Memorandum

Orexigen 1Q15 Quick Take – May 11, 2015

Orexigen provided its 1Q15 financial update in a call led by CEO Mr. Michael Narachi last Friday. Management expressed enthusiasm about Contrave’s (naltrexone/bupropion; partnered with Takeda) growth for the quarter; the product posted net sales of $11.5 million in 1Q15 – this rose an impressive 77% sequentially from 4Q14’s $6.5 million --  with Orexigen receiving $2.3 million in royalties. IMS prescription data showed an impressive ~117,000 total prescriptions for Contrave in 1Q15, with substantial growth each month. Management also highlighted the European approval of Mysimba (Contrave’s European brand name) in March. Notably, management noted that the company is now engaging with European regulatory authorities to discuss a diabetes indication for Mysimba (either as monotherapy or as a fixed-dose combination with metformin, a DPP-4 inhibitor, or an SGLT-2 inhibitor). Orexigen’s market research in the region has suggested that such an indication would be “attractive,” especially with regard to reimbursement – we agree that coverage for obesity alone will likely be challenging given how nascent the market is. In addition, management stated that the company is making “solid progress” on an ex-North America partnership, although few further details were provided. Regarding CVOTs, management stated that Takeda is on track to initiate the post-marketing trial for Contrave later this year, having recently finalized the study protocol in April. There was significant interest in the ongoing Light Study during Q&A in the context of the 25% interim data disclosure controversy; management clarified that there are no plans to disclose data from the recent 50% interim analysis – unsurprising, given the furor, though we note that far less controversy ensued with early PCSK-9 results. Orexigen also highlighted the recent appointment of Merck’s Mr. Tom Cannell as new Chief Commercial Officer during the call – see our original coverage for more.