the possible end of the three days rally.The stock price propelled after FDA agreed to review their drug candidate addressing obesity. Orexigen was one of the three companies to submit drugs that are somewhat effective. One of the competitors has already been partly ruled out by the FDA, as the advisory panel refused to recommend Vivus Inc. solution Qnexa, pointing out various safety concerns.[BANNER]
Qnexa is a combination of two existing drugs, which is similar to the solution Orexigen has to offer. Ruling out recommendation for Vivus clearly showed FDA favors solutions with less harmful side effects.
The sell-off on Thursday was likely a reaction concerning competitor’s failure, as both drugs use a similar approach. The price reaction to these developments is likely short lived in any case. FDA will be reviewing Orexigen’s candidate only in December, still half a year to go before results are out. The price will likely be sticking to the already accepted downtrend or consolidating during the time, especially considering that the company’s fundamentals have nothing to do with these swings.
Concerning the effectiveness, Orexigen’s Contrave is in the middle of the three candidates, showing 5 to 10 percent weight reduction over a year. Vivus solution showed 13%-15% weight loss, and the least harmful Arena Pharmaceuticals Inc. lorcaserin barely meets the minimum of 5%.
