Takeda dumps weight loss med Contrave, leaving Orexigen in the lurch

The moment Orexigen ($OREX) investors have been dreading is here.

On Tuesday, Takeda--the California drugmaker's marketing partner on obesity med Contrave--bade it farewell amid underperforming sales and an expensive outcomes trial tab, returning all of the drug's U.S. marketing rights. Instead, Takeda will deploy its commercial resources for its other launches in the antidepressant and inflammatory bowel disease markets.

While not wholly unexpected, it's a big blow to Orexigen, which was counting on Takeda's 900 reps to help it stay afloat in an obesity market that's proven a tough nut to crack for pharma. While Contrave may not have reeled in much last year--it generated just $53 million in sales--it still managed to snag the market lead over rivals from Vivus ($VVUS) and Arena ($ARNA), despite arriving third to the party.

As RBC Capital Markets analyst Simos Simeonidis pointed out in a recent note to shareholders, though, it may have been cheaper for Takeda--which was on the hook for a $50 million spend in both 2016 and 2017--to bail on the partnership and pay a breakup fee than it was to press forward. And it's not as if the two had never had their differences: Last year, the Japanese pharma threatened to walk after Orexigen blabbed some early cardiovascular outcomes trial data, incensing researchers and the FDA and leading to a cancellation of the pair's outcomes trial.

Now, the company faces the prospect of trying to reel in another partner--or going it alone in the U.S., a strategy that proved disastrous for Vivus. On top of that, it has an expensive new outcomes trial hanging over its head, with a bill that could run as high as $250 million.

For now, Orexigen is hoping it can keep sales coming with a "more focused" launch strategy, Leerink Partners analyst Paul Matteis wrote in a note to clients Wednesday. While Takeda's tack was to try to expand the market by targeting non-prescribing primary care docs as well as current script-writers, Orexigen will use a "modestly sized" sales force to focus on the top 60% of obesity script-writers, which translates to about 18,000 physicians.

Orexigen did have one bright spot Tuesday, though, relatively speaking. Embattled drugmaker Valeant signed on to market the weight-loss med across the pond, where it goes by the name Mysimba, with a deal that covers 19 European countries.

Just how much time and energy Valeant ($VRX) has left to devote to Mysimba, though, remains to be seen. The Canadian company is grappling with a host of serious problems that Tuesday lopped nearly half the value off its shares.

- read Takeda's release

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