Orexigen Therapeutics (OREX) awaits word Wednesday on the U.S. approval decision for its obesity pill Contrave. Investor sentiment is positive, meaning most people expect FDA to approve Contrave. The bigger question mark is what happens next: Can Orexigen succeed commercially where competitors Vivus (VVUS - Get Report) and Arena Pharmaceuticals (ARNA - Get Report) have so far fallen way short?

I've long described Contrave as the Goldilocks of weight-loss pills, meaning the pill's advantage might be the mix of efficacy and safety which sits right in the middle between Vivus' Qsymia and Arena's Belviq:

Goldilocks picks up the big red bowl of porridge (Qsymia) that belongs to Papa Bear (Vivus) but it's much too hot to eat. Goldilocks then picks up the blue bowl of porridge (Belviq) that belongs to Mama Bear (Arena Pharmaceuticals), but it's too cold. Finally, Goldilocks finds a yellow bowl of porridge (Contrave) that belongs to Baby Bear (Orexigen.) She tastes the porridge, and it's just right. Not too hot, not too cold. It's delicious, and she eats the entire bowl.

Obese patients treated with Contrave for one year lose approximately 5% of their body weight, adjusted for placebo. By comparison, Qsymia's placebo-adjusted weight loss at one year is around 9%, Belviq is 3%. The three drugs have never been compared directly in a single clinical trial. 

Selling weight-loss pills to fat Americans is clearly more difficult than Vivus and Arena envisioned. Orexigen will face the same challenges, but of the three companies, it has the best marketing partner in Takeda because of its metabolic drug expertise. Takeda's diabetes drug Actos is a blockbuster, so expect the company to apply that know-how to selling Contrave. If approved, Takeda is going to launch Contrave with 900 sales reps, which is way more than Vivus and Eisai (Arena's marketing partner) deploy. 

Orexigen also has the advantage of having the only obesity drug with clinical trial data ruling out an increased risk of heart-related side effects. Interim, top-line results from the Contrave "LIGHT" cardiovascular safety study were announced last fall. Data from the heart-safety study are unlikely to be included in the Contrave FDA label just yet in order to allow the study to continue to the end. Still, Takeda sales reps might just find a way to make sure doctors know that the interim analysis of the LIGHT study was positive.

Over the past year, Orexigen shares haven't exactly been lighting Wall Street on fire, but the stock has outperformed its rivals by a wide margin:

OREX Chart
OREX data by YCharts

Here's the same three stocks, but with enterprise values charted year to date. 

OREX Enterprise Value Chart
OREX Enterprise Value data by YCharts


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.