On Thursday, just one day after approving Orexigen's ($OREX) Contrave to promote weight loss, the FDA got advice from an advisory panel that it should approve a second obesity drug, Novo Nordisk's ($NVO) Saxenda. Although FDA approval is not assured, it is expected by October, and it would add to a struggling category a player whose expertise is with doctors treating diabetes, the physicians more likely to prescribe the drugs.
|Mads Krogsgaard Thomsen|
"We start at full tilt and are already a bit in front of our competitors, because technologically and biologically this is very close to what already is on our home ground," Novo's chief science officer, Mads Krogsgaard Thomsen, told Reuters after the panel vote. "The potential patient group is very large. In the U.S., around 100 million people are obese and around a fourth of them are so severely obese that they have diseases in connection with the obesity such as prediabetes. We don't just aim for obese patients, we aim for people with complications connected to their overweight."
Contrave and Saxenda will be joining two weight-loss contenders that hit the market in 2012 but have been struggling to catch on among the one-third of American adults whom the Centers for Disease Control and Prevention considers to be obese. They are Arena Pharmaceuticals ($ARNA) and Eisai's Belviq, which brought in just $25 million in sales in fiscal 2013, and Vivus' ($VVUS) Qsymia, which had sales of $23.7 million. Those results are rather paltry when you consider that Wall Street analysts initially estimated that the total obesity market would be worth multiple billions of dollars a year, which all these companies would hypothetically split.
Some experts are optimistic that adding two drugs to the market will actually help to stimulate more sales. Bloomberg notes that with the additional products in the mix, insurance companies may be more willing to cover weight-loss drugs. Until now, consumers have been expected to pay for obesity therapies largely out of pocket, presenting a huge disincentive for patients to even try them.
The buy-in from the insurance industry won't come overnight, however. Saxenda is expected to cost $25 a day--a price that's likely to raise a few eyebrows at managed care organizations.
And the drug companies marketing these products will have to work hard to overcome concerns about side effects. The FDA slapped a "black box" warning on Contrave concerning possible neuropsychiatric effects, including suicidal behaviors. The agency is requiring Orexigen to conduct postmarketing safety and efficacy studies in pediatric patients, for example, and in people with liver and kidney disorders.
Plenty of concerns have been linked to Novo's Saxenda (liraglutide), as well. The FDA's advisory panel took note of rare cases of pancreatitis and an increased risk of thyroid and breast cancer. The drug may also raise the risk of an increased heart rate. Still, most panel members agreed that those risks could be further explored after the drug is on the market, by requiring Novo to perform more studies. The panel voted 14-1 in favor of approval, with the only dissenting vote coming from David Kelsen of Memorial Sloan-Kettering Cancer Center in New York, who griped that the uncertainties about side effects outweighed the drug's benefits, according to Reuters.
When it comes to the question of whether consumers will buy in to the burgeoning market for prescription weight-loss drugs, Wall Street remains optimistic. Analysts are already projecting that Saxenda will haul in $427 million in sales in 2017, according to Bloomberg.
And Novo thinks its sales could eventually be more than twice that. "We say this has blockbuster potential," Krogsgaard said.