The last year was an interesting one in the Biotechnology industry, with a number of different drugs receiving the FDA’s approval. In an unusual move, the body gave its nod to two drugs aiming to control the growing concern of obesity. As can be expected, after the approval of their respective drugs, the stock price of both Vivus, Inc. (NASDAQ:VVUS) and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) skyrocketed. The analysts started churning out sky high valuations and blockbuster sales estimates.
As could be expected of most single drug companies, the company’s stocks have plummeted significantly since the approval has come through. Smart investors followed the motto of buying on the rumor and selling on the news, everyone else lost money. The chart below shows the dramatic rise and fall of both stocks.
Orexigen Therapeutics, Inc. (NASDAQ:OREX) is another player trying to enter the obesity market. The company has still not been able to get FDA approval for its primary candidate Contrave. The FDA rejected the application in February 2011 and asked investigations in to effects of Contrave on cardiovascular health. The valuations of Orexigen are also tied to the commercial success of Qsymia and Belviq.
According to company website:
‘Contrave is currently being evaluated in the Light Study, a multicenter, randomized, double-blind, placebo-controlled long-term research study. The Light Study is designed to assess the cardiovascular health outcomes of Contrave.’
data by YCharts
The aim of this article is to find the best obesity control best in the stock market. I will undertake this task in two different steps. The first step is to analyze the two drugs and then take a look at the stock.
Belviq vs Qsymia
There has been a lot of debate on which drug is better. During trials, subjects using Qsymia went from an average weight of 227 pounds to 204 pounds, 10% loss in body weight. On the other hand subjects using Belviq went from 220 to 207, losing approximately 5.9% of their body weight. This shows that Qsymia is almost twice as effective as Belviq.
There are side effects of both Belviq and Qsymia. The drugs are prohibited to pregnant women. Qsymia can cause birth defects if taken in the first month of pregnancy i.e. even before a woman knows she is pregnant. The FDA has strict guidelines in place for women interested in a Qsymia prescription. Belviq on the other hand had been flagged by FDA for having the potential for abuse.