Stock Alert for Orexigen Therapeutics Inc. (OREX)
  • Stock Alert for Orexigen Therapeutics Inc. (OREX)
  • Stock Alert for Orexigen Therapeutics Inc. (OREX)
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    Stock Alert for Orexigen Therapeutics Inc. (OREX)

    Orexigen Therapeutics Inc. (OREX) is a biopharmaceutical company focused on the treatment of obesity. The Company’s lead product, Contrave, has completed phase III clinical trials and has received a Complete Response Letter from the FDA for its New Drug Application.  The Company is in the process of determining the next steps for Contrave.  Its second product, Empatic, has completed phase II clinical development. OREX’s lead product candidates reflect its growing understanding of how the central nervous system (CNS) regulates appetite and metabolism as well as the mechanisms that limit weight loss over time. Each product candidate is designed to act on a specific group of neurons in the CNS with the goal of achieving appetite suppression and sustained weight loss, through combination therapeutic approaches.

    OREX was founded in 2002 and is based in La Jolla, California.

    Share Statistics (01-June-11) FY 

    2009

    FY 

    2010

    %  

    Chg

    Q1 

    2010

    Q1 

    2011

    %  

    Chg

    Symbol OREX Revenue, $Mn 0.09 1.23 1266.7% 0.02 1.83 9050.0%
    Current price $3.34 Gross marg. 100.0% 100.0% 0.0% 100.0% 100.0% 0.0%
    52wk Range: $2.47-$11.15 Oper. margin -4175.1% -629.0%
    Avg Vol (3m): 1,244,990 Net margin -73956% -4220.3% -94.3% -70400% -633.9% -99.1%
    Market Cap. 160.63M
    Shares Outstanding 48.08M EPS, $ -1.67 -1.10 -34.1% -0.30 -0.24 -20.0%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    OREX made more than 18% gains in Wednesday’s trading after the obesity drug developer said it will provide a regulatory update on its highly awaited Contrave treatment this Friday. OREX added $0.51 to close yesterday’s session at $3.34. About 9.19 million shares have traded hands during the session, over 15 times the 10-day average volume.

    Contrave is OREX’s lead product candidate for the treatment of obesity. The diet pill has completed phase III clinical trials and has received a Complete Response Letter from the FDA for its New Drug Application. The weight-loss drug suffered a setback early this year after U.S. regulators rejected it over safety concerns.  OREX was asked to conduct a new clinical trial to demonstrate the long-term, cardiac safety of the company, an effort expected to delay a resubmission of its FDA application.

    OREX has put renewed hopes on Contrave in April when it announced additional data showing overweight and obese patients treated with Contrave maintained normal 24-hour circadian patterns over one year of treatment. The Company presented the data at the 60th Annual Scientific Session of the American College of Cardiology.

    About Contrave: Contrave is an investigational combination therapy for the treatment of obesity. The two components of this combination therapy, naltrexone SR and bupropion SR, appear to act in a complementary manner in the central nervous system and are believed to address both biological and behavioral drivers of obesity.

    OREX has been moving within a range of $2.47 – $11.15 over the past 52-weeks. The stock is currently trading above its 50-day moving of $2.97 and below its 200-day moving average of $4.88. Market capitalization currently stands at $160.63 million and OREX has 48.08 million outstanding shares.

    Visit OREX at www.orexigen.com

    Financial Summary

    For the first quarter ended March 31, 2011, OREX reported a net loss of $11.6 million, or $(0.24) per share, as compared to a net loss of $14.1 million, or $(0.30) per share, for the first quarter of 2010. As of March 31, 2011, the Company had $39.6 million in cash and cash equivalents and an additional $36.9 million in marketable securities, for a total of approximately $76.6 million.

    Total operating expenses for the quarter came in at $13.3 million, down from the year-ago quarter’s $14.0 million. OREX attributed the decline to a drop in research and development expenses of $1.4 million, which is mainly related to the reduction in costs incurred in connection with the preparation for its NDA filing for Contrave in the first quarter of 2011, as compared to same period in 2010. This overall decrease was partially offset by an increase in general and administrative expenses principally related to one-time corporate realignment costs.

    Source: www.orexigen.com

    Financial Strength (01-June-2011) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 2.23 2.08 0.71
    Current Ratio (MRQ) 8.14 2.76 2.60 1.03
    LT Debt to Equity (MRQ) 0.00 10.71 22.30 128.51
    Total Debt to Equity (MRQ) 4.29 14.86 28.32 175.07
    Interest Coverage (TTM) -67.00 0.21 1.62 17.96

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast among six polled investment analysts. Against the Orexigen Therapeutics Inc company.

    Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
    Latest 1 0 5 0 0 0
    4 weeks ago 1 0 6 1 0 0
    2 months ago 0 0 8 1 0 0
    3 months ago 0 0 8 1 0 0
    Last year 5 4 0 0 0 0

    The three analysts offering 12-month price targets for OREX have a median target of 2.50, with a high estimate of 5.00 and a low estimate of 2.00. The median estimate represents a -11.66% decrease from the last price of 2.83.

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates Mean High Low 1 Year Ago
    SALES (in millions)
    Quarter Ending Jun-11 5 0.70 1.00 0.03
    Quarter Ending Sep-11 5 0.80 1.30 0.03
    Year Ending Dec-11 6 5.25 12.40 1.05 36.93
    Year Ending Dec-12 6 5.14 12.40 0.10 103.02
    EARNINGS (per share)
    Quarter Ending Jun-11 5 -0.20 -0.15 -0.26
    Quarter Ending Sep-11 5 -0.18 -0.10 -0.26
    Year Ending Dec-11 6 -0.71 -0.30 -1.02 -0.96
    Year Ending Dec-12 6 -0.70 -0.23 -1.33 -0.3

    Technical Analysis

    Source: http://stockcharts.com

    On Tuesday, OREX closed above its 20-day moving average. This is generally considered to be an indication of a bullish trend.

    OREX is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

    OREX’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    June01-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Abbott Laboratories ABT 51.92 80.70B 11.29 10.47 2.10 2.01
    Arena Pharmaceuticals Inc. ARNA 1.43 208.63M n/a n/a 14.82 6.10
    GlaxoSmithKline plc GSK 42.43 107.92B 11.41 10.55 2.42 2.33
    Amylin Pharmaceuticals Inc. AMLN 14.04 2.05B n/a n/a 3.37 3.25
    Drug Manufacturers – Other Median 23.76 n/a 5.87 n/a
    Orexigen Therapeutics Inc. OREX 3.34 160.63M n/a n/a 31.56 31.25

    Source: Thomson Financial

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