The last of a trio of diet drug hopefuls faces scrutiny next week, after two rivals failed to convince U.S. regulators that marginal weight loss associated with their drugs made up for major health risks.
Orexigen Therapeutics, which has partnered with Takeda Pharmaceutical, is hoping its experimental obesity drug Contrave can tap into the potentially huge U.S. market, where two out of three Americans are overweight.
Safety and other issues dogged candidates from Arena Pharmaceuticals Inc and Vivus Inc earlier this year, and Wall Street and other experts have mixed views on whether Orexigen faces any better odds.
"I don't give it a lot of hope that it will get a positive recommendation," said Washington Analysis Corp's Ira Loss, citing potentially sidelining side effects such as suicidal behavior and seizures.
On Friday, U.S. Food and Drug Administration staff reviewers are due to release their assessment of Orexigen's data, offering a first glimpse into the agency's thinking that is likely to move the biotech's shares.
Outside experts will consider the staff's views as well as Orexigen's perspective at an FDA advisory meeting December 7.
Some analysts, including Jefferies & Co analyst Corey Davis, are more confident in the drug's chances. Orexigen "is our top small cap pick right now for investors willing to stomach" the uncertainty of FDA's review, he said in a recent note.
Orexigen is hoping to avoid agency concerns about possible serious side effects with Contrave, which combines two medicines already cleared for other uses.
Contrave includes naltrexone, used to fight alcohol and drug addiction, and the antidepressant bupropion. It aims to target cravings, curb appetite and boost metabolism.
"Basically, the studies are good," said Loss, but at issue is whether FDA panelists who rejected rivals will now accept Contrave's risks as well as the limited 12 months of data.
The FDA will weigh the advisory panel's recommendation in making a final decision, which the company expects by January 31.
Weight can be managed in most cases through diet and exercise, but some doctors and others say such lifestyle changes can be difficult and that a medicine could help, especially as U.S. obesity rates soar.
Orexigen Chief Executive Officer Michael Narachi told Reuters earlier this year that he was closely watching his rivals' panel meetings to gain a better sense of the FDA's stance on obesity products.
In late October, the FDA rejected Arena and partner Eisai Co Ltd's drug, lorcaserin, citing potential concerns about cancer risk following tumors that were found during the company's animal studies.
A few days later, it shot down Vivus' Qnexa, which also combined two known drugs -- appetite suppressant phentermine and anti-seizure drug topiramate, and asked for more data on its heart risks.
Both moves followed negative FDA advisory panel recommendations.
They also came just weeks after FDA removed Abbott Laboratories' controversial diet pill, Meridia, from the market citing dangerous heart side effects.
BioMedTracker estimates that while Contrave's likelihood of approval has dropped in the wake of its rivals, it still stands a 75 percent chance of getting on the market.
Wall Street, too, holds hope in going last before the FDA.
"We've long felt it's a significant strategic advantage to be third in the obesity regulatory queue," J.P. Morgan analysts wrote earlier this month.
Orexigen "appears focused on applying knowledge gained from recent FDA panels for Qnexa, lorcaserin, and Meridia to prepare for its" own meeting, especially in managing Contrave's potential risks, they said.
But known side effects of Contrave's two drugs could still trip it up.
Naltrexone is known to cause a variety of reactions from confusion and hallucinations to vomiting and headaches. Bupropion, like other depression drugs, already carries a strong boxed warning about possible suicidal behavior that Contrave would also likely carry if approved — something that could hinder use.
"Somehow or other that box will follow it," said Loss.