OREX

Orexigen Therapeutics, Inc. (OREX)

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Orexigen Therapeutics, Inc. (OREX)

JPMorgan Global Healthcare Conference Call
January 8, 2013 1:30 pm ET

Executives

Michael Narachi – President and Chief Executive Officer

Analysts

Cory Kasimov – JPMorgan

Presentation

Cory Kasimov – JPMorgan

Good morning, everybody. My name is Cory Kasimov. I’m a biotech analyst at JPMorgan. It’s my pleasure to introduce Orexigen Therapeutics, obviously a very big year for the company, upcoming with some pivotal data expected later in 2013. Here to tell us more about the story is the company’s CEO Mike Narachi and please note that following Mike’s presentation, there will be a break out just down the hall in the right in the Sussex room. So with that, I’ll turn it over to Mike.

Michael Narachi

Thanks and thanks for coming. I will be making forward-looking statements and I encourage you to look at our SEC filings either on the SEC web page or the Orexigen website and look at the risk factors regarding investments in Orexigen.

2013 is going to be a pivotal year not just for Orexigen, but I think lots of new information is continuing to come in the overall obesity space with the new entrance. For us, finalizing our submission path, we had a press release recently with some progress we made with the FDA following a dispute resolution, a meeting with the review division, they clarified a path be efficient with the data, I’ll talk about that later in the talk that would then – with that clarity now, we know exactly what to do when we get our data from the Light trial that takes us through an interim analysis or resubmission. We also plan a European submission this year and major progress on commercialization partnership in an important transaction for us, for rest of the world.

I'll talk a little bit about the obesity prevalence. We all know it's a global healthcare epidemic, it's a big problem. But let's focus on the lower right hand quadrant of the slide, this is our budget problem in the United States, but look what’s really driving the percent, the spending as the percent of GDP its our healthcare. And the major driver of that dramatic increase in cost that’s unsustainable overtime is chronic illness. And most of its preventable chronic illness and obesity is at the heart of this. And I think this is important to recognize, because the recognition of this is growing, and it’s causing inevitability of change.

A lot of you have asked us, what's going to be this time about obesity therapeutics? Why are they going to be big? Why are this going to be sustainable? Why isn’t it going to be a blooming bud? This is a big part of the issue, because now I think many things, many forces are combining, political, socio-economic, personal economic, and medical forces are combining to say we have to do something about it to address this epidemic, and multi-factorial approaches are being tried, here are just some examples.

The Affordable Healthcare Act typically were allowed to charge a differential price for controllable factors of about 20%, the ACA lets you automatically now take it to 30% differential pricing. And it gives a secretary of the discretion to allow employers to take it to 50% differential pricing, that's a big deal. And now when you can exclude people for pre-existing conditions, people are going to use differential pricing for healthcare.

Most large employers already have wellness programs with barometric spending related to obesity. That trend is increasing. We had early programs from companies like Safeway that use character and stick type programs. The state of Alabama charges state employees extra money if you are a smoker and extra money if you are an obese employee and not trying to lose weight. I read yesterday in the U.K. Guardian, they are thinking about for the people that are on the [inter gent] programs, housing and food support that if you're not compliant with the diet program, it’s been prescribed by the doctor, they are going to lower your payments from the government.

So this is happening fast. In 2011, there was a bill in front of Congress addressing obesity. In 2012, there were two bills addressing obesity, this specifically called out how to pay for prescription drugs. I expect more of those bills and perhaps success, trying to get rid of the medicare exclusion, et cetera. So this change is inevitable and it's coming fast.

Contrave is poised to deliver. The path to approval has been clarified through a number of dispute cycles with the FDA. We then capitalize the company to fund the Life Study, which is a large cardiovascular outcomes trial that’s required pre-approval for us. It’s an event driven trial and non-inferiority trial. The probability of success for that study we think is very high, and I’ll talk a little bit about that today.

And then path to commercial success I think is clear, large growing market, lot of unmet need, limited competition, and we have a partnership, a fantastic partnership with Takeda, that’s going to bring not only the skills, but essential, high levels of resources to the commercialization effort.

Talk just for a minute on the Light Study, I won’t dwell on it much, because we’ve talked a lot about this over the last nine months. The complete response letter that we’ve received after the full NDA was reviewed and Contrave identified a single approval deficiency and that is exclude a certain amount of risk. Turns out they want us to exclude a doubling of risk for Contrave. So the Light Study designed as a large cardiovascular outcomes trial focused on Core MACE, heart attack, stroke and CV death and we need to exclude that doubling at the interim analysis as a gate to approval.

Read the rest of this transcript for free on seekingalpha.com