Arena Pharmaceuticals Inc. (ARNA) reported Friday a successful late-stage trial of its weight-loss drug, but Vivus Inc. (VVUS) is still considered the leader as three companies conclude an important lap in the race to deliver a new, viable drug to fight obesity.

Both companies and Orexigen Therapeutics Inc. (OREX) provided important updates this summer regarding their lead obesity drugs. Most observers see Vivus in front, although all three drugs have their strengths and possible place in the market. Next up: The companies battle for regulatory approval and pursue a deep-pocketed partner to help sell their therapies to physicians.

It shouldn't be hard to find potential partners. Treating obesity is a highly desirable market with multibillion-dollar sales potential. The Centers for Disease Control estimates 34% of U.S. adults are obese. However, obesity has been a difficult field for drug makers because of problems with past drugs.

Under Food and Drug Administration guidelines, clinical trials for obesity drugs must meet one of two goals. A trial must show that at least 35% of the drug group lost at least 5% of body weight, and that group must be approximately double the percentage of patients with similar weight loss on the placebo. Alternatively, a study can show that patients had an average weight loss that was at least five percentage points higher than the placebo group's loss.

Vivus' Qnexa is the only drug that beat both benchmarks. Orexigen's Contrave had its three main trials meet the first guideline, with one meeting the second guideline as well. Arena's first trial clearly met the first guideline, and it contends that the second did as well.

Despite the mixed results on effectiveness, each drug has factors that may make it more attractive to patients, physicians and potential partners. For example, Arena's lorcaserin didn't show the effectiveness of the others but it is a new drug with minimal side effects and ample patent protection, which could be attractive to a partner when compared with the other two, combinations of already marketed drugs.

Meanwhile, Vivus' drug has shown strong results in morbidly obese patients, while Orexigen's includes an antidepressant that could be attractive for certain patients.

Adam Cutler, analyst at Canaccord Adams, believes there should be room for all three because grabbing just 1% of the overall market will translate to more than $1 billion a year in sales for any one drug.

"There are certainly attributes of each of these drugs that will get highlighted over time that will help segment the market a little bit," Cutler said.

Arena and Vivus plan to file for marketing approval by year end, while Orexigen will do so in the first half of 2010. That means the first approved drug could hit the market late next year.

But all three drugs have potential drawbacks from a regulatory point of view, notes Rodman & Renshaw analyst Elemer Piros. Arena's drug is related to a former Wyeth (WYE) drug that causes heart-valve damage, which could prompt questions and a rigorous patient-monitoring plan. Meanwhile, individual components of the other two drugs have issues with known side effects.

But Wall Street's opinion of the drugs' prospects seems to be reflected in the stock performance of the companies: Vivus and Orexigen have more than doubled in value in the last three months, while Arena has risen 8%.

Furthermore, the market value of Vivus is more than $800 million, almost double the individual values of the other two companies.

Any future partnership is likely to incorporate the risks of the drug, as well as the enormous marketing expense. But given the opportunity, Big Pharma - already suffering from a lack of pipeline prospects - may be tempted to buy one or all of these companies, especially because their small size is easily digestible when compared with the deals totaling more than $100 billion in the industry this year.

-By Thomas Gryta; Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com