Orexigen Therapeutics
Initiation of coverage
Contrave – leading branded weight loss medicine
Pharma & biotech
14 December 2015
There is reason to be optimistic about Contrave after its progress vs
competitors following launch just over one year ago and the backing of a
dedicated salesforce of 900, through partner Takeda, selling into a massive
potential market. Contrave was approved in the EU in March and recently
Price
signed a commercialization agreement with Kwang Dong in South Korea,
communicating its ex-US strategy in its Q3 conference call whereby it
plans a territory-by-territory approach. On our analysis, the strong pull
back in the stock in recent months, due in part to disappointing interim
results of the subsequently withdrawn LIGHT study, provides investors
with an attractive entry. We value Orexigen at $1.09bn or $7.49 per share.
Net cash ($m) at end September 2015
Market cap
$246m
146.4
Shares in issue
145.4m
Free float
92.2%
Code
OREX
Primary exchange
Revenue
($m)
PBT*
($m)
EPS*
($)
DPS
($)
P/E
(x)
Yield
(%)
12/13
3.4
(77.7)
(0.80)
0.0
N/A
N/A
12/14
55.5
(37.5)
(0.32)
0.0
N/A
N/A
12/15e
32.4
(78.7)
(0.59)
0.0
N/A
N/A
12/16e
85.6
(33.8)
(0.23)
0.0
N/A
N/A
Year end
$1.69
NASDAQ
Secondary exchange
N/A
Share price performance
Note: *PBT and EPS are normalized, excluding intangible amortization, exceptional items
and share-based payments.
Contrave showing strong uptake
Orexigen’s obesity drug, Contrave, is an extended-release oral combination of longmarketed bupropion (Wellbutrin for depression) and Naltrexone (Revia for
addiction). It has potential to make inroads into the notoriously elusive but
enormously attractive obesity market. Impressive traction since launch (October
2014), as evidenced by weekly scrip data and the backing of ~900 dedicated sales
reps by partner Takeda in the US, support our optimism that Contrave could
achieve global sales of ~$600m before patent expiries in 2024-25. We suggest this
is realistic given market share trends and growth of prescription obesity treatments.
Market-by-market approach ex-US
In its Q3 earnings call, Orexigen provided more color as to its structured approach
for marketing Contrave in Europe and RoW, which will largely follow a country-bycountry plan in terms of partnering, pricing and marketing. Takeda has returned its
rights to Orexigen for Contrave in Canada and Mexico (following the renegotiated
terms of its marketing agreement on the back of interim results in May from the
CVOT LIGHT study). We expect rights in these key territories will provide leverage
in its discussions with potential partners in international markets.
%
1m
3m
12m
Abs
(37.9)
(30.7)
(70.7)
Rel (local)
(35.9)
(32.5)
(70.3)
52-week high/low
US$1.69
Business description
Orexigen is a biopharmaceutical company focusing
on obesity treatments. The company sells its sole
product, the weight management treatment,
Contrave in the US through its partner, Takeda.
Contrave was launched in the US in October 2014
and approved in the EU in March 2015 under the
trade name Mysimba.
Next events
Weekly Contrave
prescription trends
Ongoing
FY15 results
Valuation: $1.09bn or $7.49 per share
Global partnerships
Our fair value for Orexigen of $1.09bn, or $7.49 per share, is based on an NPV
analysis applying a 10% discount rate, assuming Contrave sales trend up solidly in
Analysts
the US and a successful launch in key European countries and South Korea in
H216. We currently model Orexigen to become profitable in the latter part of 2017.
Cash holdings of $233m at end-September should fund the group through to
profitability. Cash includes intakes in September of $22m in received milestones
from partners and a $60m private placement to the Baupost Group (20m shares of
common stock at $3.00 and 5m warrants priced at $6.00 per share).
US$8.49
February 2015
Q4215/2016
Katherine Genis
Christian Glennie
+1 646 653 7026
+44 (0)20 3077 5734
[email protected]
Edison profile page
Orexigen Therapeutics is a research
client of Edison Investment
Research Limited
Investment summary
Company description: Pure obesity play
Headquartered in La Jolla, California, Orexigen is a biopharmaceutical company focusing on the
treatment of obesity. In October 2014 it launched Contrave in the US as an addition to a reducedcalorie diet and increased exercise in overweight (with comorbidity factors) and obese adults.
