Can Novo Nordisk and Orexigen finally open up a blockbuster weight-loss market?

Orexigen CEO Michael Narachi

Over the next few days two new contenders for the heavyweight title for weight control drugs face critical regulatory hurdles. After a long and expensive repeat voyage through a late-stage safety study, Orexigen ($OREX) is slated to get the FDA's marketing decision on Contrave by Thursday. And on the same day Novo Nordisk ($NVO) will run through a gamut of questions at an FDA independent panel review of liraglutide 3 mg, with the pharma player betting that it can ultimately get a green light that will open up a new market for its drug that will be worth billions of dollars in added annual sales.

Novo Nordisk CEO Lars Rebien Sørensen

Today the FDA issued its in-house review of liraglutide 3 mg, carefully sizing up the pros and cons of a drug that clearly met the agency's guidelines on the minimum weight loss needed to qualify for an approval. Adding up all its trial data, the FDA concluded that 60.3% of the patients in Novo's studies lost at least 5% of their weight from baseline, compared to only 24.4% in the placebo arm. And close to a third of the patients lost more than 10% of their body weight, an achievement reached by fewer than one in 10 patients in the placebo group.

But there were also some safety issues to note, including rare cases of pancreatitis and an increased heart rate.

Novo has a long history with liraglutide, which at 1.8 mg is approved as Victoza, a GLP-1 therapy that diabetics use to help control their disease. That history, along with the company's bullish projections on how the 3 mg treatment can knock back blood pressure and help at-risk patients avoid developing diabetes--potentially slowing a global epidemic--has inspired some big thinking about market potential. Some of the most optimistic analysts have projected peak sales at $4 billion a year, which Novo has helped support by anticipating a possible price of $25 a day for this treatment, according to a report from Reuters.

Provided people keep taking it indefinitely to keep the weight off, a $9,125 yearly price would represent a heavy premium over the troubled weight drugs that gained marketing approval two years ago. Regulators, though, wonder in their internal review whether they're worth as much as most physicians seem to expect.

There's an assumption that when you improve cardiovascular and metabolic risk factors you can lower the risk of stroke and heart attack, the FDA notes in its review. But two big outcomes studies in recent years challenge that assumption, says the in-house review.

"These findings raise the concern that a pharmacological effect on weight loss may not provide enough assurance of a CV benefit to offset a CV safety issue (such as increased heart rate) associated with a weight loss drug," says the review.

Doubts about weight drugs' safety and efficacy have helped thwart a pair of troubled efforts to market the first two new weight drugs to come along in more than a decade. Arena ($ARNA) and Eisai have had trouble selling Belviq, just as Vivus's ($VVUS) Qsymia has encountered stubborn market resistance. One of the big hurdles has been set up by payers, many of whom require overweight members to pick up a considerable portion of the cost of these drugs. But some analysts have voiced the hope that more entries could help expand the market for everyone, with more attention being paid to the choices.

If Novo and Orexigen can start offering a compelling case for the treatments, a new round of approvals could trigger the long-awaited arrival of a multibillion-dollar market for weight-loss drugs. Falling short, though, can only lead to added disappointment for a market segment that has long failed to perform as many analysts still confidently expect.

- here's the review from the FDA (PDF)

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