution is to go to the patients and get them to ask their doctor about it. A doctor who's a little skeptical of a drug's risk-benefit profile might be more willing to prescribe the drug if a patient asks for it even if the doctor wouldn't initiate the prescription. Eisai already has print advertisements. The next logical step is television spots.

The other major stumbling block has been paying for the drug. Insurers are slowly adding Belviq and Qsymia to their coverage lists, but it's often at tier 3, which comes with high copays. Both Eisai and VIVUS have had to give free and discounted drugs to get and keep patients on their drugs.

From an insurer's perspective, the problem is that weight loss has long-term rather than short-term health benefits. Since insurers don't know if their member is going to be with them next year, it's hard to justify encouraging patients to use the drugs to lose weight.

Employers that self insure, on the other hand, have more motivation for their employees to lose weight. In addition to the health benefits, feeling good can make people more productive; the reason that employers offer memberships to gyms to their employees.

Last month, VIVUS announced that it was partnering with Aetna (AET) to include Belviq as part of a weight loss program offered to Aetna's self-insured plans. Arena and Eisai would be well advised to follow suit with other insurers.