Orexigen Surges on New Hope for Diet Pill - Minyanville.com
This morning, Orexigen's shares are up 66% after the company says it sees a "clear and feasible path to approval" for the experimental drug. Mind you, the shares are jumping off a low base -- they traded at $2.40 in early trading Wednesday. The company never fully recovered from the market loss after a particularly stinging rejection earlier this year. Investors bid up the shares to more than $9 each in January on a bet that Orexigen had the best shot among a group of three companies seeking Food and Drug Administration approval of the first new diet pill in the US in more than a decade.
The US officials were concerned about the heart risks associated with Contrave and it seemed that proving the drug was safe would be an overly expensive and time-consuming endeavor. Contrave appeared to be dead. Now, the company says it has an agreement with the FDA that "could" result in an approval. According to Orexigen, the FDA told the company "if the interim analysis meets the specified criteria to exclude an unacceptable increased cardiovascular risk, the drug could be approved."
Orexigen needs to conduct a large human study (the company says it would require "less than 10,000 patients") and enroll a group of obese and overweight people with at least a 1% annual risk of "major cardiovascular events." Orexigen says it can conduct the trial in less than two years and hopes for potential approval in 2014.
There are still a lot of "ifs" and "buts" before Orexigen actually gets approved to sell Contrave. It needs to pay for the study. The company did say it may seek a second development partner. Orexigen is partnered with Japan's Takeda Pharmaceutical to sell the drug (once approved) in the US, Canada, and Mexico. But Orexigen could bring on another development partner to sell Contrave outside North America.
But showing the drug is safe is paramount to any hope of approval. The FDA folks don't like diet drugs -- they've seen too many safety issues dating back to Wyeth's fen-phen cocktail debacle and more recently Abbott Laboratories' (ABT) Meridia. The Abbott drug was pulled from the market last year on safety concerns.
The Orexigen news comes a week after rival Vivus (VVUS) said it plans to resubmit its application to the FDA to sell diet drug Qnexa after that drug was rejected by the US agency. (See Diet Pill Maker Vivus is Back in the Game.)
Orexigen, Vivus, and Arena Pharmaceuticals (ARNA) were in a race last year to get US approval for a new diet drug. The companies argued that obesity has become an epidemic in the US and it needs to be treated to stem the rise of related illnesses, including diabetes and heart disease. But all three drugs were rejected by the FDA. Orexigen seemed to show the most promise for being approved after a US panel of medical experts recommended the FDA allow Contrave to be sold. (See Orexigen Shares Double in Morning Trading After Diet Pill Clears First Hurdle.) The agency went against its experts' advice because of the safety concerns.
Twitter: @brettchase
No positions in stocks mentioned.
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