Commercialization rights to Contrave in the US have been licensed to Takeda and to Kwang Dong
in South Korea. The company continues to weigh up its partnering options in the rest of the world
following the drug’s recent EMEA approval in March under the trade name Mysimba. NASDAQlisted, Orexigen was founded in 2002 and raised $84m at the time of its IPO in April 2007. An
additional $510m in capital has been raised since then. The company currently employs 52 people.
Valuation: Pull back in share price provides significant upside
We value Orexigen at $1.09bn or $7.49 per share. Our fair value is based on an NPV analysis of
the FCF from Contrave/Mysimba and the company’s ongoing costs for R&D and SG&A, to which
we apply a 10% discount rate, appropriate for a biotechnology company with an approved and
marketed product. Our analysis is highly sensitive to Takeda/Orexigen’s ability to penetrate the vast
obesity market, with a large swing factor in fair value on small changes in penetration. Our
sensitivity analysis indicates share price potential ranging from $6.59 to $7.82 assuming
Contrave/Mysimba obtains a 0.37-0.77% market share in the US and 0.19-0.39% share in Europe
ahead of expected patent expiry in 2025. Orexigen’s share price declined sharply mid-year
following the release of second interim data on the terminated LIGHT study by the Cleveland Clinic
and the now resolved arbitration proceedings by Takeda related to the deal terms of the planned
$210m CVOT study, which Orexigen will now assume. We anticipate the steady renewal of
shareholder confidence on the back of an expected continuation of positive scrip trends for
Contrave vs its peers. Additionally, the announcement of partnerships for the launch of Mysimba in
Europe and ongoing communication regarding a strategy for RoW should support the shares.
Sensitivities: Commercialisation risk following effective launch
Orexigen is subject to the risks associated with a pharmaceutical company in the early phases of a
major product launch, including exposure to the commercial decisions of its partner (Takeda) and
the potential for side effect issues to emerge post launch. One year into launch, Takeda has
achieved a strong sales trajectory for Contrave. Contrave is an extended-release version of two
long-marketed drugs that have withstood time in terms of overall safety. Other company-specific
risks include IP concerns given Actavis’s recently filed abbreviated new drug application (ANDA) on
Contrave’s formulation, although the current expectation is that the key patent will hold until 202425. We believe the recent resolution of the dispute with Takeda and renewed commitment by both
parties to marketing Contrave in the US removes considerable uncertainty about the shares and
our valuation factors in all renegotiated terms with Takeda on future trial costs.
Financials: Profitable by end 2017e
Sales of Contrave were $12.8m in Q315, down from $16.0m in Q215, dipping from the previous
quarter despite the increase of 10% in prescriptions sold. With little information from management
on these trends (due to confidentiality agreements with Takeda), we believe that a combination of
inventory fluctuations and price discounting led to the discrepancy. Orexigen reported revenue of
$10.0m on royalties/milestone payments in Q315. We anticipate successful top-line development
for the company on Contrave’s successful product launch and expect Orexigen will be profitable in
the latter half of 2017 factoring in costs for funding the upcoming $210m CVOT trial (vs the
previously negotiated 50/50 split between Orexigen and Takeda). On our forecasts, Orexigen’s
current cash holdings of $233m (as at 30 September) should carry the company through to
profitability.
Orexigen Therapeutics | 14 December 2015
2
Orexigen: A streamlined investment
Orexigen offers a pure-play investment into the relatively new and rapidly growing market of safe
and viable oral weight loss treatments. Contrave is arguably the best placed among a group of
three relatively recently launched oral obesity drugs in terms of overall efficacy, safety and sheer
market power. Orexigen, through its partner Takeda, has ~900 reps detailing Contrave, more than
triple that of competitors Vivus and Arena/Eisai. Following a successful initial launch in October
2014, a targeted marketing program has begun for Contrave, with focus on increasing patient
awareness and ultimately including advertising in the form of digital, print and TV. Contrave is also
the first anti-obesity treatment approved in Europe in over a decade.
