Knobias Clip Report (10-17-2007)

Sumbmited From Knobias ClipReport

OREX: Shares Up on Initiation of Ph III Trial for Contrave(TM) Obesity Drug

Shares of Orexigen Therapeutics, Inc. (OREX) opened higher in Wednesday's session with the initiation of the third trial in its Phase III clinical trial program for its lead product candidate Contrave(TM) as a treatment for obesity. The program includes a set of four Phase III trials evaluating a variety of obesity-related outcome measures. Orexigen expects to begin a fourth Phase III trial for Contrave in the fourth quarter of 2007.

Contrave is a proprietary fixed dose combination of bupropion SR (sustained release) and Orexigen's novel formulation of naltrexone SR in a single tri-layer tablet. In a previous Phase IIb multi-center clinical trial, Contrave demonstrated statistically significant weight loss at 48-weeks compared to bupropion SR alone, naltrexone IR (immediate release) alone, and placebo.

Orexigen's other obesity candidate is Empatic(TM), which is in the later stages of Phase II development. It is a fixed dose combination of zonisamide SR and bupropion SR. The primary outcome measure for this trial is percent change in body weight 24 weeks after the start of treatment, with a 24 week extension period.

Bupropion has been approved by the FDA for the treatment of depression and to assist smoking cessation. GlaxoSmithKline's currently markets bupropion drugs: Wellbutrin(R) SR, Wellbutrin(R) XL and Zyban(R). Wellbutrin SR and Wellbutrin XL are typically used to treat depression, while Zyban is most often prescribed as a quit smoking aid. The FDA requires bupropion to carry a black box warning stating that antidepressants may increase the risk of suicide in persons younger than 25. It is expected that a similar warning statement will be required on labeling for both Contrave and Empatic. Zonisamide is an anticonvulsant approved for use as an adjunctive therapy in adults with partial-onset seizures.

If approved and commercialized, both Contrave and Empatic will compete with well established prescription drugs for the treatment of obesity, including Roche's Xenical(TM)(orlistat) and Abbott's (ABT) Meridia(TM)(sibutramine). Orlistat has also been launched by GlaxoSmithKline (GSK) in an over-the-counter form under the brand name Alli(TM). Sanofi-Aventis' (SNY) Acomplia(rimonabant) has been approved in certain European countries. Sanofi-Aventis withdrew the rimonabant NDA in the United States. Xenical and Meridia have had somewhat poor sales because of unpleasant side effects. The dual mechanism of Contrave and Empatic provides a sustained even flow of drugs that minimizes the side effects.

In May 2007, the Company completed an initial public offering of 7,000,000 shares of common stock at a public offering price of $12.00 per share. Net cash proceeds from the initial public offering were approximately $76.2 million. As of June 30, 2007, the Company had an accumulated deficit of $73.0 million and cash and available securities of $109.5 million.

Executive officers, directors and their affiliates together beneficially own approximately 49% of the Company's outstanding common stock.

JP Morgan recently stated that Contrave and Empatic sales could reach $3 billion a year and JMP Securities sees $1 billion a year. JMP also upped its rating of OREX this month to "Strong Buy" from "Market Outperform." Leerink Swann has increased their one-year fair value range to $17-$21 from $16, and it said that undervalued Orexigen could potentially hold the rights to two obesity drugs classified as best-in-case.


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