Orexigen Therapeutics (OREX)
Shares of Orexigen Therapeutics were up 40% on 3/3/15 when the company announced that early safety data showed that Contrave was not only safe to take but in addition it was able to reduce a patient’s risk of generating cardiovascular health issues such as a heart-attack. Contrave was approved by the FDA in September of 2014 to treat obesity patients who had a Body Mass Index — BMI — of 30 or greater and at least one weight-related condition. These early safety results were from a trial that the FDA made Orexigen run in order to meet the requirements of keeping Contrave on the market. In addition this safety study known as the “Light Study” was also created to assess the risk of patients taking this weight loss drug so they don’t suffer from cardiovascular problems.
The problem though is that shares of Orexigen tanked on 3/6/15 by 11% because of an article that came out the day before from Forbes that had an interview with a top FDA official about unethical behavior by the company. The top FDA official stated that Orexigen’s study results was “unreliable” and “misleading”. The safety results that were reported were early in nature but what biotech company doesn’t report early results to boost their share price? The problem though could have been that the data given to the company was only supposed to be seen between them and the FDA. Maybe Orexigen overstepped its bounds slightly but now the FDA is considering taking harsh action against the company. We don’t foresee the FDA outright pulling Contrave from the market, but more than likely the company will probably face some fines in terms of penalties. Do you believe that Orexigen overstepped its bounds to promote its company? Does the FDA have the right to be commenting on individually traded public companies or should that be left for the media to handle?
Abbvie (ABBV) and Pharmacyclics (PCYC)
Abbvie announced on Wed. 3/4/15 that it will acquire Pharmacyclics for about $21 billion dollars in a mixed cash and stock deal. That puts the final buyout price of Pharmacyclics for about $261 per share. Abbvie will now have access to Pharmacyclics’ pipeline including the popular blood cancer drug IMBRUVICA. The cancer drug IMBRUVICA was approved by the FDA to treat a rare blood cancer known as Chronic lymphocytic Leukemia – CLL — for patients who have at least attempted treatment with a previous therapy first. CLL is a rare blood and bone marrow cancer that slowly diminishes a patient’s body and allows the growth of an abundant amount of cancerous B-cells. Typically normal B-cells are good for the body because they allow the body to fight off diseases with antibodies — they are the immune system of the body. The problem is that these B-cells sometimes become malignant and then spread throughout the patient’s body causing damage. IMBRUVICA’s main function is to block the division of these malignant B-cells in the body. Abbvie has done a good thing by acquiring Pharmacyclics because it also gives the company access to other drugs in the pipeline.
Many analysts question if this deal actually made sense for Abbvie and that it was not a great idea to buy the company. We have to disagree with this sentiment, because Abbvie is looking at their long-term strategy in mind. For instance Gilead Sciences (GILD) bought a company back in 2011 known as Pharmasset. Gilead sciences bought Pharmasset for its Hepatitis C franchise for about $11 billion dollars but at that time Gilead Sciences was criticized for paying so much to acquire the company. As we can see now though with for Sovaldi the analysts were wrong and that acquisition has paid off greatly. IMBRUVICA has been off to a great start anyways and Pharmacyclics expects sales of IMBRUVICA to double to $1 billion dollars in 2015. Was Abbvie right to acquire Pharmacyclics? Was the price tag worth the sales that IMBRUVICA and other drugs in the pipeline may or may not do in the future the right move?
OHR Pharmaceuticals (OHRP)
OHR Pharmaceuticals shares soared on 3/2/15 after the company had announced that it had received positive results in a phase 2 trial in patients with — wet age-related macular degeneration — wet AMD. Wet AMD is a disease where the patient has vision loss. This occurs as the membrane under the retina thickens then breaks thereby causing the leaking of blood vessels. The leaking of blood vessels under the retina then causes vision loss for the patient. There is no way to reverse wet age-related macular degeneration at the moment but certain treatments can help if they are applied early. OHR Pharmaceuticals used their squalmine eye drops — OHR-102 — together with Roche (RHHBY) Lucentis to test against Lucentis as a mono-therapy alone. Lucentis is an injectable ranibizumab drug produced by Genetech, which is a subsidiary of Roche. The combination of eye drops and injectable Lucentis performed better than Lucentis mono-therapy alone in a phase 2 study. In addition the company reported that patients who took the combination therapy saw no increase in subretinal hyper-reflective material — SHRM — while the patients who took the mono-therapy Lucentis alone saw a 15% increase in SHRM over a 9-month period. Will shares of OHR Pharmaceuticals trade higher in the months to come? What do you think these results do for the bottom-line value enhancement of the company?