Drug: Contrave
Company: Orexigen and Takeda
PDUFA date: Jan. 31
Peak sales: Who knows?

To continue the story....

Arena Pharmaceuticals found itself in a world of hurt after the FDA surprised everyone by announcing its concern for the signs of cancer spotted in animal studies of lorcaserin. A majority of the experts voted against it and the stock tanked as management tried to mollify investors--unsuccessfully--by explaining that they had been right on top of that cancer issue with regulators and that it wasn't relevant to humans. That, evidently, is something that analysts would have liked to have seen as they were evaluating lorcaserin's chances at the FDA.

So what about Orexigen's (OREX) drug Contrave? Biotech scribes have already highlighted their concerns for safety issues, noting the possibility of cardio and psych side effects. Orexigen bet that combining two well known drugs--the antidepressant bupropion and naltrexone--gives it a mountain of safety data to rely on. But analysts note that some of that safety data is outlined on buproprion's black box warning. And there's no way that the agency is going to overlook black box concerns about an obesity drug.

Orexigen shares benefited from Arena's woes, but writers like Forbes influential Matthew Herper note that the obesity market is so enormous, no one is going to be truly competing with each other. Provided, of course, that two of these drugs are approved in the near term.

This has proved one of the toughest challenges in biotech and there's no sign that it's going to get any easier.

Read more on Contrave from the Wall Street Journal