5 Reasons Not to Get Excited About Orexigen's New Rx Diet Drug

In the space of just four days the FDA has re-inflated the obesity treatment bubble: an advisory committee voted in favor of Contrave, a new diet pill from Orexigen (OREX); and the agency extended an approval for the Allergan (AGN) Lap-Band for less obese people.

Again, the analysts have trotted out predictions of $1 billion annual sales for Contrave and any other other diet pill that can get onto the market. Orexigen's shares went up 109 percent on the news (even though the FDA does not make a final decision until January). And Vivus (VVUS) plans to take its diet pill, Qnexa, back to the FDA for a second attempt at an approval.

The turn of events has made me look an idiot for suggesting two months ago that there's no money in diet drugs. But before you break out the Doritos and phone your doctor, here are five reasons to be cautious about the potential for success of any obesity treatment:

1. Contrave doesn't work very well: It did not one of the FDA's standards for effectiveness, weight loss of 5 percent more than those on a placebo.
2. Taking Contrave will be an unpleasant experience. It's a mixture of naltrexone, the anti-alcohol drug that comes with a nasty list of side effects, and Wellbutrin (also known as Zyban or buproprion), an anti-depressant that has some interesting risks of its own. Patients in the Contrave trials had higher blood pressure, and the FDA is recommending long-term monitoring of heart problems on the drug. (In five years' time we could be looking at headlines about Contrave being withdrawn.)
3. If you're taking Contrave, you can't drink because of the naltrexone ingredient (sometimes known as Vivitrol, the drug for alcoholics). Good luck with that, imbibers!
4. Even when diet products have reached the market, they don't sell very well. Sales of GlaxoSmithKline (GSK)'s Alli and Roche (RHHBY)'s Xenical were both in decline. Abbott Labs (ABT)'s Meridia made $300 million globally before it was taken off the market. Allergan's Lap-Band is also in decline, with just $60 million in revenues in the last quarter.
5. Alli and Xenical failed because they have unpleasant side effects and aren't effective unless the patient puts in some effort at self-control. Contrave has the same problem.

Results:

• With Meridia Gone, Can't We Just Admit There's No Money in Diet Drugs?