(Corrects paragraph 9 to say RS Investments, not RS Investments’ value fund, holds a stake in Orexigen. A previous version was corrected to fix Daniel Lang’s designation)
By Natalie Grover
Sept 10 (Reuters) - A new diet pill Contrave got approval to be sold in the United States on Wednesday, only the third obesity treatment in more than a decade to win approval from the Food and Drug Administration.
Made by Orexigen Therapeutics Inc, Contrave is a combination of the antidepressant bupropion and Orexigen's formulation of naltrexone, designed to prevent drug dependence. (1.usa.gov/1wguwo4)
The company did not say when the pill would become available or how much it would cost.
The FDA in June had delayed its decision on the drug by three months due to concerns about adequate warnings on the packaging.
Because Contrave contains an antidepressant, it will carry a warning about increased risk of suicidal thoughts and behaviors.
Contrave joins Vivus Inc’s Qsymia and Arena Pharmaceuticals Inc’s Belviq, both approved in 2012, in the battle to be the treatment of choice and at least one analyst expects the new entrant’s sales to top that of its rivals by 2016.
The two existing treatments were billed as potential blockbusters but have had lukewarm sales, hurt by bungled launches and marketing strategies, as well as adverse effects ranging from depression to heart risks.
The drugs also face reimbursement challenges. Government and private health insurers are reluctant to cover Belviq and Qsymia, unconvinced of their long-term efficacy and given that patients often drop out of the treatment.
“For all the obesity drugs that are out there, only 30 to 40 percent of the health maintenance organizations pay for obesity coverage,” said Daniel Lang, co-portfolio manager at RS Investments, which holds a stake in Orexigen.
“That speaks to the relative apathy towards obesity as a serious condition.”
Still, Wells Fargo analyst Matthew Andrews expects Contrave’s U.S. sales to eclipse that of Belviq and Qsymia by 2016.
Contrave sales are expected to be about $200 million in 2016, slightly higher than Belviq’s $180 million and well ahead of Qsymia’s $150 million, said Andrews, who covers all three companies.
Arena reported Belviq sales of $5.7 million in 2013, with $5.3 million of that attributable to its partner Eisai Co . Qsymia’ sales were $23.7 million.
Reimbursements will remain a challenge for the foreseeable future until insurers are convinced they can be justified even without improvements in cardiovascular health.
“If these obesity cardiovascular outcomes trials do show that they reduce heart attacks, or hospitalizations, then ... the market would be reignited,” said Lang, a trained cardiologist.
Orexigen’s Contrave, slated to enter Europe before both Qsymia and Belviq, is licensed in North America to Takeda Pharmaceutical Co.
It will be marketed by a 900-strong sales force, compared with Arena and partner Eisai Co’s 600 and Vivus’ even smaller sales force.
Historically, weight loss drug developer’s have met with regulatory ire, as debilitating side effects associated with their pills led to their forced removal.
Among these are the notorious “fen-phen” combination that was pulled out in 1997 due to heart valve problems and Sanofi SA’s Acomplia, taken off the market in 2008.
Trading in Orexigen shares was halted after market closed. Nasdaq stated the reason was pending news. The company plans to hold a conference call on Thursday.
The shares closed up 0.85 percent at $5.90 on the Nasdaq on Wednesday. (Reporting by Natalie Grover in Bangalore; Additional reporting by Shailaja Sharma in Bangalore; Editing by Lisa Shumaker)