A U.S. Food and Drug Administration panel's positive recommendation of Orexigen Therapeutics Inc.'s (OREX) weight-loss drug Contrave raises the likelihood for approval and provides hope for Arena Pharmaceuticals Inc. (ARNA) and Vivus Inc.(VVUS), both of which had their diet drugs rejected by the agency in October.
The FDA doesn't have to follow the panel's recommendation, but the positive vote puts Orexigen ahead of the other two companies--which received negative recommendations from similar panels previous this year--by easing investor concerns that major clinical studies would be needed before approval.
Although cautious, the panel on Tuesday was persuaded that Contrave's potential protection risk can be managed and tested after it hits the market. The FDA is expected to make its decision on Contrave in January, but some analysts expect a delay to work out post-marketing requirements.
"We think yesterday's vote suggests Contrave is likely to get FDA approval during 2011," Cowen & Co. analyst Phil Nadeau said in a note to clients. After the FDA panel decisions on Arena and Vivus, Wall Street had low expectations for Orexigen, Nadeau said.