Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Arena Pharmaceuticals, Inc. (ARNA), VIVUS, Inc. (VVUS): One Weight-Loss Drug That Investors Forgot

Page 1 of 2

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)You know Belviq and Qsymia and Contrave and Empatic, but do you recall the still most widely used weight-loss drug of all? It seems almost like ancient history now, but back in 1999 the Food and Drug Administration approved Roche Holding Ltd. (ADR) (OTCBB:RHHBY)‘s Xenical.

Fast-forward to 2013. Many investors are excited about the prospects for a new weight-loss drug on the market from Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). Many are disappointed by the sluggish start for VIVUS, Inc. (NASDAQ:VVUS)‘s  Qsymia. And some are hopeful for potential drugs on the way from Orexigen Therapeutics, Inc. (NASDAQ:OREX).

Meanwhile, Xenical still reigns as the most-used obesity drug. Are there lessons to be learned from this weight-loss drug that investors likely forgot? Let’s take a look.

The tortoise and the hare
Xenical quickly became one of Roche Holding Ltd. (ADR) (OTCBB:RHHBY)’s top-selling drugs and “exceeded expectations by a substantial margin” in the U.S. after its launch. In 2001, sales for Xenical reached $600 million — not bad, but not blockbuster status. Unfortunately, that also marked the peak for the drug. By 2004, sales were down to $464 million, and GlaxoSmithKline plc (ADR) (NYSE:GSK) bought the rights to sell the drug over-the-counter in the U.S. under the brand name Alli.

The lesson for today’s investors is that of the old story about the tortoise and the hare. A quick start doesn’t always win the race. That could be comforting for VIVUS, Inc. (NASDAQ:VVUS) investors. Qsymia sales in the first quarter totaled $4.1 million, well below analysts’ expectations. This slow start added fuel to the fire for efforts by activist investor First Manhattan to replace VIVUS, Inc. (NASDAQ:VVUS)’s management team.

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) investors were excited about initial sales results for Belviq. That quick start is good news, but the real key for Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) will be to sustain solid sales. Remember: Xenical started out as a hare and morphed into a tortoise.

The real tortoise of today could be Orexigen Therapeutics, Inc. (NASDAQ:OREX). While Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and VIVUS, Inc. (NASDAQ:VVUS) battle with their drugs already on the market, Orexigen’s Contrave has yet to gain FDA approval. The company hopes to secure that go-ahead in 2014. If its large cardiovascular study goes well, Orexigen could be in position to succeed over the long run — especially with its partnership with Takeda for commercialization of Contrave.

Market potential is still just potential
The number of obese individuals was high in the early years for Xenical. GlaxoSmithKline plc (ADR) (NYSE:GSK) and Roche touted the market potential of 129 million Americans at risk for serious health concerns due to being obese or overweight. In 1999, analyst Rene Nordmann said that Xenical “will reach peak sales of up to $1 billion worldwide after five years.” It didn’t happen.

GlaxoSmithKline put Alli (its non-prescription version of Xenical) up for sale in 2011 along with a block of other over-the-counter drugs, although the company delayed the sale due to manufacturing problems. Despite a big marketing push, sales disappointed to the point where Glaxo didn’t even break out Alli sales beginning in 2010.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...
X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!