Orexigen (OREX) Posts Narrower-than-Expected Loss In Q3

Orexigen Therapeutics, Inc. (NASDAQ:OREX) reported a loss of $1.01 per share in the third quarter of 2016, narrower than the Zacks Consensus Estimate of $2.13 but wider than the year-ago loss of 86 cents.

Quarterly revenues came in at approximately $7 million, down from to $10 million in the year-ago quarter, which included an anniversary milestone earned from Takeda Pharmaceutical Company Limited (OTC:TKPYY) . Revenues were also missed the Zacks Consensus Estimate of $16 million.

Quarterly Detail

Orexigen recorded Contrave sales of $5.3 million in the U.S., following its Aug 2016 acquisition of the U.S. rights to the product. Royalties on U.S. sales of Contrave were $0.9 million. The company also received collaborative income of $0.9 million.

As per IMS Health data, Contrave scrips were down 13.6% sequentially to 165,141 in the third quarter of 2016.

While R&D expenses declined 40.4% from the year-ago period to $5.3 million, general and administrative expenses were up 190% to $35.1 million.

Meanwhile, Orexigen's Central and Eastern European (CEE) partner, Valeant Pharmaceuticals International, Inc. (NYSE:VRX) , launched Mysimba (EU brand name for Contrave) in five countries. Valeant expects to launch the drug in six additional CEE countries by 2016 end, and in Greece and Cyprus in the first quarter of 2017.

Guidance

Orexigen expects cash operating expenses of $160–$180 million in 2016. Contrave U.S. net sales are envisioned in the range of $47–$52 million.

While R&D spend is projected in the range of $44–$49 million, the company anticipates spending $80– $90 million on sales and marketing. General and administrative expenses are estimated in the range of $36–$41 million.

Total annual cash operating expenses are expected in the range of $180–$200 million during the 2017–2019 period. This includes annual sales and marketing expenses of about $80–$100 million. External R&D expenses are projected to be $15–$20 million per year in 2016 and 2017, and an average of $50 million a year from 2018 through 2021, doe to costs related to the cardiovascular outcomes study.

Orexigen expects to achieve profitability in 2019, with U.S. sales in the range of $160 million–$260 million.

Contrave’s market share, which was 6% in Aug and Sep 2016, is expected to be mostly flat in the fourth quarter, followed by growth in the first half of 2017. Annual market share growth is expected in the range of 2–6% during the 2017–2019 timeframe.

Zacks Rank & Key Picks

Orexigen carries a Zacks Rank #3 (Hold). Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) is a better- ranked stock in the healthcare sector, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss estimates narrowed from $3.84 to $3.79 for 2016 but remained unchanged for 2017 over the last 60 days. The company has posted a positive surprise in all of the four trailing quarters with an average beat of 67.62%.

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