Contrave
Contrave aims to target the behavioral mechanisms of craving and reward that can lead to
overeating. The extended-release (ER) tablets combine bupropion HCI ER and naltrexone HCI ER,
regulating appetite and energy expenditure through central nervous system (CNS) activity. The
individual compounds works on two separate, complementary areas of the brain: the hypothalamus
and the dopamine reward system. The hypothalamus plays an important role in the regulation of
the body’s appetite, satiety and metabolism (energy expenditure) receiving various chemical and
hormonal stimuli including glucose, insulin, leptin and peptides secreted by the gut processing food.
The dopamine reward system regulates control eating behavior and cravings.
First approved in 1985, bupropion has been widely used for treating depression under the brand
Wellbutrin (typically at 400mg/day), particularly in overweight people. Although efficacy in
depression looks to be comparable to the commonly prescribed SSRIs, the drug has not been
associated with their weight gain (or lack of sex drive) and in fact one of the side effects of
bupropion reported in clinical trials in depression was modest weight loss. Bupropion was also FDA
approved for smoking cessation in 1997 under the brand Zyban. A norepinephrine dopamine
reuptake inhibitor (NDRI), the compound has been shown in studies to activate the proopiomelanocortin (POMC) area in the hypothalamus, which looks to cause a reduction in appetite
and increase in energy expenditure. The firing of POMC neurons (brought on by bupropion)
appears to lead to the production of a natural opioid, beta-endorphin that can slow the POMC
system equally, moderating potential weight loss. Naltrexone counters this impact by blocking
opioid receptors in the brain and limiting the impact of beta-endorphin on the POMC system. Thus,
when administered together in a single pill, the increase in activity of the POMC neurons is
sustained over an extended period. In a separate mechanism, both bupropion and naltrexone are
approved for addiction disorders through the regulation of dopamine and naturally occurring opioids
and therefore, when taken together, it is expected they may also impair food craving. Naltrexone is
marketed in generic fast-release form as its hydrochloride salt, naltrexone hydrochloride, under the
brands ReVia and Depade and Vivitrol (1x monthly ER injectable). In the US, naltrexone was
approved for opioid addiction in 1984 and in 1994 for alcoholism. Orexigen’s proprietary ER oral
formulation of naltrexone alleviates the common side effect of nausea in its original immediate
release form.
COR – clinical trial program
Contrave was approved in September 2014 in the US and in March 2015 in the EU on the back of a
large Phase III pivotal trial program, COR, evaluating the drug in 4,536 patients in four studies
across three doses of naltrexone ER (16mg, 32mg and 48mg) with bupropion ER (360mg). All
studies were 56-week, randomized double-blind and placebo controlled, with one focusing on the
evaluation of patients with type 2 diabetes (COR-Diabetes) and another on intensive behavior
modification (COR-BMOD). Co-primary endpoints for all trials were those typically used in antiobesity studies: the proportion of patients achieving at least 5% weight loss and percentage change
Orexigen Therapeutics | 14 December 2015
3
in body weight vs placebo. Endpoints were analyzed using a modified intent-to-treat (ITT), last
observation carried forward (LOCF) on treatment. All trials met their endpoints with efficacy broadly
in line with the other currently marketed anti-obesity treatments, although data suggest that Vivus’s
Qsymia (phentermine/topiramate) has an edge on efficacy.
Overall, the program discontinuation rates of 42-51% for those on Contrave were similar to placebo
(41-50%) with 19-29% due to adverse events (mainly moderate and transient nausea, headache,
dizziness and vomiting) vs 10-15% on placebo.
