Over the course of the year, shares of Orexigen (OREX) have been hammered on just about every step it takes toward a regulatory decision on its obesity drug, Contrave, one of a slate of new weight-loss drugs being advanced in a foot race with Vivus and Arena. Yesterday, though, the developer had a chance to bask in the warmth of positive data reflecting the drug's potential for diabetes and depression. Its stock, down 36 percent on the year, jumped as high as 16 percent.
"It seems like they are getting very modest credit for having an approvable product," Cowen & Co. analyst Phil Nadeau told Dow Jones.
Maybe, or maybe not. Other analysts were just as quick to call the diabetes data "incremental," and there's plenty of debate of how the three weight drugs will shake out as each faces a panel review in the second half of this year, with Vivus facing the music in July, Arena in September and Orexigen in December.
For his part, Orexigen CEO Michael Narachi says that his company's beaten-down stock is starting to look pretty good to big investors, with others waiting on the sideline until the FDA panel tips its hand on how it will review these therapies. Orexigen's new data Monday demonstrated that Contrave helped moderate symptoms of depression in a small study while also helping people to lose weight and manage their blood sugar levels.
"You are basically getting a 2-for-1 benefit here," says Dennis Kim, Orexigen's senior vice president of medical affairs. "It's often recognized in the minds of physicians, but there hasn't been a tool that would deliver both benefits. Physicians often accepted that you need to treat their [blood sugar levels] but you can't often address their weight. Most diabetes therapies actually cause weight gain."