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Orexigen Stock Up on Commercialization Deal for Contrave

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Orexigen Therapeutics, Inc.’s shares were up 4.2% after the company announced that it has entered into a commercialization and distributorship agreement with Valeant Canada, a subsidiary of Valeant Pharmaceuticals International, Inc. , for its obesity drug, Contrave (EU trade name: Mysimba), in Canada.

Under the terms of the agreement, Valeant will be responsible for a regulatory approval in Canada and for all commercialization activity and expenses. On the other hand, Orexigen would supply Contrave tablets for an agreed transfer price, based on certain potential regulatory and sales milestone payments.

A regulatory application for Contrave in Canada is expected to be filed by Jan 2017.

Note that Contrave was approved in the U.S. in 2014, as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in adults with an initial body mass index (BMI) of 30 kg/m2 or greater (obese), or 27 kg/m2 or greater (overweight) in the presence of at least one weight-related comorbid condition.

We remind investors that in Mar 2016, Orexigen struck a deal with Valeant to commercialize Mysimba across 19 countries in central and eastern Europe. The companies anticipate a launch of the drug in 11 countries by the fourth quarter of 2016. This would be followed by its launch in two more countries in the first quarter of 2017.

According to data from Statistics Canada, almost two-thirds of adult Canadians are either overweight or obese. It has been estimated that each year, the economic burden of obesity ranges from $4.6–$7.1 billion in Canada.

The obesity market is already crowded with drugs like Belviq, Qsymia and Saxenda, among others and competition intensifying with the entry of new products.

Orexigen currently has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Pacira Pharmaceuticals, Inc. (PCRX - Free Report) and ANI Pharmaceuticals, Inc. (ANIP - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy).

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