Orexigen Therapeutics, Inc.’s (OREX) shares shot up approximately 15% after the company announced that it has earned a milestone payment of $70 million from its partner Takeda Pharmaceutical Company Ltd (TKPYY).
The milestone pertains to the shipment of obesity drug, Contrave, to pharmacy wholesalers ahead of the commercial launch of the drug. Takeda's cardiometabolic sales team, which will deploy 900 people, will promote the drug in the U.S. Orexigen expects to receive the milestone payment within 30 days of invoice.
Last month, the FDA cleared Contrave as an adjunct to a healthy diet (low on calories) and physical activity for chronic weight management in obese (Body Mass Index, or BMI, ≥ 30) or overweight (BMI ≥ 27) adults suffering from at least one weight-related co-morbid condition including high blood pressure, type II diabetes and high cholesterol. The approval and subsequent delivery of Contrave launch supplies to Takeda triggered a $30 million milestone, which was received by Orexigen on Oct 7.
Orexigen has a collaboration agreement with Takeda for the development and commercialization of Contrave in North America. Orexigen has rights to Contrave outside North America and is looking for a partner to commercialize Contrave in ex-North America territories.
Orexigen is also looking to get Contrave approved in Europe. A recommendation from the European Medicines Agency's Committee for Medicinal Products for Human Use is expected after the review of the Day 180 List of Questions.
We note that Contrave will enter a highly crowded obesity market consisting of products like Qsymia and Belviq. However, given the Light study data on Contrave, expectations remain high that the product will most likely be more successful than currently available obesity treatments.
Orexigen carries a Zacks Rank #3 (Hold). Some better-ranked biopharma stocks include Ligand Pharmaceuticals Inc. (LGND) and Medivation Inc. (MDVN), carrying a Zacks Rank #1 (Strong Buy).
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