JPMorgan Confident Orexigen's (OREX) Will Receive FDA Approval; Comments on Meeting

December 21, 2012 11:56 AM EST
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Orexigen Therapeutics (Nasdaq: OREX) shares are up on the session following a little pressure earlier in the week on its Contrave NDA resubmission.

JPMorgan is out with comments following Orexigen's analyst day this week. The firm remains confident on approvability of Contrave and that any good news from Arena Pharmaceuticals (Nasdaq: ARNA) and VIVUS, Inc. (Nasdaq: VVUS) will be a positive for Orexigen. The firm noted, "On top of that, the company also has important, high-probability clinical (and potentially regulatory) events that could serve as meaningful catalysts."

On the LIGHT study, JPMorgan thinks it would be "highly unlikely that Contrave increases the risk of MACE (let alone doubles it), as buproprion - the Contrave component in question - has been used in >50M pts over 25 yrs, and we assume we would know by now if it were cardiotoxic."

On talks with the FDA over NDA resubmission in advanced of interim LIGHT data, JPMorgan noted that discussions are still ongoing. The firm said, "Assuming a positive outcome from these talks, the FDA may be in a position to act on Contrave soon after interim data, which could speed a potential approval up by [about 3 to 4 months]."

Management expectations for the LIGHT market: "Management discussed the obvious unmet medical need with only [about 2 million of 107 million] target patients actually treated today given the huge gap in options between diet/exercise on one end and surgery on the other. In terms of filling this need, Orexigen suggests that the market for obesity therapeutics could grow 3-4x within 5 years from a 2012 base of ~7.8M scripts (vast majority of which are for phentermine). By 2020, the company anticipates that [about 7 to 8 million] obese patients will be treated (out of 131M total) and ~30M Rx will be written."

On Takeda: "[Orexigen managment] sees its partnership with Takeda (JPM analyst Masayuki Onozuka) as a key potential advantage vs. the competition. Takeda will target >50k docs upon approval of Contrave. For perspective, VIVUS is currently only targeting ~25k docs with a field force of 150 contract reps (Eisai/ARNA will have ~200 reps)."

JPMorgan rates Orexigen at Overweight with a $12 price target.

Shares are up 0.4 percent Friday.

For an analyst ratings summary and ratings history on Orexigen Therapeutics click here. For more ratings news on Orexigen Therapeutics click here.

Shares of Orexigen Therapeutics closed at $5.22 yesterday.

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