Orexigen Therapeutics, Inc. (NASDAQ: OREX)
Orexigen took a major hit in the market earlier this week. Unfortunately, the company announced that it will be stopping testing on the cardiovascular candidate known as Contrave. As a result, the stock dived. However, today we’re starting to see gains for the first time since the bad news; leading investors to ask, “Is OREX going to bounce back?” Personally, I don’t think we’re going to see any massive growth any time soon. So below, we’ll talk about why the Contrave studies were stopped, how it affected OREX stock, and what we can expect to see in the future. So, let’s get right to it.
Why The Contrave Studies Were Stopped
The bottom line is that after a several studies, Contrave proved to be ineffective. In preliminary studies, Contrave seemed like it may be effective, and OREX released those results. However, this is a classic case that proves that no moves should be making on a pre-judgement basis. Here’s what Steve Nissen, the lead researcher for for the Cleveland Clinic Cardiovascular unit had to say about the results…
“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 demonstrates 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 To The News
As I’m sure you could imagine, Orexigen investors weren’t happy with the fact that Contrave studies are going to stop. The reality is, the company has spent an amazing amount of money on the discovery and development of this drug; and that money is now going down the drain. As a result, OREX stock fell hard; losing nearly 30% since the break of the news.
What We’re Seeing In The Market Today
Today, the story seems to be a bit different. Investors are starting to pump the value of OREX back up in the market. Currently (12:44), OREX is trading at $5.11 per share after a gain of 1.79% so far today.
Can Orexigen Recover?
Now the big question is “Can OREX bounce back in the market?” In my opinion, the answer is yes, but it’s going to take several years. Orexigen is of course going to look for new candidates. However, those candidates aren’t likely to hit the market for at least 7 years. So, in the short term, I’m not expecting to see anything too positive out of the stock. However, in the long term, things may be different. Nonetheless, I don’t see any reason to start pumping investment dollars into the company at the moment.
What Do You Think?
Will OREX recover? Why or why not? Let us know in the comments below!