Big Demand for (Free) Obesity Drugs
Orexigen's (NAS: OREX) Light Study hasn't been light on the enrollment. Yesterday, the company said the safety study for its obesity drug Contrave has recruited more than 4,500 patients and is now on target to close enrollment by the end of the year.
You'll recall that the Food and Drug Administration rejected Contrave in 2011, requesting a cardiovascular outcomes trial to rule out possible heart problems. The agency originally wanted a humongous trial, but later conceded that a smaller trial would suffice. With the quick enrollment, Orexigen is gaining ground on Arena Pharmaceuticals (NAS: ARNA) and VIVUS (NAS: VVUS) , which got their obesity drugs approved this year; the biotech expects to be able to conduct an interim analysis of the safety data in 2013, which might be enough to resubmit to the FDA.
As a small conciliation for being behind, Orexigen has effectively taken the patients in the Light Study off the market as potential customers for the currently approved drugs. Vertex Pharmaceuticals (NAS: VRTX) actually blamed the slowing sales of Incivek on hepatitis C patients choosing clinical trials over Incivek. But I don't think it'll be as big of an issue for Belviq or Qsymia; there are substantially more obese people in the U.S. than there are people with known hepatitis C infections.
The faster-than-expected enrollment for the Light Study is a clear sign that there's demand to pop a pill to lose weight, but there's a caveat: In the Light Study, patients get Contrave for free. Patients taking Arena's Belviq and VIVUS' Qsymia will have to pay for the drug. According to CNBC's Ruth Coxeter, the wholesale price of the Qsymia will be $120 per month and more for the higher dose.
That's a lot more than your average gym membership. Sure, popping a pill is less work, but substantial weight loss is going to come from diet and exercise combined with taking the medication. Lazy patients trying to take the easy way aren't likely to stay on the drug for very long if they're paying full price.
It seems to me that the key to getting Belviq and Qsymia to blockbuster status is to convince the insurance companies to cover the drugs. If patients are only paying the cost of their copay to get their medication each month, they might be willing to stay on the drug even if they're only experiencing minor weight loss.
Otherwise, expect light sales.
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The article Big Demand for (Free) Obesity Drugs originally appeared on Fool.com.Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
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