Yesterday was a good-news, bad-news day for Orexigen ($OREX), which won FDA approval for its obesity drug Contrave. The good: The green light, three years after the agency demanded additional safety testing. The bad: The FDA slapped Contrave with the dreaded "black box" warning on side effects. And patients could have yet another weight-loss choice, as a panel of FDA advisers meet today to weigh Novo Nordisk's ($NVO) rival drug, Saxenda.
Orexigen's drug will be marketed by Takeda Pharmaceuticals, which is planning a fall launch, according to a press release from the two companies.
Contrave was approved on the strength of Orexigen's total clinical trial package, which included data collected from about 4,500 patients, according to a statement from the FDA. In one trial, 42% of patients treated with the drug lost at least 5% of their body weight. Only 17% of patients treated with placebo lost that much. All of the patients modified their diet and exercise routines.
"It's important that physicians and appropriate patients have options when discussing weight management, especially when you look at the prevalence of obesity in today's society," said Douglas Cole, president of Takeda Pharmaceuticals USA, in its release. About one in three adults over age 20 are now classified as obese, according to data acquired by Takeda.
That said, the FDA is concerned about Contrave's possible neuropsychiatric and cardiovascular side effects. So it only approved the drug to be used in patients who are both overweight and who have a related condition such as high cholesterol, Type 2 diabetes, or hypertension. The black box warns of increased risk of suicidal thoughts and other psychiatric issues. And Orexigen will be required to perform a litany of postmarketing safety and efficacy studies, including clinical trials in pediatric patients and in adults with liver and kidney disease.
Those limitations could make it challenging for Orexigen to compete in the rapidly expanding market for obesity drugs. In addition to battling Arena Pharmaceuticals ($ARNA) and Eisai's Belviq and Vivus' ($VVUS) Qsymia, both approved in 2012, Orexigen could soon be facing a new rival in Saxenda. Novo has already been boosting its U.S. sales force in anticipation of Saxenda's approval. And it's hard to argue with the drug's clinical trial results: In four studies, more than 60% of patients taking Saxenda lost 5% or more of their body weight and nearly a third lost at least 10%.
Competition aside, Wall Street analysts are already counting up the billions they expect Contrave to eventually generate. Wells Fargo analyst Matthew Andrews predicts the drug will bring in $634 million in sales in 2020, but that figure could be as high as $1.2 billion if Orexigen wins approval for the drug in treating diabetes, according to a report acquired by Bloomberg.
Judging from the muted reception for weight-loss drugs already on the market, however, it's clear Takeda and Orexigen will have their work cut out for them. Belviq brought in just $25 million in sales during the year ended in March, while Qsymia sales for 2013 were just $23.7 million.