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Diet Pill Maker Orexigen Sees Room for Three Rivals


Weight-loss drugs made by Vivus and Arena Pharmaceuticals are much closer to reaching market than Orexigen's Contrave, but a company exec says at least three pills can compete in a growing market of obese Americans.

MINYANVILLE ORIGINAL Orexigen Therapeutics (OREX) is more than two years away from even getting the chance to sell its weight-loss pill but the company's marketing machine is already revved up. The US can support multiple diet pills as an obesity epidemic created pent-up demand for such products, a company executive says.

Orexigen rivals Arena Pharmaceuticals (ARNA) and Vivus (VVUS) appear to be close to receiving approvals that would make them the first new diet drugs in the US in more than a decade. The Food and Drug Administration is scheduled to make a decision on Arena's lorcaserin by June 27 and Vivus' Qnexa by July 17. Both drugs are backed by expert advisers to the FDA who say the benefits of the drugs outweigh the risks. (See Diet Pill Maker Arena Pharmaceuticals Wins Backing of FDA Advisers.)

Orexigen is familiar with risk. The company is enrolling patients in a study that will test 10,000 obese Americans for cardiovascular risk for the company's obesity drug Contrave. The trial is necessary to win approval. Orexigen has to complete about a quarter of the study and show the FDA that the drug isn't overly risky to patients in order to get market clearance. The remainder of the study will continue even if the drug is approved. The company has to show that there is not an excessive amount of risk of heart attack or stroke for patients taking Contrave. If the drug appears to be safe in the study, Orexigen plans to refile for US approval in 2014. (Contrave was rejected by the FDA last year.)

Preston Klassen, senior vice president and head of global development for Orexigen, insists there will be demand for his drug even if Vivus and Arena beat his company to market. More than 90 million Americans are obese, a number projected to rise to 120 million in five years, according to figures cited by Orexigen. More than one-third of Americans age 20 or older are obese, according to government data.

"This is not about who gets to the finish line first," Klassen says in an interview. "We would have preferred to have been on the market by now, but ultimately this is not a timeframe that makes that much of a difference."

He reasons that there are so many potential users of these weight-loss drugs that one pill isn't going to be enough to satisfy demand. He also says Contrave has qualities that the other drugs lack.

Contrave is a combination of two older drugs: the antidepressant bupropion and naltrexone, which is used to stop the cravings of alcoholics and drug addicts. The antidepressant and anti-addictive qualities of the drug may appeal to patients, Klassen says. Contrave will attract women of childbearing age who won't take Vivus' Qnexa, he adds. (Qnexa contains the drug topiramate, which is linked to birth defects.) Klassen also touts his company's partnership with Japanese pharmaceutical maker Takeda, which will sell the drug in the US. Takeda has a sales force that has many relations with primary physicians, he says.

"Frankly, we wish them well," Klassen says of his competitors. "We want them to talk about obesity as a condition that needs to be discussed seriously."

Orexigen and its rivals have been making the argument for the past couple of years that new weight-loss drugs are necessary as obesity is causing many other medical conditions, including diabetes and heart disease. No longer are the pills aimed at women who dream of being supermodels. Klassen compares obesity to the diabetes market, which has multiple drugs.

As part of its study, Orexigen is offering patients in the trial a Web-based diet and exercise program. Click here to see more about the trial.

Shares of Orexigen more than doubled this year, trading at $3.24 Friday morning. But the stock traded well above $9 a share in early 2011, just before the FDA rejected Contrave. (See Orexigen Nose Dives on Shock Diet Pill Rejection.) At the time, Orexigen CEO Michael Narachi didn't rule out scrapping Contrave.

Orexigen, of course, didn't give up on the drug even as its rivals moved ahead toward their own potential approvals. Some investors are betting that any of the drugs may eventually generate hundreds of millions if not more than $1 billion in yearly sales. Estimates are, at best, squishy right now. Still, there's plenty of enthusiasm among investors. Vivus is up 150% this year and its market cap swelled to $2.4 billion. Arena is up 250% and boasts a market value of $1.2 billion. Orexigen's market cap still stands at $220 million.

"The obesity market is bigger than investors believe," Leerink Swann analyst Joshua Schimmer says in a recent note recommending Orexigen. He predicts the safety study will be positive and Contrave will be approved.

Twitter: @brettchase

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