Orexigen Therapeutics, Inc. ( OREX ) swung to profit in the third quarter of 2014 with earnings of 9 cents per share beating the Zacks Consensus Estimate of 5 cents. The company had incurred a loss of 19 cents per share in the year-ago quarter. Shares of the company jumped over 33% following the earnings announcement.
Earnings were boosted by higher revenues. Orexigen recorded revenues of $30.9 million as compared to 0.9 million in the year-ago quarter. The company received two regulatory/development related milestone payments for its first approved product, Contrave. Revenues during the quarter were above the Zacks Consensus Estimate of $16 million.
Contrave was approved in the U.S. as an adjunct to a healthy diet (low on calories) and physical activity for chronic weight management in obese (Body Mass Index, or BMI, ≥ 30) or overweight (BMI ≥ 27) adults suffering from at least one weight-related co-morbid condition including high blood pressure, type II diabetes and high cholesterol.
Orexigen received a $20.0 million milestone payment regarding the U.S. approval of Contrave and a $10.0 million payment for the delivery of Contrave launch supplies from Takeda Pharmaceutical Company Ltd ( TKPYY ).
Regarding the Marketing Authorisation Application for Mysimba (EU trade name for Contrave), the company stated that it is expecting an opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) on the approval of the drug by year end.
Operating expenses decreased to $17.8 million during the third quarter of 2014 from $19.4 million a year ago, primarily due to lower research and development (R&D) expenses related to Contrave.
R&D expenses decreased 17.7% from the year-ago period to $10.7 million. General and administrative expenses were up 10.7% to $7.1 million.
We are encouraged by the U.S. approval of Contrave. With Contrave launched in the U.S., we expect investor focus to stay on the performance of the drug. We note that the obesity market is already crowded with products like VIVUS Inc.'s ( VVUS ) Qsymia among others. Investor interest is also expected to be on the EU status of the drug.
Orexigen carries a Zacks Rank #3 (Hold). A better-ranked health care stock,includes AMAG Pharmaceuticals, Inc. ( AMAG ) sporting a Zacks Rank #1 (Strong Buy).
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