Exhibit 1: Results of the COR-program
COR-I*
56 weeks
*diff from placebo, p<0.001
Mean weight loss (%)
Mean weight loss (lbs)
≥ to 5% weight loss (%)
≥ to 10% weight loss (%)
COR-II**
56 weeks
**diff from placebo, p<0.001
Mean weight loss (%)
Mean weight loss (lbs)
≥ to 5% weight loss (%)
≥ to 10% weight loss (%)
COR-BEMOD***
56 weeks
***diff from placebo, p<0.001
Mean weight loss (%)
Mean weight loss (lbs)
≥ to 5% weight loss (%)
≥ to 10% weight loss (%)
COR-diabetes****
56 weeks
****diff from placebo, p<0.001
Mean weight loss (%)
Mean weight loss (lbs)
≥ to 5% weight loss (%)
≥ to 10% weight loss (%)
Modified intent to treat
Contrave
Placebo
Completers
Contrave
Placebo
n=471
6.1%
13.3
48%
24.60%
n=511
1.3%
3.0
16.4%
7.40%
n=296
8.1%
17.5
61.8%
34.5%
n=290
1.8%
4.1
23.1%
10.70%
n=702
6.4%
13.8
50.5%
28.3%
n=456
1.2%
2.9
17.1%
5.7%
n=434
8.2%
17.5
64.9%
39.4%
n=267
1.4%
3.4
21.7%
7.9%
n=482
9.3%
20.3
66.4%
41.5%
n=193
5.1%
11.0
42.5%
20.2%
n=301
11.5%
25
80.4%
55.2%
n=106
7.3%
16.0
60.4%
30.2%
n=265
5.0%
11.6
45%
18.5%
n=159
1.8%
4.2
18.9%
5.7%
n=175
5.9%
13.5
53.1%
26.3%
n=100
2.2%
5.1
24.0%
8.0%
Source: Orexigen
Exhibit 2: Weight loss over time in the completer
population – COR-I Trial
Exhibit 3: Contrave with intensive BMOD (behaviour
modification – COR-BMOD completer analysis
Source: Orexigen
Source: Orexigen
Orexigen Therapeutics | 14 December 2015
4
Outcome studies and the LIGHT controversy
The LIGHT study was initiated following Orexigen’s receipt of a complete response letter in January
2011 on its initial NDA requiring a large-scale outcome safety study evaluating Contrave’s
cardiovascular safety in high-risk patients over the longer term. Led by the Cleveland Clinic,
approximately 8,900 obese and overweight individuals were enrolled in the trial. In November 2013
Orexigen announced a successful interim analysis, meeting the FDA’s pre-specified criteria, with
the trial demonstrating an absence of a doubling in CV risk for patients taking the drug, deemed
sufficient for approval. The results of the initial interim data, analyzed after ~25% of major adverse
cardiovascular events (MACE) occurrences, showed an encouraging hazard ratio (HR) of 0.59
(95% confidence) or 35 MACE events vs 59 for those on placebo, and these data were published
by the company in conjunction with the issue of a patent in March 2015. Shortly before approval of
Contrave in November 2014, the FDA asked for a new long-term, 9,000-patient outcome study
pointing to potential bias in the LIGHT study related to issues of disclosure. This new CVOT trial is
due to start in the coming months with targeted completion in 2022 and an estimated cost of
$210m. The interim trial result was made public without Takeda’s recommendation. In early May
2015 further data were reported by the study’s leaders at Cleveland Clinic, which were somewhat
less promising. A statistically significant benefit of Contrave on CV risk was no longer seen. After
~50% MACE occurrences, the HR increased to 0.88 (102 CV occurrences in placebo vs 90
Contrave) and for the second 25%, 43 events occurred on placebo and 55 in the Contrave group.
However, importantly, the data confirmed the original study intent as to Contrave’s safety. The
Cleveland Clinic’s steering committee concluded that “these results show neither benefit nor harm
for patients taking the drug”. As previously agreed in March, LIGHT was halted on the basis of
issues on disclosure. Final, fully analyzed data are to be presented at a scientific forum in due
course.
Orexigen’s shares have been hit hard in recent months on arbitration talks with Takeda and
additional costs taken on by Orexigen to fund a new study. Investor hopes for a higher market
penetration of Contrave due to a CV benefit have proved likely unrealistic, based on the interim
LIGHT study findings. However, the study results confirmed safety and efficacy and the data point
to no increased risk of MACE events for Contrave, which was the original intent of the LIGHT study.
