The biotech industry skyrocketed in 2012 as a result of an increase in the number of new drug approvals. Through September 2012, the US Federal Drug Administration (FDA) approved twenty-two new drugs. There is an improving trend for FDA review approvals and a rise in the rate of new drug approval for rare diseases. Here is a company that is about to get approval for a new drug.
A bio-pharmaceutical company focused on the treatment of obesity, Orexigen Therapeutic Inc (NASDAQ: OREX) has completed phase III clinical trials for Contrave. To fast track the approval process, Orexigen is discussing a faster resubmission path of the New Drug Application (NDA) Contrave with the FDA. When Aetna (NYSE: AET) agreed to provide coverage for the anti-obesity drug, Orexigen shares surged in the market.
The Company’s other product candidate, Empatic, has completed Phase II clinical trials. It is a fixed dose combination of two previous drugs used for the treatment of epilepsy , depression, and smoking cessation. Orexigen developed its own proprietary SR version of the drugs in an effort to improve tolerance for the drug.
“We expect 2013 to be a pivotal year for our company,” said Michael Narachi, Orexigen’s CEO. “US approval of Contrave could come as early as late 2013, and we’re working closely with our North American partner, Takeda, to prepare for commercialization.”
For the three months ended September 30, 2012, Orexigen had $56.1 million in cash and equivalents, and an additional $52.2 million in marketable securities. The company projected the use of $70 million to $75 million in cash in 2012, resulting in a year-end balance of cash, cash equivalent, and marketable securities of between $130 million to $135 million. In October 2012, Orexigen completed a follow-on public offering of common stock raising net proceeds of approximately $56.5 million.
Total operating expenses for the third quarter of 2012 were $31.5 million, compared to $5.4 million for the third quarter of 2011. The increase reflects an increase in research and development expenses associated with the light study of Contrave. The company expects some clinical trial costs originally projected for 2013 to now be incurred in 2012, leading to a commensurate reduction in anticipated clinical trial costs for 2013.
Although procedural details need to be addressed, Orexigen is optimistic that its discussion with the FDA could result in faster path to resubmission of the Contrave NDA. In November, it announced an update to the projected time frame for completion of enrollment of the Contrave® clinical trial. Orexigen now expects to complete enrollment of patients required for the interim analysis in the first quarter of 2013, potentially reducing by half the original projections.
Its competitors are Abbott Laboratories (NYSE: ABT), GlaxoSmithKline plc (NYSE: GSK), and Roche Holding AG (OTC: RHHBY). Trading at a cheap price of about $6 per share and having a market capitalization of $489.54 million, consider putting this company in your watch list. It could turn out to be a solid investment in the near future.