SAN DIEGO (TheStreet) -- The going rate the Japanese are willing to pay for development rights to a unapproved obesity drugs seems to be $50 million.
A $50 million upfront fee is what Takeda Pharmaceutical Co. will pay Orexigen Therapeutics (OREX) to secure North American marketing rights to Contrave, Orexigen's experimental obesity drug, according to terms announced Thursday.
Orexigen shares closed Wednesday at $4.59, ahead of the partnership announcement.The relatively small upfront payments, especially for drugs already under review by the U.S. Food and Drug Administration, reflect a cautious outlook towards the approvability and commercial potential for these drugs. It's also worth noting that to date, none of the large U.S.-based pharmaceutical companies have been willing to sign obesity drug deals. The Orexigen-Takeda partnertship leaves Vivus (VVUS) as the only U.S.-based obesity drug developer without a larger marketing partner. An FDA advisory panel in July voted against recommending approval of Vivus' Qnexa, fearing the drug's long-term safety. Similar FDA panels will be reviewing Arena's lorcaserin on Sept. 16 and Orexigen's Contrave on Dec. 7. In exchange for the $50 million upfront payment, Takeda receives exclusive Contrave marketing rights to Contrave in the U.S., Canada and Mexico. Orexigen will have the right to co-promote the drug. Takeda will pay upwards of an additional $1 billion to Orexigen upon Contrave achieving certain, undisclosed, regulatory and sales-based milestones. Takeda will also pay tiered double-digit royalty payments on net sales of Contrave in North America. Again, the future terms of the Orexigen-Takeda partnership mirror those signed earlier by Arena and Eisai. Contrave is similar to Vivus' Qnexa in that it's a two-drug combination designed to help patients lose weight. Contrave consists of two currently approved drugs combined together to suppress appetite and fight food cravings. One of the drugs in Contrave is naltrexone, currently used to fight opioid and alcohol addiction; the other drug is the antidepressant bupropion. Phase III studies demonstrated that Contrave helps patients lose weight, but the drug also causes an increase in blood pressure, which has raised some doubts about the drug's approvability, especially in an regulatory environment where the cardiovascular safety of weight-loss drugs is being heavily scrutinized. On Sept. 15, an FDA panel will consider whether to allow Abbott Labs to continue selling the weight-loss drug Meridia after a long-term study tied the drug's use to an increase in heart attacks and strokes. Meridia also causes an increase in blood pressure and heart rate.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV