Orexigen Therapeutics (OREX) surged early this week with the release of positive interim study results for Contrave, the company’s approved weight loss drug. Public comments from an FDA official on Thursday, however, put a damper on the celebration.
Orexigen shares hit their highest level in eighteen months after the company reported that Contrave, which was approved by the FDA in late 2014, demonstrated cardiovascular benefits during an interim analysis of an ongoing and sizable post-marketing study of the drug in obese patients. Contrave is one of the most recent entrants to the anti-obesity treatment market. A few years ago, analysts and investors saw obesity treatments as “the next big thing” given that the FDA had not approved a new weight loss drug in a decade. Thus far, numbers from other approved products have been disappointing, to say the least. Arena Pharmaceuticals (ARNA) and Vivus (VVUS) have seen their weight loss drugs register disappointing sales since launching over two years ago. Initial sales of Orexigen’s Contrave have been encouraging by comparison.
The interim data released on Tuesday were crucial in setting Contrave apart from the competition. Neither Arena or Vivus have cardiovascular outcomes data for their weight loss drugs.
The FDA was not happy with Orexigen’s decision to make the interim data public.
In an interview with Forbes writer Matthew Herper, FDA’s director of the Office of New Drugs, John Jenkins, said that the interim data could be potentially “misleading.” He also highlighted concerns about the future of the LIGHT study. In a public statement, the FDA said they “strongly urged Orexigen to protect the interim data from public discourse, and we are very disappointed by Orexigen’s actions.”
Orexigen defended itself saying that it disclosed the data in a SEC filing after the U.S. PTO issued a new patent for Contrave. The company said that it was necessary to make sure the information from the study was equally available to all investors. This has not gone down well with the agency, which requires preliminary data be kept confidential, as disclosure could undermine the ongoing study.
Orexigen’s decision to share interim data could have serious repercussions. In a worst-case scenario the company could be forced to take Contrave off the market. This would be a disaster for Orexigen and its partner Takeda Pharmaceuticals, as the drug was only launched a few months ago. We see this as unlikely.
The ethical aspects of this event are interesting as well. Will patients want to risk receiving a placebo in the ongoing study (which is randomized and blinded), or simply leave the study and have Contrave prescribed by their doctor? Essentially, the data disclosure may have jeopardized the ability to complete the LIGHT study.
Orexigen is operating in an apparent grey area of the law. If interim study results directly relate to a newly-approved patent and are material to investors, they may have a duty to the SEC to report this in a filing – which is exactly what they did. The following statement from Orexigen makes their legal position clear: “Orexigen is also committed to simultaneously meeting its obligations to other regulatory authorities in the U.S., such as the SEC, and abroad, such as the EMA, which are relevant to, and have authority over, its business. The Company is similarly committed to meeting its fiduciary duties to shareholders.”
All these developments have meant that Orexigen shares have had a rollercoaster ride this week. The stock saw a huge rally on Tuesday but is down sharply in pre-market trading on Friday after the public back-and-forth between OREX and the FDA.
