Shares of Orexigen Therapeutics (OREX) fell 13% in today’s trading session after the company reported that its health-benefit study had to end early. This study was known as the Light study, which enrolled approximately 9,000 patients to prove that taking Contrave did not increase cardiovascular risks for patients. Results from the trial were released early and the FDA did not approve of this early release as they were supposed to be in strict confidence.
Orexigen now has to run a a new cardiovascular outcomes trial. This is because in March 2015 Orexigen disclosed preliminary data which showed a 41% drop in the risk of heart attacks, strokes, and death. The problem was that this was only 25% of the overall data shown and the FDA says that you can’t draw any type of logical conclusions with only 25% of the data available.
The Light trial expected completion by 2017, but now the second trial which is currently underway will take many more years to completion. The announcement came from both Orexigen and partner Takeda (TKPHF) this morning. The Cleveland Clinic running the trial released the actual data shortly thereafter. The new data showed 12% drop in the risk of heart attacks, strokes, and death and this compared to early data that showed 41%.
In addition to this trial halting news, Orexigen experience more pain in after hours trading as it met with resistance from its partner Takeda. Shares of Orexigen are down an additional 14.84% after hours down to $5.05 per share as now Takeda wants Orexigen to pay for the costs of the second Light trial. This is another bombshell for the company already facing problems with the FDA. Orexigen might be good for a day trade but with all these problems I would stay away investing long-term in shares of Orexigen.
