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Feb 10, 2011

Uncertainty over Obesity Drug Approval Prompts Orexigen to Restructure

Uncertainty over Obesity Drug Approval Prompts Orexigen to Restructure

Firm will reduce its workforce by 40% and expects a $5 million decrease in yearly cash expenditures.[jwbinn-Fotolia.com]

  • Orexigen Therapeutics decided to cut about 40% of its staff, or 23 employees, because approval of its obesity drug, Contrave, was delayed in the U.S. On January 31, the firm received a complete response letter (CRL) that highlighted the cardiovascular safety profile of the therapy when used long-term and asked for an additional clinical trial.

    “We continue to believe in the potential of Contrave and look forward to discussions with the FDA,” says Mike Narachi, Orexigen CEO. “Unfortunately, given the near term uncertainty of Contrave approval, we felt it prudent to consolidate and focus our resources.”

    Orexigen expects to incur restructuring charges in the first quarter of 2011 of approximately $2.6 million in connection with one-time employee termination costs including severance and other benefits. Substantially all of these charges are expected to represent cash expenditures. The company expects the workforce reduction to reduce annualized cash expenditures by approximately $5 million.

    The day Orexigen received the CRL from the FDA it lost about 70% of its value, going from $9.09 at the close of the previous day to $2.53 by close of January 31. The CRL stated, “Before your application can be approved, you must conduct a randomized, double-blind, placebo-controlled trial of sufficient size and duration to demonstrate that the risk of major adverse cardiovascular events in overweight and obese subjects treated with naltrexone/bupropion does not adversely affect the drug’s benefit-risk profile.”

    Contrave combines naltrexone HCl and bupropion HCl. It is being investigated for its ability to help people with obesity initiate and sustain weight loss of at least 5% of their starting body weight in one year. Takeda paid $50 million in September 2010 to become Orexigen’s North America partner and agreed to about $1 billion in sales-related milestones plus tiered double-digit royalties.

    The two other contenders in the obesity market are Qnexa, being developed by Vivus Pharmaceuticals, and lorcaserin, being developed by Arena Pharmaceuticals and Eisai. Both drugs met the same fate in October 2010 as Contrave did this year. Vivus was asked for clinical, labeling, REMS, safety-update, and drug-scheduling data, but no request was made for further clinical studies at the time.

    Arena and Eisai were asked to provide additional clinical and nonclinical data as well as conduct another clinical trial with their candidate. Arena was also forced to reduce its staff, reporting in January that it would nix about 25%, or 66 employees. The company expected a one-time restructuring charge of $3.8 million and to decrease annual cash expenditures by approximately $13.5 million.


Readers' Comments

Posted 02/24/2011 by alex edwards

Natural diet pills can help you to lose weight very quickly, but they should only be used when prescribed by a doctor to patients who are clinically obese. wallmart The whole treatment should occur under strict guideline on the product box. Anyone who is overweight but not obese should be told to lose weight by a combination of healthy eating and exercise, perhaps with the aid of a nutritionist.

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