Orexigen gears up for a second go at FDA approval for its weight-loss drug

Orexigen CEO Michael Narachi

Two years and $100 million removed from a devastating FDA roadblock, Orexigen Therapeutics ($OREX) is again knocking on the agency's door with its weight-loss drug Contrave, filing an NDA with fresh hopes that it wins approval and succeeds in a tough market.

In the drug's 2011 go-round, the FDA rejected Contrave and told Orexigen not to come back until had cardiovascular safety data on about 10,000 patients, a costly demand for a small-cap biotech. But Orexigen ponied up the needed $100 million for a new Phase III study, and, in a statement last month, the company said Contrave met the FDA's requirements in an interim analysis. Now, with a new filing in the agency's hands, the company believes its drug could win approval as soon as June 2014.

Orexigen is yet to release the data from its large-scale safety study, but, assuming it cleared the FDA's hurdles and can lock up approval, the company is in line for another challenge: launching an obesity drug in a crowded market. While Orexigen was busy enrolling patients in a massive trial, rivals Arena ($ARNA) and Vivus ($VVUS) snuck ahead and marketed their own weight-loss pills. However, each has struggled to gain any commercial foothold thanks to reimbursement woes and a cold shoulder from would-be Big Pharma partners.

But Orexigen believes it can succeed where others have faltered thanks in large part to partner Takeda, and CEO Michael Narachi has said the Japanese drugmaker has a sales force of 2,000 waiting in the wings to make Contrave a hit once it gets a regulatory go-ahead, setting the table for a big 2014.

"With the successful Light Study interim analysis, we are confident in the prospect for approvals next year in the United States and in Europe," Narachi said in a statement. "If Contrave is approved, we look forward to a well-executed U.S. launch by Takeda."

From there, Narachi and company plan to start hunting for ex-U.S. partners, hoping to make Contrave a global blockbuster. First, though, they must convince the FDA, and despite some initial excitement, investors are taking a wait-and-see approach to Contrave's future: Orexigen's shares rocketed up about 28% to $6.83 on last month's interim analysis announcement but have since come largely back to Earth, closing at $5.83 on Tuesday.

- read the announcement