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Orexigen shares hit by FDA delay in obesity drug

Investors and analysts were confident that by the end of Wednesday, the Food and Drug Administration would have approved the third obesity drug in two years to enter the U.S. market. Not so, it turns out.

Orexigen Therapeutics said Wednesday morning the FDA delayed its decision on the drug for three months as the regulator and the company work out post-marketing safety monitoring requirements. Orexigen's stock sank 15 percent. (For the latest Orexigen stock quote, click here.)

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Shares of competitors Arena Pharmaceuticals and Vivus rose slightly. Their medicines, Belviq and Qsymia, were approved in 2012, both with requirements to do post-marketing studies to monitor safety. Many obesity drugs in the past have been pulled from the market, so regulators have heightened concerns about their safety, particularly their cardiovascular effects.

Why the delay for Orexigen?

The La Jolla, California-based company and marketing partner Takeda were required by the FDA to start a long-term cardiovascular outcomes trial before applying for approval of their drug, called Contrave or NB32. Despite the delay for getting to market, Orexigen Chief Executive Officer Mike Narachi said additional data ultimately will work in the drug's favor by supplying more safety information to physicians.

ammza12 | iStock | Getty Images

The problem is, having an ongoing study complicates things when it comes to data disclosures in the drug's labeling and post-marketing requirements, Narachi said in an interview Wednesday.

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"It's an issue that has to be grappled with, because typically all the information you use for drug approval is disclosed to the public," Narachi said by telephone. "In this case, we have to balance that disclosure policy with, 'Wait a minute, we have an ongoing blinded trial.' We don't want the regulators or the company to unblind the trial, otherwise it could call into question the utility of the data from the ongoing trial."

Translation: Trial results are kept private while the study is ongoing so patients aren't influenced by knowing how things are going. Narachi said there have been precedents for this situation involving diabetes drugs, and he sees a path forward. He said he expects approval by the new decision date, Sept. 11.

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