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Arena Pharmaceuticals, Inc. (ARNA), VIVUS, Inc. (VVUS): Which Obesity Drug Will Boost Your Portfolio?

In 2012, the FDA approved two obesity drugs for use in the United States. One drug, named “Belviq”, is from Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and the other, “Qsymia”, is from VIVUS, Inc. (NASDAQ:VVUS) . There is another drug, named “Contrave”, from a company known as  Orexigen Therapeutics, Inc. (NASDAQ:OREX) but has not been approved yet by the FDA.Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)‘s Belviq

On June 27, U.S. regulators approved Belviq for use with people suffering from obesity. Belviq was the first obesity drug to be approved in 13 years, and marked a huge milestone for obesity drug makers. Arena’s Belviq allows people to lose on an average about 5% of their weight. Even the FDA label states that “patients who don’t lose 5% of their body weight in the first twelve weeks of treatment should stop taking the drug”.

In order for Belviq to be sold in the United States, Arena has to wait on the Drug Enforcement Administration. The DEA has classified Belviq as a schedule 4 drug, meaning that it has a low risk for abuse. The thing to note about Belviq is that drug works by suppressing appetite, allowing people to be satisfied with small meals. Therefore, Arena claims that patients will have to engage in exercise in conjunction with taking Belviq to lose weight.

Belviq is yet to go on sale, and we will see how the drug fares once it falls into patients’ hands. Despite the weight loss being modest at 5%, the drug is still safer to take than Qsymia. I would think that patients would rather have Belviq, which is safer to take with a modest weight loss instead of Qsymia, which results in more weight loss but carries greater risks. This is why I think Arena’s sales will climb once the drug hits the U.S. market.

VIVUS, Inc. (NASDAQ:VVUS)’ Qsymia

On July 18, U.S. regulators again approved another obesity drug, named Qsymia, for use by people suffering from obesity. VIVUS, Inc. (NASDAQ:VVUS)’ drug is made up of two drugs, Phentermine and Topiramate. Phentermine is an appetite suppressant that allows the patient to not be hungry as often. Topiramate is used to treat epilepsy and migraines, but the risk factor is great because of the side effect of this drug. Topiramate has been known to increase the risk of oral clefts in newborns of expectant mothers who took Topiramate.

Unlike Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), VIVUS, Inc. (NASDAQ:VVUS) has already launched its obesity drug Qsymia. Sales were decent, but not at par with investors’ expectations. VIVUS, Inc. (NASDAQ:VVUS) only made $2 million in the fourth quarter, below the $3 million expected by analysts. I think it will be a while before VIVUS, Inc. (NASDAQ:VVUS) sees better sales of Qsymia.

One thing to note is that after witnessing the sales of Qsymia, VIVUS, Inc.  has a difficult road ahead before it can become profitable. Total expenses for the quarter were on average around $50 million, and the company only produced $2 million in sales. At this rate, the company will have to find a way to sell more, as the $215 million cash it currently holds won’t last for long.

Orexigen Therapeutics, Inc. (NASDAQ:OREX)’s Contrave

In January, 2011, the FDA had sent a complete response letter to Orexigen Therapeutics, Inc. for its obesity drug Contrave. The FDA had some safety concerns about the cardiovascular safety profile of the drug. This was a huge blow to Orexigen Therapeutics, Inc.  and now the company doesn’t expect to resubmit an NDA until the second half of 2013. This will be possible when the study interim analysis is determined appropriate by an independent data monitoring committee.

With that being said, the approval of Contrave is expected to be in the early part of 2014. Contrave, like Qsymia, is a combination of two FDA approved drugs. The first drug is naltrexone sustained release, which helps improve energy balance in the body. The second drug, known as Bupropian, acts to suppress appetite in the body, thus allowing people to not feel hungry all the time.

The efficacy of Contrave is somewhere in between Belviq from Arena and Qsymia from VIVUS, Inc. . Patients lost about on average 5% body weight, which is similar in efficacy profile of Belviq. Patients on Contrave did experience nausea and vomiting from the combination of naltrexone and Bupropian.

Final thought

The battle between all the obesity drug makers will take a while to pan out and see which drug gains more market share. But overall, I think that Arena Pharmaceuticals, Inc.  will be the top seller against Qsymia, because of its safety profile.

For Orexigen Therapeutics, Inc.  it is still up in the air, because they won’t go up against an FDA panel for approval until 2014. Also we don’t know if the “Light Study” from Orexigen Therapeutics, Inc. will be enough to show the FDA that Contrave is safe and effective. Qsymia has started earlier in sales for now, and it still remains to be seen how successful it will be in the long run.

Arena Pharmaceuticals, Inc.  is set to bring out Belviq sometime in 2013, and it should sell well because of its safety profile. If I had to choose one winner out of all the obesity drugs, I would choose Arena Pharmaceuticals, Inc. Belviq for long-term success.

The article Which Obesity Drug Will Boost Your Portfolio? originally appeared on Fool.com and written by Terry Chrisomalis.

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