Orexigen Therapeutics Inc. (OREX) is a biopharmaceutical company focused on the development of pharmaceutical product candidates for the treatment of obesity. Its combination product candidates targeted for obesity are Contrave, which has completed phase III clinical trials, and Empatic, which has completed phase II clinical trials. Contrave is a combination of two drugs, bupropion and naltrexone, in a sustained release (SR) formulation. Bupropion is a prescribed antidepressant and smoking cessation medication; naltrexone is a treatment for alcohol and opioid addiction. Empatic is a combination of bupropion SR and zonisamide SR. Zonisamide, in a release formulation, was approved in the United States for the adjunctive treatment of partial seizures, a form of epilepsy. These product candidates regulate appetite and energy expenditure through the central nervous system (CNS).The Company was founded in 2002 and is based in La Jolla, California.
| Share Statistics(28-Jun-10) | FY 2007 | FY 2008 | % Chg | Q4 2008 | Q4 2009 | % Chg | ||
| Symbol | OREX | Revenue, $Mn | 0.09M | 0.09M | 0.0% | 0.02M | 0.02M | 0.0% |
| Current price | $4.76 | Gross marg. | 100.0% | 100.0% | 0.0% | n/a | 100.0% | n/a |
| 52wk Range: | $10.83-4.00 | Oper. margin | -69115% | -107754% | 55.9% | n/a | -73800% | n/a |
| Avg Vol (3m): | 647,026 | Net margin | -64188% | -103600% | 61.4% | n/a | -75100% | n/a |
| Market Cap. | 224.75M | |||||||
| Shares Outst. | 47.2M | EPS, $ | -3.08 | -2.76 | 10.4% | -0.64 | -0.32 | 50.0% |
Source: Reuters.com, SEC Filings.
Financial Summary
OREX announced financial results for the first quarter of 2010. For the quarter ended March 31, 2010, OREX reported a net loss of $14.1 million, or $0.30 per share attributable to common stockholders, as compared to a net loss of $19.3 million, or $0.56 per share attributable to common stockholders, for the first quarter of 2009. As of March 31, 2010, OREX had $17.8 million in cash and cash equivalents and an additional $57.5 million in marketable securities, for a total of $75.3 million.
Total operating expenses for the first quarter of 2010 were $14.0 million compared to $19.1 million for first quarter of 2009. The decrease in operating expenses primarily reflects a reduction in research and development expenses of $7.8 million, principally related to the completion of Contrave phase III clinical trials and completion of the phase II clinical trial for Empatic, offset partly by an increase in general and administrative costs of $2.7 million due principally to increases in salaries and personnel related costs, stock-based compensation expense and marketing expenses.
First Quarter 2010 Highlights
- Submitted Contrave NDA to the FDA.
- Executed a manufacturing services agreement with Patheon to help ensure stable commercial supply of Contrave.
- Appointed Peter Honig, Ph.D. and Wendy Dixon, Ph.D. to the board of directors. Dr. Honig brings to the OREX board over 20 years of clinical and regulatory experience from past roles in industry and the FDA. Most recently, he was senior vice president of Worldwide Regulatory Affairs and Product Safety at Merck & Company and co-chair of Merck’s Late Development Review Committee overseeing the company’s late stage pipeline. Dr. Dixon brings 30 years of pharmaceutical development and commercial experience to the OREX board. Most recently, she was the president of Global Marketing and chief marketing officer at Bristol-Myers Squibb.
| Financial Strength (28-Jun-2010) | Company | Industry | Sector | S&P 500 |
| Quick Ratio (MRQ) | 6.18 | 2.07 | 2.08 | 0.80 |
| Current Ratio (MRQ) | 6.18 | 2.42 | 2.49 | 0.96 |
| Long-Term Debt to Equity(MRQ) | 1.67 | 7.93 | 18.23 | 133.99 |
| Total Debt to Equity (MRQ) | 10.35 | 10.89 | 23.51 | 200.21 |
Source: Reuters.com, SEC Filings.
Analyst Consensus
| Buy | Outperform | Hold | Underperform | Sell | No Opinion |
This is the consensus forecast amongst nine polled investment analysts. Against the Orexigen Therapeutics Inc company.
| Analyst Detail | Buy | Outperform | Hold | Underperform | Sell | No Opinion |
| Latest | 5 | 4 | 0 | 0 | 0 | 0 |
| 4 weeks ago | 5 | 4 | 0 | 0 | 0 | 0 |
| 2 months ago | 5 | 3 | 0 | 0 | 0 | 0 |
| 3 months ago | 5 | 3 | 0 | 0 | 0 | 0 |
| Last year | 5 | 3 | 0 | 0 | 0 | 0 |
The seven analysts offering 12-month price targets for OREX have a median target of 13.50, with a high estimate of 16.00 and a low estimate of 12.00. The median estimate represents a 225.30% increase from the last price of 4.15.
