Weight Loss Drug Sweepstakes
Alexander is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The weight-loss industry has been heating up quite a bit over the past few quarters.
First investors were reminded of the struggle between Vivus (NASDAQ: VVUS), Arena Pharmaceuticals (NASDAQ: ARNA) and Orexigen Therapeutics (NASDAQ: OREX) to see which company could get their drug on the market first. Now, that Vivus has Qsymia on the market and Arena has Belviq on the market, it appears as though all of the companies are going to help prop each other up for now.
Proving a market
One of the hardest things to do in drug development is prove that there is truly a market for the drug. Weight-loss drugs are no exception.
How do you convince physicians that it is necessary to take measures in order to help patients lose weight? All of the attention that Vivus has seen, getting its drug Qsymia on the market first has helped Arena sell Belviq. As Vivus had meetings with more and more doctors it was paving the road and proving that there is actually a market for the drug.
Now it appears as though Arena is helping Vivus as Qsymia prescription numbers have gone up substantially since Arena's launch of Belviq. While this could be a coincidence it appears that as the first company is beginning to convince doctors to prescribe the drugs, the other is getting some attention for doctors. Both of the drugs have the potential to be effective therapeutic options.
Why the drugs might be mutually beneficial
Qsymia has a much larger benefit in terms of weight-loss, however, it has a much more restrictive Risk Mitigation and Mitigation Strategy (REMS) as well as more side effects when compared to Belviq. REMS is a program in order to help control the supply of a drug on the market, and take measures in order to make sure that the drug does not end up in the hands of people who would not benefit from the drug, and to help make sure that the drug is not abused. In the case of Vivus, the amended REMS allows for Qsymia to be dispensed through certified retail pharmacies, as well as certified mail order pharmacies. Previously, the REMS restricted Qsymia to being dispensed through certified mail order pharmacies.
While Belviq does seem to have an impact in terms of weight loss, it is not incredibly large for patients. Hence doctors will likely do a balancing act between both therapies and try to, on a case by case basis, choose which drug is right for the patient. With this being said it is also likely that the doctors are not loyal to one company, hence a doctor with a patient who needs to lose a lot of weight very quickly might choose Qsymia, whereas the doctor might chose Belviq under different circumstances. With Belviq and Qsymia both getting into doctors offices, doctors will likely prescribe one or the other depending on the circumstances. Thus market penetration for one will help to also bring doctor's attention to the other treatment as well.
Could Orexigen throw a wrench in this system?
Since Arena and Vivus would both have their drugs on the market for a while before Orexigen has its drug approved, Vivus and Arena may enjoy their beneficial relationship.
Since Orexigen's drug is essentially in the middle of both of the drugs in terms of risk/benefit (provided that Orexigen's phase III trial comes back clean) it could steal prescriptions from both. While in this scenario there still may be a beneficial relationship for all three companies in terms of getting into doctor's offices, it would appear as though Orexigen might benefit from this relationship more than both Vivus or Arena.
Foolish bottom line
While investors in each company like to think that their company's treatment is superior, all companies in a new area benefit from getting into doctor's offices. With the recent classification of obesity as a disease, both Vivus and Arena should also gain more attention from the medical community. It appears that, although competitors Vivus and Arena might be mutually benefiting from the attention that they are receiving from doctors. Orexigen may be able to benefit from the relationships built by Vivus and Arena. However, it is also possible for Orexigen to cut into sales of both drugs, only time will tell if the relationship between all three of the companies will be able to be beneficial.
Can VIVUS pick up its lagging sales and fend off the competition, or will Arena Pharmaceuticals reign supreme in the obesity space? If you're in the dark, grab copies of The Motley Fool's premium research reports on VIVUS and Arena Pharmaceuticals to stay up to date. Senior biotech analyst Brian Orelli gives investors the must-know information, including an in-depth look at the obesity market and reasons to buy and sell both stocks. Click now for an exclusive look at Arena and VIVUS -- complete with a full year of free updates -- today.
Alexander Maxwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!