FDA Approves Orexigen Therapeutics Inc.'s Goldilocks Obesity Drug

Source: Takeda Pharmaceuticals

Patients now have a third drug to treat their obesity. Today, Orexigen (NASDAQ: OREX) and Takeda Pharmaceuticals announced that the Food and Drug Administration approved its obesity drug Contrave .

(The FDA made the same announcement yesterday, but let's give the companies the announcement glory; the approval has been a long time coming after all.)

In 2011, Orexigen was in a tight race with VIVUS (VVUS) and Arena Pharmaceuticals (ARNA) to gain FDA approval of the first new obesity drug. Both of its competitors were rejected and the FDA advisory committee recommended approval of the drug, putting Orexigen in the driver's seat

But the FDA ignored its outside advisors and rejected the application. Adding insult to injury, Orexigen had to run a large clinical trial to rule out heart problems, while VIVUS and Arena Pharmaceuticals were able to fix their deficits relatively quickly and have already launched Qsymia and Belviq respectively. The FDA even made Orexigen wait an extra three months while it worked out issues with post-approval requirements.

"Just right"

So technically Goldilocks never said that about Contrave. But it is still rings true -- it's a nice balance between the other two.

Qsymia has the best efficacy of the three, producing a placebo adjusted 8.6% weight loss. But it comes with potential for side effects including birth defects if women take it while pregnant. Belviq is considerably safer, but it doesn't help patients lose nearly as much weight. Contrave's efficacy falls between the two with the biggest side effect worry coming from an antidepressant that's one of the components of Contrave, which is known to increase the potential for suicidal thinking.

Source: FDA 

Is efficacy and safety the real issue?
While Orexigen might have the winning combination of efficacy and safety, it's no guarantee that the drug will succeed where Qsymia and Belviq have failed.

Part of the reason VIVUS and Eisai, Arena's marketing partner, have had trouble selling their obesity drugs has more to do with Fen-Phen and Abbott Labs' (ABT -0.41%) Meridia than it does with Qsymia and Belviq. Both Fen-Phen and Meridia were pulled off the market after side effects were discovered. Doctors don't want to repeat the same mistake prescribing the drugs to every overweight person that walks through their doors, potentially putting them at risk for unknown side effects.

Even when doctors are willing to prescribe the drugs, patients may not be willing to pay for them. Many insurers don't cover Qsymia and Belviq, and those that do often put them as a tier 3 drug so patients have to pay large co-pays for the drugs.

Takeda, which plans to launch Contrave this fall, is going to have the same kinds of challenges although adding another player could help all three drugs since their marketing efforts will get doctors thinking about treating obesity.

Takeda will also have an easier time getting insurance coverage since VIVUS and Eisai have done much of the hard work. If an insurer is going to cover one obesity drug, it'll likely cover all three. Gaining tier 2 status with a smaller co-pay will be harder.