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VIDEOOrexigen Fattens Its Coffers With Takeda Cash
The biotech and the Japanese pharmaceutical company settle on an agreement to market Contrave.
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The Japanese company is only giving the biotech $50 million upfront -- that's a small amount for a drug that has such big prospects (the obesity market is worth upwards of $2 billion). The deal is weighted heavily toward sales after approval, meaning Takeda won't face a huge loss if the regulatory process for Contrave hits a snag. The rest of the deal includes payments based on regulatory and sales milestones, as well as double-digit royalties for Orexigen should Contrave reach the market. The companies said during a conference call on Thursday morning that Orexigen will handle manufacturing, while Takeda will fit the bill. The pair has also agreed to split the cost of any post-marketing studies that may be required -- Takeda will pick up 75% of these costs. (But any pre-market costs still fall to Orexigen.)
"Takeda is an ideal partner for Contrave given its proven track record in commercializing innovative medicines and its commitment to the treatment of obesity," said Michael Narachi, president and CEO of Orexigen.
During the conference call, Orexigen and Takeda spoke about their other obesity prospects in their respective pipelines. Orexigen said it will hold off on the development of Empatic until after the approval of Contrave and that it won't move forward into phase III trials of the drug unless it finds a partner. The biotech had publicly stated in the past that it was hoping to partner the drugs together, but Narachi said on the conference all that the company believes it can get a better deal for Empatic if Contrave is approved.
As for Takeda, it's paired on an obesity drug with Amylin Pharmaceuticals (AMLN). Takeda executives said Contrave is considered to be a complimentary product to the Amylin products in development.
Orexigen's competition, Arena Pharmaceuticals (ARNA), was the first of the three biotechs in the obesity race to snag a partner. Arena announced at the beginning of July that it had caught the attention of Japan's Eisai; brokering a deal with a $50 million upfront payment and prospects of reaching $1.16 billion.
(To read more about Arena's deal, see Arena Garners Low-Faith Deal From Eisai for Its Obesity Drug)
It couldn't have been easy for Orexigen to shore up this deal. The company has been lagging behind its two competitors, Arena and Vivus (VVUS), throughout the regulatory process. Vivus and Arena filed New Drug Applications with the FDA last December, but Orexigen didn't get its application in until well into the new year; the other two biotechs are expecting approval decisions by the end of October, while Orexigen will have to wait until January.
Making it even harder to strike a deal has been the added fear that these drugs may never make it to market. Prospects that any of these three drugs will get approved got a little murkier in mid-July when an advisory panel to the FDA voted against the approval of Vivus' Qnexa, which until this point had largely been the favorite of analysts and investors. Arena will face a similar panel on September 16 (Join Minyanville for the live blog of the event.)
See also, How to Trade on an FDA Advisory Panel
Investors and analysts worry that Arena will get a negative vote based on its mild risk-versus-reward profile; Arena's Lorqess, also known as lorcaserin, has shown to be the least effective weight-loss agent of the bunch. It doesn't help that the same panel of experts will be doing two-day duty -- they'll be presiding over the advisory meeting for Abbott Laboratories' (ABT) obesity drug Meridia the day before. New data has shown that the already-approved drug has major safety concerns. (Join Minyanville on September 15 for the live blog of the Meridia panel).
Orexigen will be keeping a close eye on Vivus' Qnexa. Unlike Lorqess, Qnexa and Contrave are both combination pills. Contrave is a combination of two therapies that have been on the market for years. It's made up of a sustained-release version of bupropion, also known as the anti-depressant Wellbutrin, and a sustained-release version of naltrexone, which is primarily used in the management of alcohol and drug dependence. Executives for the biotech said on Thursday that they'll be watching the regulatory process for the combination pills very closely.
Contrave will face an advisory panel on December 7.
(For more on Contrave, see Orexigen Steps Out of the Shadows in Obesity Race)
Twitter: @biowriterchik
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