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The last of a trio of diet drug hopefuls faces scrutiny next week, after two rivals failed to convince U.S. regulators that marginal weight loss associated with their drugs made up for major health risks.
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Orexigen Therapeutics, which has partnered with Takeda Pharmaceutical, is hoping its experimental obesity drug Contrave can tap into the potentially huge U.S. market, where two out of three Americans are overweight.
Safety and other issues dogged candidates from Arena Pharmaceuticals Inc and Vivus Inc earlier this year, and Wall Street and other experts have mixed views on whether Orexigen faces any better odds.
"I don't give it a lot of hope that it will get a positive recommendation," said Washington Analysis Corp's Ira Loss, citing potentially sidelining side effects such as suicidal behavior and seizures.
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Shares of Orexigen are down 22 percent this year amid concerns about the struggling obesity drug sector that has also seen the demise of one already approved product.
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If approved, sales could reach more than $1.2 billon by 2018, according to forecasts by BioMedTracker, part of specialized research and data firm Sagient Research Systems. That would be a big boost to Orexigen and the whole obesity sector, which took in just $381.5 million in 2009, according to data from IMS Health.
On Friday, U.S. Food and Drug Administration staff reviewers are due to release their assessment of Orexigen's data, offering a first glimpse into the agency's thinking that is likely to move the biotech's shares.
Outside experts will consider the staff's views as well as Orexigen's perspective at an FDA advisory meeting December 7.
Some analysts, including Jefferies & Co analyst Corey Davis, are more confident in the drug's chances. Orexigen "is our top small cap pick right now for investors willing to stomach" the uncertainty of FDA's review, he said in a recent note.
Orexigen is hoping to avoid agency concerns about possible serious side effects with Contrave, which combines two medicines already cleared for other uses.
Contrave includes naltrexone, used to fight alcohol and drug addiction, and the antidepressant bupropion. It aims to target cravings, curb appetite and boost metabolism.
"Basically, the studies are good," said Loss, but at issue is whether FDA panelists who rejected rivals will now accept Contrave's risks as well as the limited 12 months of data.
The FDA will weigh the advisory panel's recommendation in making a final decision, which the company expects by January 31.
THIRD TIME'S THE CHARM?
