Orexigen Therapeutics CEO Discusses Q2 2012 Results - Earnings Call Transcript

Orexigen Therapeutics, Inc. (OREX)

Q2 2012 Earnings Call

August 7, 2012, 8:30 a.m. ET


Heather Turner – VP & General Counsel

Mike Narachi – President and CEO

Preston Klassen – SVP, Global Contrave Team

Jay Hagen – Chief Business Officer


Charles Duncan – JMP Securities

Marko Kozul – Leerink Swann

Steve Byrne (Tazine) – BoA/Merrill Lynch

Christian Glennie – Edison Investments

Charles Duncan – JMP Securities



Welcome to the Q2 2012 Orexigen Therapeutics, Inc. earnings conference call. My name is Lorraine and I will be your operator for today's call. (Operator Instructions).

I will now turn the call over Miss Heather Turner. Miss Tuner, you may begin.

Heather Turner

Hello, and thank you for joining us to discuss the company's second quarter 2012 financial results. I am joined on this call by Mike Narachi, Chief Executive Officer, Dr. Preston Klassen, Senior Vice President Development, Jay Hagen, Chief Business Officer, and McDavid Stilwell, Vice President of Corporate Communications and Business Development.

This morning, we issued a press release that provides details of the company's second quarter financial results. Please note that all of the information discussed on this call this morning is covered under the Safe Harbor provisions of the Private Securities Litigation Reform act. I caution listeners that during this call, the company's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and the company's SEC filings including the form 10-Q the company plans to file this week.

The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 7th, 2012. Orexigen takes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

I will now had the call over to Mike Narachi, Orexigen's Chief Executive Officer to provide an overview of today's call. Mike.

Mike Narachi

Thanks, Heather. For the call today, I'll first provide a brief update on the progress we're making in the Contrave cardiovascular outcome study or what we call the Light Study. I'll also want to discuss the recent FDA approvals of two new obesity therapeutics and the implications of these approvals on an hour two late stage obesity product candidates, Contrave and Empatic. I'll then ask Preston to provide an update on the Empatic program. And finally, Jay will wrap up with the financial results for the second quarter, 2012. After that, we'll be pleased to take questions.

I'm very pleased with the progress our team has made in enrolling patients into the Light Study. As many of you know when we originally began planning this clinical trial, we were cautioned that industry experience would indicate that enrolling a large cardiovascular outcomes trial of 7,000 to 10,000 patients could take up to three years and may require international recruitment. When we closely examined historic reasons for such a protracted timeline, we felt we could do much better and focused our efforts on strategy to enroll the trial as expeditiously as possible.

We saw enrollment as something that was in our control and could speed the time to the interim analysis and potential approval of Contrave. Once we established our plans, we believed a reasonable estimate for enrolling this study would be 18 to 20 months. I'm pleased with the progress we've made. Early last month, we announced that more than 1,500 patients have already enrolled into the Light Study only five and a half weeks from the start of the trial with only 100 sites activated. Because of this incredible early progress, we updated our guidance for enrollment if 7,000 patients to be complete in the first quarter of 2013, as much as one year earlier than the original projections.

Since the last update, we have activated an additional 90 sites. And our prediction that we would achieve our enrollment goal in the first quarter of next year was predicated on the expectation that recruitment would slow down from the initial surge of patients. To date, enrollment has not slowed down, although we are not yet ready to update guidance on when enrollment will be complete.

Expedited enrollment does pull forward the time to interim analysis, which is planned once at least 87 MACE end points have been adjudicated. Exactly when the 87th MACE end point will occur is based on two key variables. The number of months of observation time for randomized subjects, and the actual observed annualized MACE rate. Using an assumption of 1.5% annualized MACE, we would need approximately 70,000 months of observation time. To date, we know enrollment rates and therefore have a pretty good idea of observation time in the randomized phase of the trial.

In order to accurately predict the time of the 87th event in the interim analysis that follows, we would also need to wait until the date a monitoring committee guides us on event rates to know how we are tracking. We would not expect to have a good estimate on event rate until enough end points have occurred to make a solid projection.

For now, we feel comfortable with our guidance that the 87th event will occur sometime in the second half of next year. According to the extensive epidemical modeling we've conducted, the population we are targeting would yield an event rate of approximately 2%. But because patients in clinical trials typically experience a slightly lower event rate than the models would predict, we based our assumptions on an estimate of 1.5% annualized mix.

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