Orexigen to Post Obesity Data in Race With Vivus, Arena

The added "lifestyle change" component makes predicting the outcome of the Contrave study more difficult.

In a typical obesity drug trial, patients treated with a placebo would be expected to lose about 1% to 2% of their body weight. However, in the Contrave study, the placebo patients will probably lose more weight because of the diet and counseling they're also receiving.

J.P. Morgan analyst Cory Kasimov predicts that a 6% to 7% weight loss reported by Contrave patients, adjusted for placebo, is likely enough to satisfy investor expectations.

In other words, if placebo patients manage to lose 5% of their body weight in the study, patients treated with Contrave need to lose between 11% and 12% of their body weight for the drug to be deemed successful. Kasimov has an overweight rating on Orexigen and a year-end 2009 price target of $18 a share. Orexigen is a banking client of J.P. Morgan.

The safety and tolerability of experimental obesity drugs are both very important, especially in light of safety problems that have forced older weight-loss drugs to be pulled from the market.

The U.S. Food and Drug Administration is paying careful attention to the potential for any new weight-loss drug to induce mood changes or behavioral and/or psychiatric side effects.

For Contrave, in particular, earlier formulations of the drug caused many patients to report significant nausea. A change to a sustained release form of naltrexone, being used in the current phase III Contrave study, is expected to reduce the rate of reported nausea.