In most things that involve a government agency, patience is not only a virtue, it is an essential requirement. Just ask pharmaceutical companies like Vivus (VVUS) and Arena (ARNA). Both companies spent YEARS getting their respective anti-obesity drugs, Qsymia and Belviq, approved by the FDA, and Arena is now patiently awaiting the DEA to assign a schedule to its product. Meanwhile Vivus' Qsymia is on the market, and as of now is the only prescription anti-obesity drug available.
When looking specifically at the anti-obesity market there tends to be a discussion about Arena and Vivus. Orexigen (OREX) is often left out of the discussion because it was thought that the company is still years away from getting approvals. Orexigen is developing a drug called Contrave which is in the preliminary stages of a two year study. That dynamic may change now if the FDA changes policy and enacts a process by which a drug trial could be shortened and conducted with fewer patients.
According to an article by Bloomberg's Anna Edney. FDA commissioner Margaret Hamburg is considering a "special medical use" label which would allow doctors to prescribe drugs to patients in dire need.
"This is an issue of having the right science and data to assess risks and benefits but also a broader societal discussion about risks and benefits that individuals and communities are willing to take on and under what circumstances" - Margaret Hamburg
Whether or not, from a medical perspective, this is beneficial will certainly be the subject of great debate. From an investment perspective there could be potential impacts as well.
Consider that Vivus and Arena were essentially in the position of having a virtual prescription anti-obesity duopoly for about three years. What if that duopoly now gets trimmed down to 2 years, or 18 months? The impacts could be worth billions if the market is as big as some believe. For a company like Orexigen, it could mean getting into a massive market earlier than anticipated. The essence here is that the FDA process may be somewhat streamlined allowing those in dire need of treatment to get it. If Orexigen can get Contrave to market in any shape or form earlier than was originally anticipated it would be a big win.
While it is still far to early to cast anything in stone, the very mention of this change by the FDA is noteworthy. Essentially it will make the street pay a little more attention to a company like Orexigen.
Certainly with obesity hitting all-time highs the market can handle a few different competitors in the field. It is just possible that the field could get crowded a little more quickly than investors though a few short months ago.
Disclosure: I am long ARNA.
Additional disclosure: I have no position in VVUS or OREX