Orexigen (OREX) Stock Dives After Terminating Contrave Testing

Orexigen Stock NewsOrexigen Therapeutics, Inc. (NASDAQ: OREX)

Orexigen Therapeutics stock was climbing recently; however, following far-from-positive news, the company’s stock is falling like a sack of bricks from the Empire State Building. Recently, the company announced the termination of their cardiovascular studies of the prospective drug Contrave; and investors clearly don’t like what they’re hearing. Today, we’ll discuss why the studies surround Contrave have been terminated, how the market reacted, and what we can expect from OREX moving forward. So, lets get right to it…

Why OREX Is Terminating Contrave Studies

This termination revolves around a study called “Light”; which was created to determine the effectiveness of Contrave. Unfortunately, information from the study showed that Contrave simply wasn’t effective; as early published information from the first part of the study in 2014 would have investors believe. Here’s what Steve Nissen, the lead researcher and chair of the Cleveland Clinic Cardiovascular unit had to say about the results of the study…
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These results show neither benefit nor harm for patients taking the drug, but are consistent with the requirement by the FDA that the Light Trial demonstrate an absence of a doubling of cardiovascular risk for patients taking the drug. The inconsistency of effects on cardiovascular outcomes between the first 25 percent and the second 25 percent of the Light Study clearly illustrates the risks inherent in pre-judgement of clinical trial results based upon an interim analysis and demonstrate why interim results should remain confidential during any ongoing trial.”

How The Market Reacted

For Orexigen shareholders, this is absolutely devastating news. As in any other case where devastating news comes out about a small-cap biotech company, the stock is falling dramatically! Currently (12:10), OREX is trading at $5.07 per share after a loss of 14.51%. That follows a major decline in the stock yesterday as well!

What We Can Expect To See From OREX Moving Forward

Moving forward, I’m not quite sure I’m expecting to see much positivity from Orexigen stock. The reality is that with Contrave out of the picture, Orexigen is essentially going to be required to start over with regard to cardiovascular studies. The new studies will have an end date in 2022; which means that OREX is now faced with 7 years of new testing, studies, and additional expenses. Unfortunately, there aren’t many investors that are going to be willing to stick around through 7 years of added expenses; so, I’m expecting to see more declines.

What Do You Think?

Where do you think OREX is headed and why? Let us know your opinion in the comments below!

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