RBC Capital Sees Tough Road Ahead Following Orexigen Therapeutics' (OREX) Takeda Partnership Termination; Cuts PT to $0.60
RBC Capital maintained a Sector Perform rating on Orexigen Therapeutics (NASDAQ: OREX), and cut the price target to $0.60 (from $1.00), following the company's announced termination of the Takeda partnership. OREX plans to commercialize Contrave in the US by building its own commercial infrastructure. As outlined in the separation agreement, the two companies have agreed to a six-month transition period during which Takeda will continue to commercialize Contrave in the U.S. while paying Orexigen obligate royalties.
Analyst Simos Simeonidis commented, "Orexigen has announced the termination of the Takeda partnership and its plans to commercialize Contrave in the US by building its own commercial infrastructure at a cost of $80-$100M/year. We view it as highly unlikely that Orexigen's salesforce of 160 will manage to achieve what Takeda's salesforce of 900 was not able to do, despite having established physician and managed care relationships."
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Shares of Orexigen Therapeutics closed at $0.64 yesterday.