Orexigen Beats the Odds, Wins OK from FDA Panel for Obesity Drug

Xconomy San Diego — 

Orexigen Therapeutics, the San Diego-based developer of obesity drugs, beat the odds today by winning a positive recommendation from an FDA advisory panel that said its lead drug deserves a spot on the U.S. market.

The FDA’s expert panel on obesity drugs voted 13-7 in favor of allowing Orexigen’s combination of bupropion/naltrexone (Contrave) for sale on the U.S. market. The FDA often follows the recommendation of its advisory panels, but it isn’t required to do so. The agency’s deadline to complete its review of the Orexigen application is January 31.

Orexigen (NASDAQ: OREX) had the benefit of being the third company this year to take a new treatment for obesity before an FDA advisory panel. That, some investors surmised, offered Orexigen an advantage in that it could watch and learn from the experience of Mountain View, CA-based Vivus (NASDAQ: VVUS) and San Diego-based Arena Pharmaceuticals (NASDAQ: ARNA). Both of those companies failed to win a positive recommendation from advisory panels, and saw their applications get shot down by the FDA shortly after.

Anyone who can win FDA approval for a new obesity drug, clearly has the potential to tap into a big market. An estimated two-thirds of people in the U.S. are considered overweight or obese, which raises their risk for a whole raft of chronic ailments like diabetes, heart disease, arthritis, and depression, to name a few. But Big Pharma has to tread carefully with new obesity treatments, remembering the fen-phen safety debacle of the 1990s and more recent safety concerns tied to drugs like rimonabant (Acomplia) from Sanofi-Aventis and sibutramine (Meridia) from Abbott Laboratories.

The clear signal from the past two FDA panels this year suggested that the safety bar is very high for a treatment that could be taken by millions of people with a chronic, non-life threatening condition.

I didn’t listen to the FDA panel myself today, but Lisa LaMotta wrote a lot about the panel in real-time on Twitter, and TheStreet.com columnist Adam Feuerstein covered this in a live blog.

While this is certainly a boon for Orexigen, the betting on Wall Street for the next few weeks will be whether the FDA actually goes ahead and follows the advice of its panel. If the FDA allows this drug on the market, the questions will get more and more serious about how Orexigen, and its partner Japan-based Takeda Pharmaceuticals, plan to start tapping into this big potential market.