Orexigen and Takeda ink a billion-dollar pact on weight loss drug

Orexigen has finally inked a deal on its weight-loss drug Contrave, accepting a relatively small $50 million upfront payment and more than a billion dollars in potential milestones from Japan's Takeda in exchange for North American marketing rights for a therapy that's about four months away from the FDA's finish line.

Orexigen's deal, which bears a close resemblance to the pact rival Arena Pharmaceuticals inked with Eisai for its experimental weight drug, leaves the biotech with co-promotion rights in the big U.S. market. There hasn't been a new obesity drug approved in the U.S. in more than a decade. And with the obesity epidemic tipping scales throughout the market, any approved drug could achieve blockbuster status.

So far, though, none of the three contenders, which includes Vivus, has been able to get a blockbuster-sized upfront check--a sign of the serious concerns about potential safety issues at the agency. That leaves much of these deals back-ended, built around milestones and the tiered double-digit royalty rate that Orexigen can earn from Takeda. Noticeably absent from the deal-making are the U.S. pharma companies, several of which have been badly burned by obesity drugs' troubled safety record. Investors, however, were excited by the size of the pact, driving up Orexigen's shares by 26 percent in early trading today.

The agency's safety concerns were on full display during a recent FDA panel review of Vivus's Qnexa, which was rejected by a majority of the agency's experts ahead of the FDA's final ruling. Orexigen now faces a panel review on December 7, with a final decision deadline of January 31. Contrave is a combination of naltrexone SR and bupropion SR.

"Contrave represents an important addition to Takeda's cardiovascular and metabolic disease franchise and we look forward to partnering with Orexigen," said Shinji Honda, the CEO of Takeda Pharmaceuticals North America. "Takeda has deep experience in providing important medicines to treat chronic disease and Contrave will help us provide a full spectrum of treatment to patients for the management of obesity."

- here's the Orexigen release
- see TheStreet's report

Correction: The story originally stated the FDA panel recently evaluated lorcaserin. It actually reviewed Qnexa.