Orexigen Therapeutics, Inc. (NASDAQ:OREX) released positive results for its diet drug, Contrave, despite the FDA telling them not to. The company revealed that during the most recent clinical trial it was discovered that the drug was effective and showed cardiovascular benefits.
Drug regulators were not happy that the company released the findings prematurely and criticized the drug maker for it happening. During the study, patients using the drug were found to have less adverse cardiovascular events and deaths than those that were given the placebo. The study had a sampling of 8,910 patients that were obese. The drug was approved by the FDA for sale and doctors were allowed to legally prescribe it to their patients in September of 2014. The pill is designed to be used along with a low calorie diet and in conjunction with an exercise program. The drug helps to reduce appetites and also stop hunger cravings during chronic weight management programs.
The clinical trial had nothing to do with cardiovascular disease but the evidence discovered was enough to cause the notation of the benefits. Patients that are obese generally are more susceptible to cardiovascular diseases and if the drug helps contain those issues it becomes a double benefit for users. This can create a strong marketing advantage for the company and bolster projected sales even more. The company claims it used the data from the study to file for a patent and that once the US Patent Office published the request, they thought the information was considered public. The FDA is concerned that by releasing the data early the rest of the trial is being jeopardized. The FDA considers the data unreliable at this point and does not want the final results to become jaded or patients in the study to report false results. This effect is similar to when they take a placebo, and believe it has worked effectively.
The stock blew up on the news release and needs to consolidate at this level before making any further moves.