The Best-Performing Obesity Drug Stock May Surprise You

OREX Chart OREX data by YCharts

LA JOLLA, Calif. ( TheStreet) -- Orexigen Therapeutics ( OREX) won't have a weight-loss pill approved and ready for sale until well into 2014 but its stock is generating far greater returns this year than rivals Arena Pharmaceuticals ( ARNA) and Vivus ( VVUS) with drugs already on the market.

Shares of Orexigen are up 12% this year, which makes it the only obesity drug stock making money for investors. Vivus shares are down 8% while Arena has lost 22% of its value.

Vivus botched the commercial launch of its Qsymia weight-loss pill and is now fighting off a dissident shareholder, First Manhattan, which wants to replace the company's board of directors and management team. For Arena, the first few weeks of prescription data reported for the early Belviq launch have done nothing to shake investors' perception that its drug is ineffectual.

Orexigen is still conducting a large cardiovascular safety study of its obesity pill Contrave, with an interim analysis and results expected in the third quarter. If Contrave gets a passing grade from the study, the drug will be resubmitted to the FDA by the end of the year or in early 2014, the company has said.

Anticipation for the Contrave heart-safety study results is one explanation for the outperformance of Orexigen shares this year, but so is the company's relatively low valuation compared to Arena and Vivus.

At the start of the year, Orexigen's market value of $488 million was dwarfed by Arena ($2.1 billion market cap) and Vivus ($1.5 billion market cap.)

Through the first half of the year, the valuation gap between the three companies has narrrowed somewhat. OREX Market Cap Chart OREX Market Cap data by YCharts

Contrave is a pill combining two already-approved medicines -- bupropion and naltrexone. Efficacy-wise, Contrave demonstrated greater weight loss than Arena's Belviq but less than Vivus' Qsymia.

Being the third obesity pill to launch commercially may be seen as a disadvantage, but of all three companies, Orexigen has the best, most experienced marketing partner in Takeda. The diabetes drug Actos is a blockbuster product for Takeda, which will leverage that metabolic drug marketing expertise when Contrave hits the market.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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