We can say this much for the FDA … at least the agency evenly spreads its torture around.
After running weight-loss drug developers Arena Pharmaceuticals (ARNA) and VIVUS (VVUS) — not to mention their investors — through the wringer, the FDA finally approved Belviq and Qsymia (respectively). But now the Food and Drug Administration has decided it needs another three months to make a final decision on diet pill Contrave, from Orexigen Therapeutics (OREX).
The end result? Disappointed OREX stock owners drove shares down 15% in the wake of the news.
Whatever the knee-jerk response, the FDA’s decision and still-likely approval of Contrave has fueled the debate over which of the three big players currently in the weight-loss game is the top dog. Despite Tuesday’s selloff, the answer may well be Orexigen.
Orexigen Gets Blindsided
If it’s all news to you, here’s what happened: Tuesday, June 11, was supposed to be the day Orexigen Therapeutics got the official word from the FDA on the approval of diet drug Contrave. The administration didn’t say either way. Rather, the Food and Drug Administration pushed back the final approval date to Sept. 11, citing concerns not about Contrave’s safety profile or efficacy, but rather, concerns about how the company plans on monitoring for heart risks after any approval is granted.
While it’s certainly not the news shareholders wanted to hear, it’s not necessarily the bad news it’s being made out to be, either. More than anything it’s the FDA being as publicly cautious as it was with Arena Pharmaceuticals and VIVUS when both of those companies were in the same place Orexigen is in now. Like the other two players, however, an approval is apt to be in the cards for Contrave. The FDA knows we need all the help we can get on the weight loss front, even if it would rather not approve any of these diet pills.
So what might OREX stock holders now expect after Sept 11? Hopefully, better success than Qsymia and Belviq have found. Then again, Contrave may be the most marketable in the bunch, capable of doing what Qsymia and Belviq haven’t
The Competition Doesn’t Stack Up
To say Qsymia has been a disappointment would be an understatement. Last quarter, VIVUS sold only $9.1 million worth of the drug. That was up from the prior quarter’s total of $7.7 million, and considerably stronger than the year-ago figure of $4.1 million. But, with VVUS stock trading at $5.21 per share, VIVUS is a $538 million organization with little else on its product menu besides its diet pills. That’s still well shy of the $1.8 billion in annual sales some analysts were batting around shortly after the drug was approved.
Indeed, it’s so shy of the high-water mark, it’s tough to believe VIVUS will ever get there…