Consensus Estimates Analysis
| # of Estimates | Mean | High | Low | 1 Year Ago | |
| SALES (in millions) | |||||
| Quarter Ending Jun-10 | 7 | 0.01 | 0.03 | 0.00 | – |
| Quarter Ending Sep-10 | 7 | 0.01 | 0.03 | 0.00 | – |
| Year Ending Dec-10 | 7 | 0.08 | 0.10 | 0.00 | 5.70 |
| Year Ending Dec-11 | 9 | 41.74 | 76.46 | 0.10 | 46.64 |
| EARNINGS (per share) | |||||
| Quarter Ending Jun-10 | 7 | -0.30 | -0.26 | -0.33 | – |
| Quarter Ending Sep-10 | 8 | -0.32 | -0.28 | -0.37 | – |
| Year Ending Dec-10 | 9 | -1.03 | 0.83 | -1.41 | -1.74 |
| Year Ending Dec-11 | 9 | -0.93 | -0.50 | -1.25 | -1.15 |
| LT Growth Rate (%) | 1 | 15.00 | 15.00 | 15.00 | 15.00 |
Investment Highlights
OREX recently announced results from a 24-week open-label study demonstrating that treatment with Contrave(R) resulted in significant improvements in depressive symptoms that was accompanied by weight loss and improved control of eating in overweight and obese patients with major depression.
The primary endpoint of the study was the change from baseline in the Montgomery-Asberg Depression Rating Scale (MADRS) at 12 weeks on an intent-to-treat (ITT) basis. Treatment with Contrave32 (32mg naltrexone sustained release (SR)/360mg bupropion SR) resulted in the MADRS score decreasing from an average of 23.7 at baseline (consistent with moderate depression) to 10.5 (mild depression) (p<0.001) at week 12 and further decreasing to 8.4 (remission) at week 24 (p<0.001). Patients who completed the study lost an average of 9.2% of total body weight and reported substantial reductions in hunger, strength and frequency of food cravings and demonstrated improved control of eating.
In this study, the most common adverse events were nausea, constipation, headache and insomnia, and, in general, were consistent with past experience in the COR program. There were no serious adverse events reported by the investigator as related or possibly related to Contrave in the trial.
About Contrave
Contrave is an investigational combination therapy believed to address both physiological and behavioral drivers of obesity. The two components of this combination therapy act in a complementary manner in the central nervous system. The central pathways targeted by this treatment are involved in controlling the balance of food intake and metabolism, and regulating reward-based eating behavior. In clinical trials, Contrave was shown to help obese patients initiate and sustain significant weight loss, improve important markers of cardiometabolic risk and increase ability to control eating.
The U.S. Food and Drug Administration (FDA) has tentatively scheduled a Division of Metabolic and Endocrine Drug Products Advisory Committee meeting on December 7, 2010, and the Prescription Drug User Fee Act (PDUFA) action date has been set for January 31, 2011.
About the Contrave Clinical Development Program
All four trials in the COR phase III program (COR-I, COR-II, COR-BMOD and COR-Diabetes) were randomized, double-blind, placebo-controlled trials. The co-primary endpoints were the proportion of patients achieving at least 5% weight loss and percent change in body weight compared to placebo. Secondary endpoints included multiple measures of cardiometabolic risk, quality of life, control of eating, and glycemic control. Contrave was generally well tolerated.
The safety and tolerability profile of Contrave in the clinical development program was consistent with the safety profile of the constituent components, which have been in use for other indications for over 20 years. The most frequent treatment-emergent adverse events in patients treated with Contrave were nausea, constipation, headache, vomiting and dizziness. These were mostly mild to moderate in severity, transient and typically occurred during the first weeks of treatment. Most common adverse events leading to discontinuation with Contrave were nausea, headache, dizziness and vomiting. Treatment with Contrave was not associated with increases in adverse event reports of depression or suicidal ideation compared to placebo. Mean blood pressure with Contrave was generally unchanged from baseline to endpoint.
Placebo patients experienced decreases in blood pressure from baseline to endpoint of approximately 2mmHg. Greater weight loss correlated with greater reductions in blood pressure in both Contrave and placebo patients, suggesting that the expected relationship between weight loss and blood pressure was maintained. Importantly, normal circadian blood pressure patterns were preserved with Contrave. There was an increase in pulse of about one beat per minute in patients taking Contrave. Serious events were reported infrequently and included events of cholecystitis (Contrave 0.2%, PBO <0.1%), seizure (<0.1%, 0%) and major cardiovascular events (<0.1%, <0.1%).Source: http://www.orexigen.com/
Comparative Analysis
| Company Name | Ticker | Price per | Mrkt. Cap. | P/E | P/S | ||
| Jun-28-2010 | symbol | Share, $ | $ Mn | 2010 | 2011 | 2010 | 2011 |
| Patheon Inc. | PTI | 2.60 | 335.84M | n/a | n/a | 0.49 | n/a |
| Arena Pharmaceuticals Inc. | ARNA | 3.34 | 337.76M | n/a | n/a | 29.89 | n/a |
| Cypress Bioscience Inc. | CYPB | 2.46 | 94.40M | n/a | n/a | 3.45 | n/a |
| Drug Manufacturers Median | 256.00M | n/a | n/a | 11.27 | n/a | ||
| Orexigen Therapeutics Inc. | OREX | 4.76 | 224.75M | n/a | n/a | 2173.04 | n/a |
Source: Thomson Financial
Insider Trading Activity
| NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months | ||
| Shares | Transaction | |
| Purchases | 788,100 | 10 |
| Sales | 975,000 | 4 |
| Net Shares Purchased (Sold) | (186,900) | 14 |
| Total Insider Shares Held | 24.58M | n/a |
| % Net Shares Purchased (Sold) | (0.8%) | n/a |
| Net Institutional Purchases — Prior Qtr to Latest Qtr | |
| Shares | |
| Net Shares Purchased (Sold) | (4,505,720) |
| % Change in Institutional Shares Held | (37.1%) |
Source: Yahoo Finance
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