Shares of Orexigen Therapeutics tumbled more than 16 percent in afternoon trading Wednesday after regulators extended by three months a review of its experimental weight loss treatment.
The Food and Drug Administration is now expected to make a decision on Contrave, also known as NB32, by Sept. 11.
Contrave is the third in a trio of weight loss drugs recently submitted to the FDA for approval in treating obesity, which affects an estimated 78 million adults in the U.S.
Orexigen’s twice-a-day pill is designed to reduce appetite and controls cravings. Contrave combines bupropion, the active ingredient in the antidepressant Wellbutrin, with the anti-addiction drug naltrexone.
The FDA refused to approve the drug in 2011, citing concerns about cardiovascular risk. Orexigen resubmitted its application to regulators in December, saying that the drug fared well in an early analysis of a study designed to rule out excessive cardiovascular risk.
Since rejecting Contrave, the FDA has approved the obesity drugs Qsymia from Vivus Inc. and Arena Pharmaceuticals Inc.’s Belviq. Both of those drugs were also rejected initially.
Analysts originally estimated that the new drugs could garner up to $1 billion in annual sales, considering that more than one-third of all American adults are obese. But sales of both Qsymia and Belviq have been far below expectations due to limited insurance coverage and high out-of-pocket costs for patients.
“If they’re covered at all it’s always by prior approval, so the physician has to get on the phone and call the insurance company,” said Dr. Robert Kushner of the Northwestern Comprehensive Center on Obesity. “Drugs that are not typically covered by health plans, or are frankly excluded, make it very difficult get an uptick in medication usage.”
Vivus reported Qsymia sales of $9.1 million in its most recent quarter. Arena and its partner Eisai reported sales of $8.4 million for its drug Belviq.
Orexigen, based in La Jolla, California, has no products on the market, and Contrave is its lead candidate. If Contrave is approved it would be marketed in the U.S. by Takeda Pharmaceuticals, which will pay royalties on sales.
Like Qsymia and Belviq, Orexigen’s drug produces feelings of fullness in patients and is designed to be used in combination with dieting and exercise.
“We use medication as a window of opportunity to educate patients on choosing a healthier diet that allows you to eat more food, less calories,” Kushner said.
Shares of Orexigen Therapeutics Inc. fell $1.16, or 17 percent, to $5.65 in afternoon trading Wednesday. The stock had climbed almost 21 percent so far this year through Tuesday’s close.