Tomahawk, WI 09/15/2014 (Basicsmedia) – Patients suffering from obesity can finally heave a sigh of relief after the Food and Drug’s administration approved Orexigen Therapeutics, Inc. (NASDAQ:OREX)’s obesity drug, Contrave. Contrary to expectations, the approval did not result in an uplift on the company’s stock in the market, according to CNBC’s Meg Tirrell.
“It was supposed to be good news Orexigen therapeutics got word after a long battle that its obesity drug was approved by the FDA, but today its stock sunk it seems counter-intuitive. Obesity is a potential huge market including more than a third of U.S. adults,” said Mrs. Tirrell.
Contrave is only the third obesity drug to be cleared by the FDA in the last three years. Previously approved drugs have not been successful in terms of adoption as physicians remain skeptical about their safety standards. Orexigen Therapeutics, Inc. (NASDAQ:OREX)’s drop in the market can be attributed to investors remaining wary about Contrave potential, taking into consideration previous encounters with obesity drugs that have not lived-up to expectations.
Orexigen Therapeutics, Inc. (NASDAQ:OREX) has reportedly partnered with Japanese company Takeda to sell Contrave in the U.S. Orexigen remains confident that Takeda sales rep of up to 900 personnel will be of benefit in terms of sales for Contrave. Despite investors remaining skeptical about Orexigen, Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co. (NYSE:JPM) have already rated it as a ‘Buy.’
“Orexigen might be suffering from investors disappointments with previous drug; Qsymia from drug maker VIVUS, Inc. (NASDAQ:VVUS) and Belviq from Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). They were both approved in 2012, and initial sales have missed expectations. There are still safety concerns about obesity drugs after several including Fenfluramine were pulled from shelves over side effects,” said Mrs. Tirrell.
Costs continue to be another challenge for pharmaceuticals like Orexigen Therapeutics, Inc. (NASDAQ:OREX) in the development of obesity-related pills. Getting insurance companies to reimburse for the development of the drugs according to Mrs. Tirrell has also been an uphill task for most of the small pharmaceutical companies.