By Thomas Gryta Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- A U.S. Food and Drug Administration panel's positive recommendation of Orexigen Therapeutics Inc.'s (OREX) weight-loss drug Contrave increases the likelihood for approval and provides hope for Arena Pharmaceuticals Inc. (ARNA) and Vivus Inc.(VVUS), both of which had their diet drugs rejected by the agency in October. The FDA doesn't have to follow the panel's recommendation, but the positive vote puts Orexigen ahead of the other two companies--which received negative recommendations from similar panels earlier this year--by easing investor concerns that major clinical studies would be needed before approval. Although cautious, the panel on Tuesday was persuaded that Contrave's potential safety risk can be managed and tested after it hits the market. The FDA is expected to make its decision on Contrave in January, but some analysts expect a delay to work out post-marketing requirements. "We think yesterday's vote suggests Contrave is likely to receive FDA approval during 2011," Cowen & Co. analyst Phil Nadeau said in a note to clients. After the FDA panel decisions on Arena and Vivus, Wall Street had low expectations for Orexigen, Nadeau said. Shares of Orexigen more than doubled Wednesday to $10.01. Vivus rose 16% to $9.02, while Arena gained 15% to $1.62 Orexigen has said it learned from the panel presentations of the other companies and decided to focus on the potential for post-marketing data collection and a risk-reduction strategy. At the panel, the company agreed with the FDA that a large study would be needed to test risk of stroke and heart attacks. It also proposed screening for patients that might have higher chances of such cardiovascular events and evaluating patients on the drug after four months of use. Contrave, which is being developed with Takeda Pharmaceutical Co. (TKPYY, 4502.TO), is a combination of two drugs already on the market, addiction-treating naltrexone and the antidepressant bupropion, commonly known by the brand name Wellbutrin. Orexigen argued that Contrave's ingredients have been on the market for 20 years and haven't shown major cardiovascular-safety problems. Leerink Swann analyst Joshua Schimmer said Orexigen's "conservative presentation seems to have cracked the code." Showing that the panel could be swayed by a thorough risk-mitigation strategy, Orexigen may have also opened some doors for its competitors. In October, the FDA said Vivus needed to provide evidence that its proposed weight-loss drug Qnexa didn't increase the risk of major adverse cardiovascular events before the agency would consider whether to approve the drug. The agency didn't request another clinical study, and Vivus has said it has sufficient data to meet the FDA's needs. It projected filing a formal response by year end. Jefferies analyst Thomas Wei said uncertainty remains for Vivus, but the Orexigen panel vote clearly increases the chances of Qnexa's ultimate approval. He highlighted that Contrave's potential risk of cardiovascular events is higher than Qnexa's. Officials from Vivus weren't immediately available for comment. While analysts generally expect Arena to benefit from the positive development for obesity-drug companies, they note that its lorcaserin faces higher hurdles before making it to the market. Arena has formed a partnership with Japan's Eisai Co. (ESALY, 4523.TO) to develop the drug. The FDA rejected lorcaserin due to safety concerns, including a potential cancer signal seen in rats, as it highlighted the drug's moderate effectiveness. Arena hasn't provided a timeline for its response but plans to meet with the FDA this month. An Arena spokesman said Wednesday that the Orexigen panel vote "demonstrates the understanding that there is a significant need for obesity medications." Despite the positive panel outcome, some doubts remain about whether the FDA will follow the committee's advice. The FDA has shown a high bar for drugs that would be taken indefinitely by millions of patients. Abbott Laboratories (ABT) removed its weight-loss drug Meridia from the market in October under FDA pressure, with the agency saying the "very modest weight loss" from taking Meridia didn't justify its cardiovascular risk. "At the core of our lingering concern is also a belief that the FDA may be less comfortable with the [cardiovascular] safety profile of new obesity drugs than the physicians on the FDA panel were," Wei said, referring to Tuesday's vote. -By Thomas Gryta, Dow Jones Newswires; 212-416-2169; firstname.lastname@example.org --Jennifer Corbett Dooren contributed to this article.