FDA rejects Orexigen diet drug over heart risks

But he said such studies tend to be “fairly large and take a fair amount of time.

“It’s safe to say we would need additional capital” to fund the study, Narachi said, noting the company had $100 million in cash at the end of September.

Among Orexigen’s major investors are Domain Associates LLC, S.A.C. Capital Advisors, and New Enterprise Associates, according to recent securities filings and Thomson Reuters data.

Many industry analysts thought Contrave was on track for approval in the coming months. In Orexigen studies of the drug, at least 35 percent of patients lost 5 percent or more of their body weight.

The research also showed a slight rise in blood pressure and pulse rates with Contrave vs. a placebo. The FDA panel of outside experts urged a long-term study of Contrave’s heart risks after approval.

While the agreement between Takeda and Orexigen calls for them to share responsibility for post-approval safety studies, Orexigen alone is responsible for pre-approval studies, such as the heart trial required by the FDA, Narachi said.

JPMorgan analyst Cory Kasimov said he would not be surprised if Takeda walks away from the drug.

Another analyst, Charles Duncan of JMP Securities, said Takeda still had time to profit from the drug because its patent life runs until 2024, and it might be in the Japanese company’s interest to pay for the trial.

“It is not the end of the road for Contrave,” Duncan said.

The fate of Contrave is key to California-based Orexigen, which focuses solely on obesity drugs and has no products on the market.

Kasimov said he would assign little value to Orexigen’s other obesity asset because it also contains bupropion.

Drugmakers trying to fight fat with a pill have been thwarted for decades by serious side effects, and few such products are available in the United States.

Vivus and Arena, whose obesity-drug candidates were rejected in October, are trying to meet FDA demands for more data on potential side effects.

Shares of Vivus closed down 15.42 percent, or $1.38, to $7.57 on Tuesday, while Arena’s beaten-down stock closed up 10 cents, or 6.33 percent, to $1.68.

“The calculus that people have to make as they embark on obesity drug development is that it’s probably going to take longer and it’s probably going to be more extensive,” Lazard’s Tanner said.

(Additional reporting by Esha Dey, Lisa Richwine and Daniel Bases; editing by Gerald E. McCormick, John Wallace, Lisa Von Ahn and Carol Bishopric)

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By Lewis Krauskopf

NEW YORK