Orexigen Therapeutics, Inc. (NASDAQ: OREX)
Orexigen Therapeutics is having an interesting day in the market today after announcing big changes with regard to CONTRAVE. Today, we’ll talk about the changes the company is making, what we’re seeing in the market as a result, and what we can expect to see from OREX moving forward. So, let’s get right to it…
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OREX Cancels Agreement With Takeda Pharmaceuticals
For quite a while, Orexigen and Takeda Pharmaceuticals have been in the midst of a collaboration agreement surrounding CONTRAVE. It was announced today that the companies have made the decision to terminate the collaboration agreement surrounding the weight management drug. OREX believes that the cancellation of the agreement will greatly increase long-term potential with regard to corporate profitablility as well as open up multiple paths for greater value creation for its shareholders.
OREX Quickly Rebounds With Valeant Pharmaceuticals
Shortly after it was announced that Orexigen would be cancelling its agreement with Takeda, another big announcement was made. OREX announced that it has entered into a commercialization agreement with Valeant Pharmaceuticals (NYSE: VRX) under which VRX will retain commercialization rights to CONTRAVE in the United States as well as in Mysimba in Central and Eastern Europe.
How The Market Reacted To The News
As investors, we know that the news moves the market. Any time there is positive news with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with that company. Adversely, any time there is negative news with regard to a publicly-traded company, we can expect to see declines. In after-hours trading, OREX was having a great time. However, following the release of the news, we saw massive declines on the stock as investors showed their disapproval of the movement. Currently (10:54), OREX is trading at $0.66 per share after a loss of $0.04 per share or 5.67% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see from OREX. In the short term, things aren’t looking good. It’s clear that investors are concerned with Orexigen’s decision to sign the agreement with Valeant Pharmaceuticals. The truth is, Valeant Pharmaceuticals has been thrown into the fire in recent months following the uncovering of its relationship with the underground pharmacy, Philidor. Since then, the company has been struggling to lift prescription numbers, eventually signing an agreement with Walgreens for the sale of its treatments. However, the numbers still aren’t perfect. At the moment, OREX investors are worried that the agreement signed with VRX will lead to declining sales of CONTRAVE. However, I don’t believe that this will be the case. Believe it or not, I have quite a bit of faith in VRX to do the right thing and really pick things up here. With that said, I’m expecting to see strong gains in Orexigen in the long term as a result of this agreement.
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What Do You Think?
Where do you think OREX is headed moving forward and why? Let us know your opinion in the comments below!
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