GSK's Alli Shows Future for Vivus, Arena and Orexigen's Obesity Candidates

(MoneyWatch)  The three companies at the forefront of the race for the new anti-obesity pill (Vivus, Arena and Orexigen) showed off their wares at the American Diabetes Association's meeting in New Orleans, and Vivus and Arena got nice bumps in their stock. Orexigen, however, declined.

The events were hailed -- as they always are -- as another step toward a fabled pharma goldmine that will bring everyone untold riches as long as we just believe. Here's RTT's report:

The market for anti-obesity drugs is virtually untapped and continues to hold a glittering allure. Till date there has been no 'silver bullet' remedy for obesity. Analysts estimate that the potential market for obesity drug ranges from $5 billion to $10 billion per year.

Untapped? Hardly. As BNET has repeatedly pointed out, this market has been tapped on a regular basis for years and currently hosts several products, none of which are very successful. Take a look at the leading product, GlaxoSmithKline's Alli. Ad Age noted that its annual sales are just $131 million, dropping by more than half from the year before. It took $95.6 million in advertising to get that $131 million. Add in the costs of sales reps and admin and this is almost certainly a money-losing drug for GSK. Ad Age:

... analysts predicted first-year sales between $200 million and $500 million.

That's an interesting potential benchmark: The difference between an obesity drug's regular annual sales and what analysts estimate first year sales will be is roughly 100 percent, i.e., sales will be about half what analysts think they can be at their peak.

And that's for drugs that actually work and get approved by the FDA. Currently, only Vivus' candidate, Qnexa, meets the 5-percent-more-effective-than-placebo standard. There's a debate as to whether Arena's lorcaserin does or not.

But there doesn't seem to be any debate that Orexigen's Contrave did not meet the 5 percent standard. Instead, the company is focusing on the fact that Contrave seems to be something of an antidepressant. RTT:

Contrave was not associated with suicidality or worsening of mood or depressive symptoms, and in fact was associated with a decreased incidence of treatment-emergent depression compared to placebo.

Regular BNET readers will note that RTT seems to have cribbed our notion that obesity is a graveyard of failed pharma products. Here's the list:

• Obesity: A Graveyard of Failed Pharma Products
• Arena Lays Off 31% of Its Staff Following Obesity Trial Failure
• Vivus Beating Arena, Orexigen In Obesity Graveyard Race
• FDA Moves Against Unapproved Obesity Drugs
• Pfizer in November 2008 scrapped its anti-fat drug, the unnamed "CP-945,598," for "regulatory" reasons.
• Sanofi-Aventis in November 2008 announced that it was ending its trials on Acomplia/Zimulti, an obesity pill that was approved and then yanked in Europe.
• Merck in November 2008 pulled its fat pill, taranabant, from its pipeline.
• GlaxoSmithKline has had dissappointing sales from Alli so far.
• Roche had negligible sales from Xenical, the Rx version of Alli.
• Solvay in November 2008 also abandoned its attempt to bring an anti-fat pill to market.
• Abbott Labs sold Meridia, but it failed to take off due to cardiovascular concerns.
• Wyeth abandoned fen-phen and Redux after they produced lawsuits.

Image by Flickr user Qole Pejorian, CC.