Orexigen Therapeutics Inc. plunged the most in four months in Nasdaq trading after the drugmaker said it will halt U.S. development of diet pill Contrave because of uncertainty in the regulatory process.
The La Jolla, California-based company fell 93 cents, or 29 percent, to $2.25 at 10:19 a.m. in Nasdaq Stock Market composite trading. The drop was the shares’ biggest decline since a 73 percent plunge on Feb. 1, after the Food and Drug Administration said a large study on heart risks would be required before Contrave could be approved.
“Is this drug absolutely dead in the water?” Charles Duncan, a senior biotechnology analyst at JMP Securities in New York, said in a telephone interview today. “No, but I do think it should be discounted by 90 percent.”
Orexigen said in a statement today that it will appeal the FDA’s decision, look at selling Contrave in international markets and pursue partnerships for new products. Orexigen and partner Takeda Pharmaceutical Co. had been in a race with Vivus Inc. and Arena Pharmaceuticals Inc. to introduce the first new obesity medicine in the U.S. in more than a decade.
Orexigen adjusted its strategy after the FDA denied the company’s proposal to sell the medicine for people with lower cardiovascular risk until data from the larger study could be reviewed, a move the company called “unprecedented.” Orexigen and Osaka-based Takeda plan to engage the FDA’s formal dispute resolution process within the next 30 days and expect a response from the agency 30 days later.
The FDA also told Orexigen that it plans to ask an advisory committee early next year to discuss changing the cardiovascular safety requirements for all diet pills, suggesting all products under development will be subject to a “different bar” for approval, Orexigen Chief Executive Officer Michael Narachi said.
“All bets are off until the results of that,” Narachi told investors and analysts today on a conference call.
Vivus, of Mountain View, California, fell 67 cents, or 7.9 percent, to $7.87 in Nasdaq trading. San Diego-based Arena dropped 4 cents, or 2.9 percent, to $1.37.
Orexigen’s decision doesn’t affect Vivus’s plans to submit the additional data requested by the FDA on its drug Qnexa in the fourth quarter, said Timothy Morris, Vivus’s chief financial officer, in an e-mailed statement. Arena, which is developing a medicine called lorcaserin with Tokyo-based Eisai Co., is also “moving forward to do what’s needed” to bring its drug to patients, said David Schull, an outside spokesman for the company, in an e-mail today.
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