OREX Chart

OREX data by YCharts

What: Shares of the anti-obesity drugmaker Orexigen Therapeutics (NASDAQ:OREX) lost nearly a quarter of their value in September based on data from S&P Capital IQ, easily outpacing the broader downturn among biopharma and biotech stocks last month. This hefty sell-off appears to be linked, at least partly, to concerns over the drugmaker's ability to finance the first $210 million of a new cardiovascular outcomes trial mandated by the U.S. Food and Drug Administration for its flagship weight loss pill Contrave. Indeed, the stock has been spiraling downwards ever since Orexigen restated its marketing agreement with Takeda Pharmaceuticals regarding Contrave's North American rights and post-marketing requirements last August:

OREX Chart

OREX data by YCharts

So what: Contrave's North American launch is still in its nascent stages, and the drug has yet to hit the European market, where it was approved under the trade name Mysimba earlier this year. So it's highly unlikely that the drug's sales will be enough to make a major dent in this substantial financial obligation. After all, Orexigen only recognized $3.1 million in royalties from U.S. net sales of Contrave in the second quarter of 2015. 

Now what: Given this precarious financial position, it's not surprising that Orexigen has already resorted to some creative financing deals, such as its private placement deal with The Baupost Group, L.L.C., which raised roughly $60 million for the company last month.

Based on Orexigen's present burn rate and cash position prior to this private placement, my back of the envelope calculations suggest that the company will still end the third quarter with only around $200 million-ish in cash, cash equivalents and marketable securities, meaning that Orexigen will almost certainly have to raise additional cash going forward.

Having said that, I personally like this stock as a speculative long-term play given Contrave's decent sales growth since its commercial launch. But the company's finances definitely make this a touch and go type of situation, one that may not be palatable to investors who are more risk-averse.   

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.