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Orexigen Receives $22M Milestone Payment for Contrave

Orexigen Therapeutics, Inc.OREX received a total of $22 million in milestone payments for its obesity drug, Contrave (EU trade name: Mysimba), from its partners, Takeda Pharmaceutical Company Limited TKPYY and Kwang Dong Pharmaceutical Company Ltd.

$15M Milestone Payment from Takeda

Orexigen received the first of three $15 million milestone payments from Takeda. The company expects to receive two additional milestone payments of $15 million from Takeda in the fourth quarter of 2016 and 2017, respectively.

We note that Orexigen had amended and restated its collaboration agreement with Takeda for Contrave in Jul 2015. While Takeda retained rights to Contrave in the U.S., it returned rights to Canada and Mexico. Moreover, the companies resolved all outstanding disputes. However, the original terms regarding royalties and milestone payments payable to Orexigen remained unchanged with one difference - Orexigen is now eligible to receive up to $105 million in additional milestone payments depending on the fulfillment of certain conditions.

$7M Milestone Payment from Kwang Dong

Orexigen also received an upfront payment of $7 million from Korea-based leading pharmaceutical company, Kwang Dong.

We remind investors that the companies had signed an agreement for the distribution of Contrave in South Korea in Aug 2015. While regulatory approval and all commercialization activity and expenses will be handled by Kwang Dong, Orexigen will be supplying Contrave to its partner. Kwang Dong expects to begin commercialization of Contrave in the second half of 2016, provided it gains approval.

Meanwhile, Orexigen informed that it expects to end 2015 with approximately $190-200 million in cash and cash equivalents.

Orexigen's sole marketed product, Contrave, is approved both in the U.S. and EU for weight management. Per Takeda, U.S. net sales of Contrave were $27.5 million in the first half of 2015.

We note that the obesity market already has products like Qsymia, Belviq and Saxenda. Meanwhile, competition is getting more intense with several health care companies looking to bring obesity treatments to the market.

Orexigen is a Zacks Rank #4 (Sell) stock. A couple of better-ranked stocks in the health care sector are Gilead Sciences Inc. GILD and Regeneron Pharmaceuticals, Inc. REGN . Both carry a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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