Arena Pharmaceuticals, Inc. (ARNA), VIVUS, Inc. (VVUS): One Weight-Loss Drug That Investors Forgot

When Belviq gained FDA approval last year, some analysts pegged peak annual sales for the drug at $1 billion. In August, analyst Thomas Wei projected peak sales for Qsymia at $1.2 billion (although that estimate was well below Wei’s initial projection of $3.6 billion in peak sales for the drug.)Analysts also think that Orexigen’s Contrave could hit peak sales around $1 billion.

Deja vu? Maybe not. Times are different — and so are the newer weight-loss drugs. However, the lesson from Xenical is still one to keep in mind: Market potential is still just potential.

Negatives add up
Perhaps the most important thing to learn from Xenical is that negatives add up. While the drug was proven to be effective in helping individuals lose weight, the side effects were and are absolutely yucky.

Xenical works by preventing absorption of fat by the body. Unfortunately, that non-absorbed fat has to go somewhere. The drug’s side effects include gas, diarrhea, intestinal cramping, and oily stools. These unpleasant aspects of taking Xenical contributed to its lack of sustained commercial success.

Today’s group of weight-loss drugs have their own side effects. Patients taking Qsymia, for example, commonly experience numbness or tingling in parts of the body, dizziness, loss of taste or change in the way foods taste, insomnia, constipation, and dry mouth. Belviq’s common side effects include headache, dizziness, fatigue, nausea, dry mouth, and constipation. Patients with diabetes also can experience low blood sugar, back pain, and cough. The biggest concern for Contrave is potential cardiovascular issues, which necessitated the study the company has under way.

Negative effects of taking a drug can hurt its chances of becoming successful. That’s not to say that side effects will derail Belviq, Contrave, or Qsymia. It’s important, though, to not overlook these hurdles.

History rhymes
I like the old saying attributed to Mark Twain that “history doesn’t repeat itself, but it does rhyme.” Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), Orexigen, and VIVUS, Inc. (NASDAQ:VVUS) aren’t doomed to experience the same issues encountered by Xenical — just as Xenical didn’t have the same issues as Fen-Phen. However, the general lessons learned from the older drug still apply today.

At this point, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) appears to be on the better track to achieve its market potential and avoid missteps from Belviq’s negatives. Like with the tortoise and the hare, though, only time will tell which company ultimately wins the race.

The article 1 Weight-Loss Drug That Investors Forgot originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.