Orexigen picks up new trial tab to settle Contrave dispute with partner Takeda

Takeda's not walking out on its partnership with Orexigen ($OREX)--something it threatened to do after the drugmaker leaked some early data on its obesity med, resulting in a cancelled trial. But it is making it pay for its mistakes.

Going forward, it'll be Orexigen that shoulders the financial burden for a new, FDA-mandated cardiovascular outcomes trial for Contrave--a study that'll run the company $210 million, RBC Capital Markets analyst Simos Simeonidis wrote in a Thursday note to clients. That's a change from the original plan, which was for the two to split costs.

Takeda wasn't so keen on that plan back in May, when it threatened to walk away from the pact altogether. Orexigen had announced early trial data suggesting Contrave might boast a cardiac benefit, ticking off the FDA and the Cleveland Clinic-led exec committee in charge of the study. Ultimately, the pair shut the trial down--and after it did, the Cleveland Clinic released updated results that erased any perceived cardiac advantage.

The way Simeonidis sees it, though, Orexigen may have lost that battle, but it ultimately won the war by convincing Takeda to stay on. The possibility of being left on its own in a growingly competitive obesity market--without the Japanese pharma's 900 sales reps--was "worrisome to investors," he noted. And "in fairness to the Orexigen management team, it is hard to negotiate with a much larger pharma partner who has what you really need … and could devastate your stock if they decided to walk away."

Meanwhile, Takeda has helped put Contrave sales on the rise; they expanded by 39% quarter-over-quarter in Q2, ringing in at $16 million. That's not that far off from the $23 million in revenue competitor Vivus ($VVUS)--which makes Qsymia--posted for the quarter, and it a two-year head start on the market.

Now, Orexigen is working to strike additional marketing agreements as it looks to take the market lead. It's still searching for a "long-awaited" European partnership for Contrave, Simeonidis wrote; execs recently said on a conference call that talks are "ongoing."

- read Orexigen's release

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