SAN DIEGO ( TheStreet) -- Orexigen Therapeutics ( OREX) is restarting development of its rejected obesity drug Contrave after U.S. regulators agreed to allow the company to conduct a potentially shorter follow-up clinical trial.

The U.S. Food and Drug Administration rejected Contrave last February, citing concerns about the risk the drug posed to the cardiovascular health of patients. FDA told Orexigen that Contrave would not be re-considered for approval without the company running a large, expensive and time-consuming study to assess the drug's heart-safety risk.

Orexigen appealed the FDA's decision and Tuesday announced that it had won some concessions from regulators. Orexigen is still required to conduct a follow-on heart-safety study of Contrave, but FDA will allow the company to resubmit for approval if an interim analysis of the safety study comes back clean.

Orexigen estimates it will take less than two years to run the Contrave safety study through the planned interim analysis, based on enrollment of less than 10,000 obese patients. The company plans on meeting with FDA to nail down a final study design with the hopes of starting the study in the first half of 2012.

That timelines sets up a potential second FDA approval decision on Contrave in 2014.

Japanese drug maker Takeda is Orexigen's North American partner for Contrave. Orexigen said Tuesday it will seek a deal to partner the drug in the rest of the world.

Orexigen ended the second quarter with $70 million in cash. The company did not say how much it expects the Contrave safety study to cost, but it's widely assumed that the company will need to raise money -- either by selling additional stock or partnering the drug -- in order to pay the cost of the new study.

Contrave is a combination pill consisting of two approved drugs, naltrexone and bupropion.

Vivus ( VVUS) and Arena Pharmaceuticals ( ARNA) are also trying to resubmit obesity drugs for approval after FDA rejections last year.

Orexigen shares were up 2 cents to $1.49 in late Tuesday trading.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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