Orexigen shares skyrocket after FDA panel endorses obesity drug

In what is likely to prove a shocker for many FDA watchers, the agency's expert advisors voted 13 to 7 in favor of approving Orexigen's ($OREX) obesity drug Contrave. And investors wasted no time in leaping on the suddenly hot commodity, pushing up shares by 112 percent.

After two negative votes for the weight drugs advanced by Arena ($ARNA) and Vivus ($VVUS), the surprising Orexigen decision followed an 11 to 9 vote in favor of requiring a study of cardiovascular safety issues post-approval rather than before the drug hits the market. If that closer CV study vote had gone against Orexigen, Contrave would have been significantly delayed.

"The fact that they were able to convince the panel not only that the cardiovascular study can wait, but that the drug can be approved, is exciting, particularly after we saw the other obesity drugs voted down," Leerink Swann's Joshua Schimmer tells Bloomberg. "It's hard to know to what extent their strategy was altered by the first two, but it sure as heck didn't hurt."

As it stands now, Orexigen  suddenly leaps into the lead among the biotech players angling for an FDA approval, which would open the door to a potential $1.2 billion in peak annual sales. Among the reporters covering the FDA session today, several noted that the panelists had not been overwhelmed by the efficacy data available for Contrave. But several of the panel members didn't want to move the goal posts for a developer this late in the game. Contrave met one of the FDA's two standards needed for proving efficacy in reducing weight.

The agency had already noted that it was dissatisfied with the safety data available from a 12-month study of Contrave. The number of cardiac events recorded in the study was too small to make "reliable inferences about [Contrave's] effect on cardiovascular risk." 

The endorsement also proves a boon for Vivus, which saw its shares climb 15 percent after the vote as analysts pondered its improved chances for gaining a delayed approval of its own weight drug. 

- here's the Bloomberg report
- get the Dow Jones report on the vote on the safety study