LA JOLLA, Calif. ( TheStreet) -- The U.S. Food and Drug Adminstration rejected Orexigen Therapeutics' (OREX) weight-loss drug Contrave Tuesday, instructing the company that Contrave is not approvable without new a clinical trial to assess the drug's cardiac safety.
The FDA's decision is the worst-case scenario for Orexigen and will almost undoubtedly cause the stock to fall sharply once an early Tuesday trading halt is lifted. In rejecting Orexigen's Contrave, FDA went against the recommendation of an outside advisory committee which voted in December that Contrave was approvable.
"We are surprised and extremely disappointed with the agency's request in light of the extensive discussion and resulting vote on this topic at the December 7 Advisory Committee meeting," said Michael Narachi, Orexigen's CEO. Orexigen did not make public a verbatim copy of the FDA's complete response letter Tuesday.
In order for Contrave to be considered for approval again, FDA told Orexigen to conduct a new clinical trial to ensure that long-term use of Contrave does not cause heart problems in patients.Orexigen was seeking to be the first company to receive FDA approval for a new obesity drug in years. Vivus (VVUS) and Arena Pharmaceuticals (ARNA) each had obesity drugs rejected by FDA last year. Vivus hopes to resubmit its drug Qnexa later this year, while Arena isn't likely to be in a position to resubmit lorcaserin until 2012. Orexigen shares closed Monday $9.09. --Written by Adam Feuerstein in Boston.
>To contact the writer of this article, click here: Adam Feuerstein. >To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein. >To submit a news tip, send an email to: firstname.lastname@example.org.
Select the service that is right for you!COMPARE ALL SERVICES
- $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
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV