What Investors Are Looking For In Obesity Stocks

Obesity stocks underwhelmed expectations in 2014, but several catalysts and news could bring investor attention back to the sector. Orexigen (OREX) was in the news frequently in 2014. In September, the FDA approved Orexigen's obesity drug Contrave. The company is now looking to receive approval in the EU. On December 19, European regulators recommended approval. This decision is expected before February 24, within 67 days of the approval recommendation. Arena Pharmaceuticals (ARNA) is up almost 50 percent so far this year on positive news. On January 7, Arena announced that its autoimmune disease drug APD334 showed positive results in a Phase 1b trial. Arena's lead drug is Belviq, which is an FDA approved drug for weight management. Arena stock traded down near 50% in 2014 due to worse than expected sales numbers. However, Arena has implemented new sales strategies for the new year. Vivus (VVUS) also has an approved weight loss product called Qsymia. Qsymia is a phentermine and topiramate ER capsule that helps obese adults lose and keep weight off. Qsymia sales have underwhelmed investor's expectations in 2014 and the stock traded down about 65%. Recently, however, North Tide Capital began buying a large stake in Vivus stock. Between December 31 and January 8, the firm has bought a total of 12.5 million shares in the $3 range. EnteroMedics (ETRM) is another obesity company that just received FDA approval this morning. The company's treatment is a surgically implanted medical device. In other news, the FDA recently approved Novo Nordisk's (NVO) Saxenda as a treatment for obesity. Saxenda is a larger dose of the type 2 diabetes drug Victoza.