Big Fat Bios
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Biotech has really been ramping this summer with the notable FDA approval for Arena Pharmaceuticals' (NASDAQ: ARNA) Belviq lorcaserin treatment for obesity. Vivus (NASDAQ: VVUS) has been moving up in anticipation of the FDA decision on its Qnexa treatment for the same. And the other name, Orexigen Therapeutics (NASDAQ: OREX) with its Contrave for obesity, also has made significant moves.
My Big Fat FDA Decision
Arena now looks like it will be the first to market with Belviq, already having a partnership in place with Eisai Pharmaceutical of Japan to market in the U.S. Approval for the European market is likely to be announced soon. The Vivus decision, yea or nay, may cause some volatility but things are looking very bright for Arena. There is a lot of chatter about buyouts and Arena would be an attractive target for numerous companies. Regardless, the FDA’s decision to approve Belviq was a landmark for obesity treatment since the Fen-Phen withdrawal from the market thirteen years ago.
A positive approval on or before July 17 for Vivus is more likely now that Belviq was approved. However, with a possible warning against its use in women of childbearing age to be implemented, this cuts down the addressable market for Qnexa considerably. Those women will likely turn to their doctors for Belviq.
If Qnexa is approved it still has the headwinds of Belviq’s headstart to market and a more troubling side effect profile which is why it will likely merit some labeling contraindications. Although percentage wise it is more effective with a 10% weight loss after a year versus Belviq’s 3-5%, doctors will more likely initiate with Belviq to see which patients are ‘good’ responders. Those patients can lose much more than 3-5%. As Arena sold off after approval and has since been moving back up, it is likely the same action will be seen in Vivus post-approval. If denied then watch out below.
Vivus has more than quintupled since its 52 week low of $6.13. A very big run, indeed, so it’s to be expected there will be profit-taking in the days before an FDA decision.
As for Orexigen, its fortunes also hinge on the Vivus decision. Trading has been very hot and heavy from its 52 week low of $1.22 up to $6.55. Almost another quintuple like Vivus, but this one will likely not be up for approval until 2014. Contrave has already suffered one FDA rejection already. Proponents will say that gives them time to fine tune everything, but it also makes them last to the party.
The Biggest Loser
Of the three, Arena is what’s working, more good news keeps coming every day and regardless of the Vivus decision it’s all good for Arena. Vivus is coming up on its biggest binary event ever and risks are high, although not as high as before the Arena decision.
The biggest loser would likely be Orexigen as it has so much more time before it ever goes to market. All of these have been long awaited by doctors and their patients with diabetes and heart problems as even losing 5% of body weight helps lessen the risks associated with these conditions. As for vanity, ah, vanity that is a huge market and patients will ask their doctors for these treatments. As the old saying goes, “You can never be too rich or too thin,” I think Arena has the best likelihood of making you both.
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