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Arena's next challenge: Build up Belviq sales

First diet drug approved in 13 years gets its shot at $1B in peak revenues
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Arena Pharmaceuticals ($ARNA) finally crossed the FDA finish line. Its weight-loss pill lorcaserin--now branded as Belviq--won a long-time-coming approval from the agency yesterday. But the race is far from over. Now, the company has to launch and sell the drug.

First, let's point out that some analysts see Belviq hitting $1 billion in sales. But Arena has a few hurdles to overcome along the way. The first: A review by the Drug Enforcement Administration, required because the FDA saw potential for abuse. The DEA will determine how and whether to put restrictions on prescribing the drug, Arena says, a process that could take 4-6 months.

Next: Persuading patients and payers that Belviq is worth the outlay. Arena hasn't announced a price yet, and won't until the DEA has its say. But whatever the price, Belviq will have to contend with some lackluster efficacy data. About 40% of patients in clinical trials lost 5% of their body weight within 12 weeks, which isn't exactly a slam dunk. FDA's summary: Patients lost 3% to 3.7% of their body weight and kept it off for a year.

The market for a weight loss drug would seem to be enormous--and growing. Some 30% of Americans are considered obese, and even more would be considered clinically overweight. But as the New York Times points out, insurers haven't been quick to cover diet drugs. Medicare, for instance, explicitly does not, and only 10 state Medicaid programs specifically do. While major private insurers will probably pay for Belviq, some might put it on a formulary tier requiring patients to bear a big share of the cost. At least until they see it benefiting patients in the real world, Piper Jaffray's Edward Tenthoff told Bloomberg.

And then there's another problem that afflicts weight-loss drugs. Patients often don't stick to therapy. In Belviq's case, they're explicitly told not to unless they achieve the aforementioned milestone: 5% of body weight by 12 weeks.

Finally, Belviq may be the first weight loss drug to be approved in more than a decade, but it may well have a new rival before the summer is out. Vivus' ($VVUS) Qnexa drug is up for FDA approval next month.

- see the FDA announcement
- read the NYT article
- get more from Bloomberg

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