Arena Pharmaceuticals Inc. claimed the brass ring Wednesday, scoring the FDA's first approval of a new weight-loss drug in 13 years.

The agency approved lorcaserin, to be marketed in the U.S. as Belviq, for chronic weight management, in addition to a reduced-calorie diet and exercise, in adults with a body mass index (BMI) of 30 or greater, or with a BMI of 27 or greater who have at least one weight-related condition such as high blood pressure, Type II diabetes or high cholesterol.

Despite the approval, it could be next year before Belviq is available at the local pharmacy, which means Vivus Inc.'s Qnexa (phentermine/topiramate) potentially could be the first new obesity drug on the market – if the FDA OKs it next month.

Belviq's launch delay stems from the FDA's recommendation that it be a Schedule IV controlled drug. While that designation would not restrict advertising or prescribing, that does mean the Drug Enforcement Administration (DEA) has to review the drug and make a final scheduling designation before Belviq can hit the market. That process typically takes four to six months, Arena President and CEO Jack Lief said in an investors' call.

As part of the approval, San Diego-based Arena will conduct six postmarketing studies, including a long-term cardiovascular outcomes trial (CVOT) and five pediatric trials, the first of which must be in juvenile rats.

While Qnexa's PDUFA date was extended three months so Vivus could work out the details of a risk evaluation and mitigation strategy (REMS) with the FDA, the agency is not requiring a REMS for Belviq. However, Arena put together a voluntary patient package insert. (See BioWorld Today, April 30, 2012.)

Belviq's labeling recommends that it be discontinued in patients who don't lose 5 percent of their body weight after 12 weeks of treatment, as they are unlikely to achieve clinically meaningful weight loss with continued treatment.

In clinical trials, 42 percent of patients without Type II diabetes who were treated with Belviq lost at least 5 percent of their body weight within 12 weeks, as did 32 percent of those with Type II diabetes.

The approval of the prescribing information triggered a $20 million milestone payment from Arena's partner Eisai Inc., which will market Belviq in the U.S. Arena also is in line for a $5 million milestone when the DEA determines the scheduling designation and a $60 million milestone following the DEA scheduling and delivery of the launch supply of the tablets, Arena's chief financial officer, Robert Hoffman, said. Arena has about 500 million tablets ready to go.

Under its agreement with Eisai, Arena will manufacture Belviq at its facility in Switzerland. Arena negotiated a 10-year tax holiday with the Swiss government, securing a significant tax benefit, Hoffman said.

Once Belviq hits the market, Arena, which has about $143 million in cash on hand without the new milestones, will be eligible for more milestones and could receive up to $1.2 billion in purchase price adjustments, including $330 million on the first $1 billion in annual sales, according to Hoffman.

With royalties of 31.5 percent to 36.5 percent of net sales, Piper Jaffray & Co. senior analyst Edward Tenthoff said Arena could realize $79 million in royalties next year, $172 million in 2014 and $391 million in 2016. Although Eisai has yet to discuss pricing, Tenthoff assumed Belviq would be priced at about $4 per day.

The next step is to focus on a successful launch, Lief said, adding that Belviq will be the primary focus of Eisai's sales force.

Besides the U.S. market, Arena is pursuing marketing authorization for lorcaserin in Europe and is eying the Asian market. An hour after the drug got a thumbs up in its second appearance before the Endocrinologic and Metabolic Drugs Advisory Committee last month, Arena expanded its marketing and supply agreement with Eisai, of Woodcliff Lake, N.J. The new agreement gave Eisai exclusive marketing rights in most of North and South America, including Canada, Mexico and Brazil. (See BioWorld Today, May 11, 2012.)

Wednesday's approval sent shares of Arena (NASDAQ:ARNA) soaring to a high of $13.50 in trading nearly four times as heavy as usual. Following a roller coaster ride that saw shares peak at $11.99 Friday before descending to a low of $7.80 that same day, Arena opened at $9 Wednesday. It closed the day at $11.39, up 28.7 percent. (See BioWorld Today, June 26, 2012.)

The Other Obesity Drugs

The approval also was good news for Vivus and Orexigen Therapeutics Inc., which, along with Arena, have been trying to get their obesity drugs to market for the past two years. Several analysts saw it as a positive indication that the FDA would approve Qnexa by its July 17 PDUFA date.

"It appears that the agency's view has officially shifted toward 'not treating obesity is a risk in and of itself, so we're willing to put drugs in the market in order to help people lose weight, even if there's risk associated with these drugs,'" Cowen and Co. analyst Simos Simeonidis said.

In light of Qnexa's efficacy data, Simeonidis doesn't view Belviq as a major competitive issue for the Vivus drug. Besides, he noted that since the anti-obesity space has the potential to be a large market, multiple therapies will be needed.

Given the size of the market, investors are counting on there being room for more than one blockbuster. Following the approval Wednesday, Vivus (NASDAQ:VVUS) jumped to $29.42, closing the day at $28.33 – up $1.94.

Shares of Orexigen (NASDAQ:OREX) were up 20.3 percent, or 83 cents, closing at $4.92 Wednesday.

Although Orexigen's Contrave (naltrexone HCl/bupropion HCl) was the only one of the three drugs to get a positive EMDAC approval in 2010, it was set back a few years when the FDA required an extensive CVOT before approval. That trial, which began enrolling subjects this month, is expected to be completed in 2014.