The share price of San Diego’s Orexigen Therapeutics (NASDAQ: OREX), which had been riding a wave of investor anticipation, lost over a dollar, or more than 16 percent, after the FDA extended its review of the company’s weight-loss drug by three months.
Investors had bet over the past two months or so that federal regulators would approve the new drug application Orexigen had re-submitted seven months ago for its anti-obesity drug, which combines the antidepressant bupropion with the anti-addiction drug naltrexone, and is known as Contrave. The FDA was scheduled to act on the application by yesterday.
Instead, Orexigen said this morning that regulators and company officials needed more time to negotiate Orexigen’s post-marketing obligations for a continuing assessment of the drug’s potential cardiovascular risk—based on data from an ongoing trial of 8,900 patients known as the Light Study. The new deadline for action under the Prescription Drug User Fee Act (PDUFA) is September 11.
The extension basically took the price of Orexigen shares back to where the stock was trading two months ago. This afternoon, Orexigen’s stock price was hovering around $5.71 a share in extremely heavy trading on the Nasdaq exchange of more than 17 million shares, more than six times the company’s recent average trading volume.
The stage for today’s action was set about three years ago, when the FDA refused to approve Orexigen’s drug, citing concerns about cardiovascular risk.
The company subsequently began the Light Study. After reporting last November that an interim analysis showed the Light Study had “clearly achieved the goal set by the FDA,” Orexigen re-submitted its application for Contrave in December,
The issue of Orexigen’s post-marketing obligations arose late in the FDA review process, Orexigen senior vice president Preston Klassen, told analysts during a conference call this morning. “Finalizing this post-marketing obligation for excluding cardiovascular risk is now the [only] issue we’re focusing on to complete the review,” Klassen said on the call.
“This is not an issue we have with the data,” added Orexigen CEO Michael Narachi. “This is not something about a signal in the data. It’s about closing on this post-marketing obligation.”
Narachi emphasized that the interim assessment of the Light Study remains unchanged.
But he said the Light Study was designed as a blinded trial and was intended to continue even after the FDA acts on Orexigen’s revised application for marketing approval. The FDA wants to include interim data from the ongoing Light Study in its approval process, which raised issues of balancing such disclosures against the importance of maintaining the integrity of the trial, Narachi said. Exactly how that will be done still needs to be worked out, he said.