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Narrower Loss at Orexigen in Q4

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Orexigen Therapeutics, Inc. reported a net loss of 21 cents per share in the fourth quarter of 2013, much narrower than the year-ago loss of 41 cents. However, loss was wider than the Zacks Consensus Estimate of a loss of 19 cents. Revenues remained flat year over year at $0.9 million, in line with the Zacks Consensus Estimate.

Orexigen reported full-year 2013 loss of 80 cents per share, wider than the Zacks Consensus Estimate of a loss of 78 cents but much narrower than the 2012 loss of $1.27 per share. Full year revenues of $3.4 million were flat year over year and in line with the Zacks Consensus Estimate.

Operating expenses decreased to $21.8 million during the fourth quarter of 2013 from $33.3 million in fourth quarter 2012, primarily due to lower research and development (R&D) expenses. R&D expenses decreased 45.2% from the year-ago period to $15.5 million primarily due to lower costs associated with the Light Study on the company’s obesity candidate, NB32. General and administrative (G&A) expenses were up 24.8% to $6.3 million.

Pipeline Update

Orexigen’s lead pipeline candidate, NB32, is currently under regulatory review in both the U.S. and the EU. The U.S. Food and Drug Administration (FDA) is expected to render a decision on NB32 by Jun 10, 2014, while a recommendation from the European Medicines Agency's Committee for Medicinal Products for Human Use is expected in the third quarter.

We note that the company has a collaboration agreement with Takeda Pharmaceutical Company Limited for the development and commercialization of NB32 in North America. Takeda has experience in the metabolic disorder market, which should be beneficial. The companies are planning to launch NB32, if approved, in the U.S. in the third quarter of 2014.

Apart from NB32, Orexigen’s pipeline includes another obesity candidate, Empatic (phase II completed). The company is looking for a partner to develop and commercialize the candidate, before initiating phase III studies.


Orexigen is confident of gaining approval for NB32 in both the U.S and EU . Thus, the company expects to receive milestone payments of $100 million from Takeda, after approval but before the first commercial sale of NB32. The company expects operating expenses to be between $75 million and $85 million in 2014.

Our Take

In the near term, we expect investor focus to remain on NB32. It is likely that NB32 will be approved both in the U.S. and EU given the positive data from the Light Study. This will also help Orexigen secure a lucrative partnership for NB32 in ex-North America in 2014.

However, we note that NB32, once launched, will enter a highly crowded obesity market with products like VIVUS Inc.’s (VVUS - Free Report) Qsymia.

Orexigen carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Alkermes (ALKS - Free Report) carrying a Zacks Rank #1 (Strong Buy).

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