What: Shares of the anti-obesity drugmaker Orexigen Therapeutics (NASDAQ:OREX) climbed by as much as 21% on heavy volume today. This rally was sparked by the company's second-quarter earnings release, where it announced that its flagship fat-fighting pill, Contrave/Mysimba, is now the market leading weight loss medicine with 172,050 prescriptions filled during the three-month period.
Perhaps more importantly, though, Orexigen also updated investors on its ongoing dispute with Takeda Pharmaceutical, Contrave's U.S. marketing partner. As a refresher, Takeda was seeking to potentially dissolve its collaboration with Orexigen over the release of the drug's interim results from its FDA-mandated cardiovascular outcomes trial dubbed the "Light Study". Per today's announcement, the two companies have now resolved their outstanding disagreements, and have reaffirmed their commitment to Contrave's long-term success.
So what: Orexigen's shares have been in a tailspin since this faux pas over the Light Study's interim data disclosure. Specifically, the drugmaker's shares, prior to today's jump, were down over 40% for the year. The market was deeply concerned that Orexigen would lose Takeda's backing for Contrave altogether, making it solely responsible for completing the drug's required post-marketing studies, as well as handling the commercialization efforts in the U.S.
Now what: While Takeda's decision to stick around is definitely good news for Orexigen, the bad news is that Contrave only mustered $16 million in U.S. net sales during the second-quarter. As a result, Orexigen is still hemorrhaging money to the tune of a net loss of $22.5 million, per the second-quarter figures, despite having an approved product on the market.
Put simply, you may want to remain cautious with this small-cap biopharma for the time being, despite today's positive news.
George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.