Posted by: ctraderd | June 29, 2012

Orexigen Therapeutics: A Deeper Look

Stock Information:

Orexigen Therapeutics (OREX) is a biopharmaceutical company that makes drugs to fight obesity. I found out about Orexigen while I was doing research on Arena Pharmaceuticals (ARNA). The reason that these two stocks are related is because both of these companies make drugs to fight obesity.

When ARNA’s drug Belviq was approved,  OREX’s stock price shot up, roughly 21%, but then fell. (See my recent post about Belviq for more information: http://bit.ly/NGLaoZ)

Right now, OREX is trading roughly .001% above it’s 50-day EMA (Exponential Moving Average) and roughly 3.3% above it’s 200-day EMA.  In my opinion, OREX is way overvalued and inflated because their next trial is in 2014, 2 years off. The only reason that the stock was run-up was because of Belviq’s approval. Belviq will be on the shelves for sale while Orexigen will still be trying to get their drug Contrave approved.

Another competitor, Vivus (VVUS), has an obesity drug called Qnexa, whose PDUFA is scheduled on July 17. If Qnexa gets approval, two of Orexigen’s biggest competitors will have drugs on the shelves for sale, while Orexigen is still trying to get Contrave approved. This scenario will prove disaster for Orexigen’s stock price.  

OREX(2)

As of March 31, 2012, Orexigen held $138.5 million, $65.1 million of that invested in securities. Orexigen earned around $857,000 in revenue in the first quarter. The company is quickly losing money because they have very little income for that expensive of a company. Their stock is decaying fast.

Drug Candidates:

OREX has a drug called Contrave that has cleared Phase III testing. Contrave was part of Orexigen’s “Light Study,” a medical research study that checks out medication used for the loss of weight. Contrave has been submitted by the NDA for a FDA trial.The FDA already rejected Contrave once and the next trial in front of the FDA is in 2014 which is a long ways off.

Full Background of Contrave: 

Contrave (naltrexone SR/bupropion SR) is an investigational medication for the treatment of obesity.

With its unique mechanism of action in the CNS, Contrave has the potential to change the way obesity is treated by:

  • Initiating weight loss by reducing appetite and increasing metabolism
  • Allowing the body to sustain continued weight loss by offsetting its natural tendency to fight back and slow down the weight loss process
  • Addressing the reward system in the brain that causes food cravings

Contrave is a combination of two well-established drugs, naltrexone and bupropion, in a sustained release formulation (SR).

  • The active ingredients of Contrave have been used for over 20 years.
  • Bupropion is a widely-prescribed antidepressant and smoking cessation medication; naltrexone is a treatment for alcohol and opioid addiction.
  • We believe that bupropion helps initiate weight loss while naltrexone may sustain weight loss by preventing the body’s natural tendency to counteract efforts to lose weight.

Source: http://www.orexigen.com/candidates/candidates_contrave.php

Another drug that Orexigen Therapeutics (OREX) is currently working on is called Empatic. Empatic has completed late Phase II trials.

Full Background of Empatic: 

Empatic is a fixed dose combination of zonisamide sustained release (SR) and bupropion SR.

Zonisamide, in an immediate release formulation, was approved in the United States in 2000 for the adjunctive treatment of partial seizures, a form of epilepsy. The precise mechanism of zonisamide is unknown; however, it is believed that zonisamide has a number of pharmacologic mechanisms including sodium-channel modulation and enhancement of dopamine and serotonin neurotransmission which result in weight loss. Zonisamide, given alone, has shown modest weight loss in prior clinical trials conducted at Duke University.

Bupropion was approved for marketing in the United States in 1985 for depression and in 1997 for smoking cessation. Functionally, bupropion is thought to increase the level of dopamine activity at specific receptors in the brain, which appears to lead to a reduction in appetite and increase in energy metabolism.

Source: http://www.orexigen.com/candidates/candidates_empatic.php

Conclusion:

Overall, Orexigen Therapeutics has jumped up 21% and then fell way down. Their next drug trial is two years off and one of their competitors already has a drug approved. Another one of their competitors has a drug trial scheduled on July 17. If Qnexa gets approved, then two of OREX’s biggest competitors will have drugs out while Orexigen is still researching. Orexigen is a company with a very small revenue that will not last them long. But the question is, what will happen next?

CTraderD

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