NEW YORK (TheStreet) -- Orexigen Therapeutics (OREX) shares are down 9.60% to $5.36 in early market trading on Wednesday after the biopharmaceutical company's weight loss drug development partner Takeda Pharmaceutical threatened to end their collaboration if Orexigen moves forward with plans to halt an ongoing heart safety study known as Light.
"Takeda sent a dispute letter to Orexigen on May 12 whereby Takeda seeks termination of its collaboration agreement with Orexigen based on Orexigen's material breach of the agreement. Takeda is working closely with Orexigen to try to resolve the situation and avoid termination of the Orexigen to try to resolve the situation and avoid termination of the agreement," company spokeswoman Sandy Rodriguez said in an email, according to Bloomberg.
Two months ago Orexigen released preliminary data from the Contrave trials that it said showed that the drug could be used to help prevent heart attacks, based on the completion of about only a quarter of the study.
That declaration was met with resistance from Dr. Steven Nissen of the Cleveland Clinic and lead researcher during the Contrave trials. Nissen disputed the company's claims that Contrave showed cardiovascular benefits, saying that patients were taking the treatment on "unreliable or unstable" preliminary data.
"This morning we and Takeda announced termination of the Light Study. We agreed with our partner, and together discussed our preferences with the U.S. Food and Drug Administration (FDA), that it was best to conclude the study in an orderly fashion, search for and gather all CV events and other safety data, have the CV events properly adjudicated, carefully analyze the final data and have these data presented and published in a scientific forum," said in a statement released yesterday before Bloomberg reported Takeda's response to the incident.
TheStreet Ratings team rates OREXIGEN THERAPEUTICS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate OREXIGEN THERAPEUTICS INC (OREX) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- You can view the full analysis from the report here: OREX Ratings Report