On July 20, Orexigen Therapeutics was living the dream of small companies everywhere. It announced that its experimental drug Contrave was safe and that it helped obese people lose weight–a combination of attributes that few pharmaceutical companies have been able to achieve. Orexigen’s stock skyrocketed 32% to $7.50 before the market opened.

But Orexigen doesn’t plan to file for FDA approval until 2010. That means the drug wouldn’t be on the market until late next year at the very earliest. For a company that had virtually no revenues and $93 million in losses last year, that’s an awfully long time to wait for what could be a hit product.

But in this case, CEO Mike Narachi is probably smart to take a lot of time putting together a really convincing case for the FDA. Contrave is a combination of buproprion, an anti-depressant, and naltrexone, a drug to treat addiction. The FDA has been particularly hard on drugs that act in the brain, because of the risk that they may cause dangerous side effects, such as suicidal tendencies. In fact, pharmaceutical giant Sanofi-Aventis stopped developing its obesity product, Acomplia, last year because of such concerns.

Contrave curbs appetite by attacking two pathways in the brain: one that controls cravings and one that increases metabolism. In three trials involving 3,800 patients, about half of patients lost at least 5% of their body weight. By contrast, fewer than 20% of patients taking a placebo lost that much weight.

There were a handful of serious side effects reported, though, including two seizures. And FDA investigators are likely to ask for details about how patients’ moods held up during the one-year trials. It will be interesting to see how this tiny company shoulders such big expectations for a promising drug.

Original post: BusinessWeek – Management IQ