Orexigen Therapeutics Inc. (NASDAQ: OREX) made waves in the market early on Wednesday, despite the sell-off on Tuesday. The company announced receipt of the first of three potential $15 million anniversary milestone payments from Takeda Pharmaceutical. There is potential for two additional $15 million anniversary milestone payments, which are expected from Takeda in the fourth quarter of each of 2016 and 2017.
Takeda is Orexigen’s U.S. partner for Contrave, which is indicated for use as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in obese and overweight adults.
Orexigen also announced receipt of the $7 million upfront payment from Kwang Dong Pharmaceutical, based in Seoul, Korea. In August 2015, Orexigen and Kwang Dong executed a Korean distributorship agreement for Contrave. Kwang Dong expects to begin marketing Contrave in the second half of 2016, if regulatory approval is obtained.
Orexigen CEO Mike Narachi said:
As we make progress in the global commercialization of Contrave / Mysimba, we expect a growing revenue stream of upfront and milestone payments as well as royalty and product sales income from currently established and potential future collaborations.
Orexigen expects to end 2015 with approximately $190 million to $200 million in cash and cash equivalents. The most recent quarterly report only listed $71.6 million in cash and cash equivalents; short-term investments totaled $103.5 million.
So far in 2015, Orexigen shares have underperformed the market. The stock is down 60% year to date and down nearly 47% in the past 52 weeks.
Shares closed Tuesday flat at $2.40 . In early trading indications Wednesday, shares of Orexigen were up 7.1% at $2.57. But shortly after the opening bell they were flat at $2.40, on a 52-week trading range of $2.19 to $9.37. The stock has a consensus analyst price target of $11.00.