Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Orexigen Therapeutics (NASDAQ:OREX), a biopharmaceutical company focused on developing therapies to treat obesity, surged higher by as much as 33% after the company reported its third-quarter earnings results and provided an update for investors on its Contrave program.

So what: Thanks to two milestone payments -- one for the regulatory approval for weight control management drug Contrave in the U.S. ($20 million) and the delivery of launch supplies to licensing partner Takeda Pharmaceuticals ($10 million) -- total revenue for the quarter leaped to $30.9 million from just $0.9 million in the year-ago period. On the flipside, operating expenses fell 8% to $17.8 million, which reflected less research and development activity.

Overall, the company reported net income of $0.09 per share compared to a net loss of $0.19 per share in the prior-year period. By comparison, Wall Street had been expecting a net loss of $0.13 per share on close to $9 million in revenue, so this was a big revenue and profit beat.

Perhaps even bigger was the update provided on its Contrave application in Europe. According to its press release, the company recently met with EU regulators after submitting its responses to the List of Outstanding Issues to the Committee for Medicinal Products for Human Use and "believes the remaining issues are addressable." In short, investors are presuming this could mean Contrave, unlike Arena Pharmaceuticals' (NASDAQ:ARNA) Belviq and VIVUS' (NASDAQ:VVUS) Qsymia, actually has a shot at a European approval.

Now what: While Monday's earnings beat was a nice surprise for shareholders, we also should be realistic in the sense that milestone payments are inconsistent at best and not something investors should regularly count on. Moving forward Orexigen's valuation will be almost entirely determined by the success or failure of Contrave via its total sales.

In one corner that's a scary proposition because weight control management drugs have largely flopped since coming to market. Both Qsymia and Belviq had blockbuster potential coming out of the gate, but neither is even closing in on $50 million in annual revenue more than two years after their approval.

Contrave could be different in that its Light Study, a cardiovascular outcomes study that examined the safety of Contrave on roughly 8,900 people, may allow it to stand out from Belviq and Qsymia. Belviq is already the more preferred weight control management drug between it and Qsymia from a safety perspective, but it still needs to complete longer-term safety studies. Orexigen, you could say, is ahead of the game given that an interim analysis of its Light Study demonstrated no alarming adverse events tied to Contrave, and it could net the company an approval in the EU and preferential status among physicians in the U.S.

To be clear, I'm not a fan of the obesity drug sector until it shows marked drug sales growth, but of the three players in this sector Orexigen looks like the one you'd want to own if my arm was twisted and I had to choose.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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