Stock Surges on OK of Anti-Obesity Drug

Interneuron Pharmaceuticals Inc. shares surged Tuesday, a day after the firm won approval to sell its anti-obesity drug, Redux, which works by making people feel they have had enough to eat.

Redux, which will be sold in the U.S. by American Home Products Corp., is the first obesity drug approved by the Food and Drug Administration in more than 20 years. Announced Monday, the decision follows the recommendation of an FDA advisory panel in November.

Shares in Lexington, Mass.-based Interneuron rose $2.25 to $39.375 on Nasdaq. The shares touched a high of $44.50 earlier Tuesday.

American Home Products shares slipped $1.375 to $105.50 on the New York Stock Exchange.

Analysts said yearly sales of Redux could reach $200 million in the next few years. About one-third of the adult U.S. population--about 60 million--is considered overweight.

“This is certainly an advancement in an underdeveloped area,” said David Maris, an analyst for ABB Aros Securities Ltd., adding that total sales depend on how quickly physicians and patients turn to drug therapy.

Redux, also known as dexfenfluramine, will be available starting this summer and will cost about $2 a day, Interneuron spokesman Bill Boni said.

It is approved for sale to patients who are 30% over their ideal body weight or for patients with other risk factors, such as diabetes, who are only 20% over their ideal body weight.

The company said that could mean up to 47 million people in the United States for whom the drug could be prescribed under the current FDA labeling.

Jenny Craig Inc., the Del Mar-based weight management company, said Tuesday that it was considering incorporating such a drug therapy into its program.

“We have anticipated regulatory approval of dexfenfluramine and have positioned our company to be able to offer the drug as an additional component of our comprehensive weight management program,” Chief Executive C. Joseph LaBonte said.

Companies including Hoffmann-La Roche Inc., Knoll Pharmaceuticals Ltd., Eli Lilly & Co., Supergen Inc. and Amgen Inc. are all in various stages of developing waist-trimming drugs.

Interneuron’s drug helps dieters lose weight by boosting the level of a chemical in the brain called serotonin, which helps control food cravings.

American Home’s Wyeth-Ayerst unit will sell Redux in the United States, with Interneuron retaining some manufacturing and promotion rights.

In clinical trials, the company found people on Redux lost twice as much weight as those on a placebo. Both groups were on a low-calorie diet.

Interneuron said side effects of Redux are minor, though some studies have shown an increased risk of a cardiovascular condition known as pulmonary hypertension. The drug was also shown to cause brain damage in rats, but the company said that was only at incredibly high doses and there was no evidence to show the drug can damage human brains.

The medicine has been used in Europe for more than a decade and is already sold in 65 countries, with yearly sales of about $150 million to $200 million, analysts estimate.