Piper Jaffray Downgrades Orexigen Therapeutics (OREX) to Neutral
Piper Jaffray downgraded Orexigen Therapeutics (NASDAQ: OREX) from Overweight to Neutral with a price target of $2.00 (from $5.00).
Analyst Charles Duncan commented, "Yesterday Orexigen announced it plans to terminate its commercial partnership with Takeda for Contrave in the US market. We believe this could eventually be a positive for Contrave, both in terms of driving further market share gains as the top branded obesity drug, but also Orexigen’s take of the economic value of the franchise. In addition, Orexigen announced a distribution agreement for Mysimba with Valeant for 18 Central and Eastern European countries. This is an early example of its EU strategy, with more to come possibly in 2016. However, we now have lower visibility on the near-term impact for Contrave in the US market for the next 6-12 months, including the new US expense structure. Therefore, we are downgrading to Neutral pending improved insight into progress on the US commercial plan and revenue growth, as well as progress in higher-value Western European markets."
The firm cut FY 2016 EPS from ($0.37) to ($0.49) and FY 2017 EPS from ($0.24) to ($0.19).
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Shares of Orexigen Therapeutics closed at $0.64 yesterday.