Shares of Orexigen Therapeutics Inc. crashed further 9% on Mar 12, after plummeting 76% a day before, following the news of the company filing for bankruptcy.
Orexigen’s stock has lost 77.5% in the last three months, underperforming the industry’s gain of 2.2%.
On Mar 12, Orexigen announced that it has decided to file a voluntary petition under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The company also plans to file a motion seeking authorization to pursue an auction and sale process under Section 363 of the U.S. Bankruptcy Code.
The bidding process is expected to conclude by May 18.
Meanwhile, Orexigen has filed a series of motions with the court thereby seeking to ensure the continuation of normal operations during this tenure. The company also has the support of a controlling number of its senior secured noteholders for this process, who have made a financing commitment of 35 million.
The news comes in the wake of an unimpressive performance of its weight-loss drug Contrave which is marketed as Mysimba in the European Union. The drug was approved by the FDA in September 2014 for use as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in adults with an initial body mass index 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 (e.g., hypertension, type 2 diabetes mellitus or dyslipidemia). Accelerated commercialization efforts have increased costs and hurt the company’s profit.
Contrave is Orexigen’s only approved and marketed drug. However, being a late entrant in the obesity market, the drug faced stiff competition from products like Roche’s (RHHBY - Free Report) Xenical (orlistat) Novo Nordisk’s (NVO - Free Report) Saxenda and Arena Pharmaceuticals’s (ARNA - Free Report) Belviq among others.
Orexigen has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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