Orexigen Therapeutics (OREX) shares are soaring over 25% in premarket trading after it announced n exclusive partnership agreement potentially worth over $1 billion with Japan's Takeda Pharmaceutical to develop and commercialize Contrave, Orexigen's promising obesity drug, in the U.S., Canada and Mexico.
Under the deal's terms, Orexigen will receive an upfront cash payment of $50 million from Takeda, which in turn will obtain exclusive marketing rights from Orexigen in the three countries, with Orexigen retaining the right to co-promote with Takeda in the U.S. Orexigen will be eligible for payments of over $1 billion upon achieving certain regulatory and sales-based milestones.
Also, Orexigen and Takeda will work together on ongoing development of the product, with Orexigen leading pre-approval activities, and Takeda leading post-approval activities.
Attempts to develop a "diet pill" to help treat obesity have been ongoing for some time. Over the past couple of years, three companies have raced to be the first to reach the market with their own version. In mid July, a Food and Drug Administration panel didn't support Vivus (VVUS) drug, Qnexa, due safety concerns. Since then, Arena Pharmaceuticals (ARNA) was seen as having a better chance with regulators because its drug is said to have a better safety profile. Arena also signed a licensing deal with Japan's Eisai.
Approximately 75 million Americans suffer from obesity, a number that's expected to rise to 103 million by 2018, according to Orexigen. Obesity is a chronic condition linked to serious medical consequences including type 2 diabetes, cardiovascular disease, cancer and depression.
Orexigen says Contrave is a combination therapy believed to address both biological and behavioral causes of obesity. It expects the FDA to make a decision by Jan. 31, 2011.