Three months after abandoning its troubled obesity drug program in the face of daunting regulatory demands, Orexigen says that a sit-down with the FDA persuaded the biotech to pursue a new, two-year study on the drug in a $100 million comeback effort to win an approval for Contrave in 2014. That news helped spur a rally in the company's stock price, which shot up 70% after investors caught wind of Orexigen's ($OREX) plan to garner marketing approval.
Success here will not be cheap or easy. The biotech--which is partnered with Takeda--says it will recruit 10,000 people to carefully study any potential heart risks from the therapy. In a letter from the Office of New Drugs, the biotech says that regulators specified that "if the interim analysis (of the study) meets the specified criteria to exclude an unacceptable increased cardiovascular (CV) risk, the drug could be approved...Orexigen believes that these design requirements are reasonable and feasible and provide the certainty required to reinitiate development of Contrave," the biotech said in a statement.
Orexigen was one of three biotechs racing to gain an approval for a new weight drug. But Orexigen's high hopes were dashed by regulatory uncertainty over the safety risks posed by a drug which mixed two older therapies into a remedy that spurred only marginal weight loss. With about a third of the U.S. population suffering from obesity, though, the revenue prospects for any approved new weight drug would be enormous.
The upcoming study may also be Orexigen's last best hope of surviving.
"We're still three years and a hundred million dollars away from approval, but we've just gone from a company on the brink of disintegration to something that should yield outsize returns for those willing to be patient," Jefferies analyst Corey Davis tells Reuters.