Why Orexigen Crashed and Novo Nordisk Soars

It’s a tale of two obesity drug makers. One – Orexigen – filed for Chapter 11 bankruptcy yesterday. Orexigen markets Contrave, a combination drug made from bupropion and naltrexone. The other company – Novo Nordisk – is building upon the early success of its obesity drug, Saxenda (liraglutide 3mg).

Why are the fortunes of these two companies so different?

A Hostile Marketplace

For starters, this is deceptively difficult terrain. Naive observers read hype about an “obesity epidemic” and think, “WOW!” More than 100 million Americans have obesity. Everyone would like to lose weight if they could. This is an easy opportunity for a blockbuster.

Stock analysts dressed up their reports on Contrave in fancier language. But it amounted to the same thing. That’s how they came up with billion-dollar forecasts. Unfortunately, Orexigen sales of Contrave only amounted to $75 million in 2017. That’s an increase of 60% from 2016, but it’s paltry compared to sky-high expectations.

By contrast, Novo Nordisk launched with much more modest expectations. This is not a weight loss market of a hundred million patients. It’s a market for obesity care that has more in common with cancer care than weight loss. It took decades for the cancer therapeutics market to develop. Obesity care will require as much or more patience.

Obesity is so highly stigmatized that it hides in plain sight. Most doctors don’t know how to deal with it and avoid the subject. Only ten percent of people with obesity seriously consult any health professional about it. Fewer than five percent consult with a physician. Less that one percent of the people whose lives might be extended with bariatric surgery wind up getting it.

Most people with obesity simply don’t want that diagnosis attached to them.

A Serious Error

Orexigen made things worse with a serious error that turned out to be fatal. FDA required an expensive ($250 million) cardiovascular outcomes study as a condition for approval. The study was underway and early signs were good, when Orexigen blew it up. The company disclosed interim results, angering both independent scientists and FDA. That led to the study’s termination. Another study started, and then stopped, when Orexigen’s partner, Takeda, walked away as a result of this mess.

This was an unforced error that made a difficult challenge impossible.

Change Is Coming

Fortunately, the environment for obesity care is improving. More and more healthcare professionals are – out of necessity – learning about obesity care. The voice of people living with obesity is growing stronger, thanks to the Obesity Action Coalition. Innovation in obesity care is continuing and promises to bring even better options.

In contrast to the bungled Contrave outcomes study, Eisai has quietly implemented its outcomes study for Belviq (lorcaserin) and may have results later this year. Whatever those results, it will be an important milestone.

This is not about weight loss. It’s about better obesity care for better health. And it requires strategic patience.

Click here and here for more on the Orexigen bankruptcy. Click here for recent perspective on Novo Nordisk’s prospects in obesity.

Crash! Black Sands Beach, CA. Photograph © nrg crisis/ flickr

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March 13, 2018