Revised collaboration with Takeda resolves previous disputes
Orexigen’s renegotiation of its contract with Takeda also created market uncertainty as to the
commitment of its US partner. However, a revised agreement ensures continuity of Orexigen’s
relationship with Takeda and a solid backing by its US partner in the ongoing commercialization of
Contrave in the US. Under the original agreement with Takeda, Orexigen was to pay the first $60m
in post-approval development expenses and costs thereafter were to be split 50/50 for safety
studies and 75/25 for other trials. Our model incorporates the revised deal with Takeda, for which
Orexigen will assume all costs related to the newly required CVOT trial, with a cap on spending of
$210m through 2022 (offset by $40m in savings on the early termination of the LIGHT study). Not
insignificant is the negotiation of the cost split for any additional trials beyond LIGHT from the
previous 50/50, where Takeda will now take on 75% of spending. We also note that other postmarketing requirements by the FDA include several short-term studies such as the QT trial (drug’s
effect on the QT interval and ECG morphology) and pharmacokinetic studies in renal and hepatic
impairment and drug-drug interaction. Exploratory studies are also being conducted in smoking
cessation and depression in overweight patients. Most trials are expected to satisfy regulatory
requirements in both the US and EU. An added $105m in milestones payable to Orexigen is also
written into the new agreement contingent on any eventual superiority claims on the labelling for
Contrave. Moreover, Takeda has given back its marketing rights in Mexico and Canada, providing
Orexigen with added flexibility in negotiations with potential international partners (anti-obesity sales
were $262m in Mexico in 2014 and $14m in Canada).
Orexigen Therapeutics | 14 December 2015
5
Highly attractive market, but marked by epic failures
Obesity is currently recognized by the larger medical community worldwide as a serious health
condition, growing in prevalence globally with decreased life expectancy and related comorbidities
including type 2 diabetes, heart disease, obstructive sleep apnoea (OSA), liver and pulmonary
disease and certain types of cancer. Additional comorbidities include anxiety, depression, chronic
pain and substance abuse. A worldwide epidemic, ~150m people in the US alone (more than onethird of adults and 17% of young people in 2012) are classified as medically obese (body mass
1
index or BMI ≥30) and life expectancy in this population is thought to be lowered by up to eight
years. Notably, there remain considerable regional differences in the US, with obesity rates forecast
2
to surpass 50% in 39 states by 2030. The World Health Organization estimates that there are
more than 500 million obese people worldwide. This comes as an enormous cost to healthcare
3
systems, with obesity and related comorbidity expenses in the US estimated at $210bn.
Exhibit 4: Governing bodies increasingly recognize obesity as disease that is treatable
Organization
American Assoc of Clinical Endocronologists (AACE)
American Medical Association (AMA)
Affordable Care Act (ACA)
European Association for the study of obesity (EASO)
European Court
US Congress
Details
AACE guidelines stress importance of weight loss (including the use of
pharmacotherapy) for patients with prediabetes and diabetes.
Recognizes obesity as a disease.
ACA allows corporate wellness programs to address obesity with
economic incentives.
Guidelines call for use of pharmacotherapy as part of a comprehensive
strategy for disease management.
Ruling that obesity may be considered a disability.
Treat and Reduce Obesity Act had strong support – reintroduction
planned in new Congress.
Source: Orexigen, various health organizations
Due to the sheer size of the potential multi-billion dollar market for obesity, there is capacity for
multiple market contenders. Although a large and growing market, the development of anti-obesity
agents has been fraught with safety issues historically and even very large pivotal programs have
resulted in high-profile failures (Sanofi-Aventis’s withdrawal of rimonabant along with three other
CB1 antagonists). Also, even large-scale trials have failed to highlight safety issues that have
become evident in a real-world setting (sibutramine withdrawal in 2010 due to safety concerns and
Fen-Phen and dexfenfluramine withdrawn in 1996). Additionally, the size of the obesity market has
been called into question given high patient dropout rates in pivotal trials and a lack of proven highvolume scrip drivers. Correspondingly, the jaded past of obesity treatments has led to a reluctance
on the part of big pharma to enter into large-scale commercialization agreements. Currently,
Orexigen’s agreement with Takeda is the biggest of two commercial licensing agreements in the
segment, the second being the agreement between Eisai and Arena for Belviq.
Despite numerous disappointments in the segment, the landscape for obesity compounds looks to
be changing with the advent of four relatively recently approved obesity treatments by the FDA, one
oral and one administered through subcutaneous injection. This newer generation of drugs looks to
be relatively safe based on data from their respective large Phase III clinical programs. However,
numerous large outcome trials, mainly in cardiovascular areas, are ongoing, often on the back of
FDA requirements on approval.
Competitors – three orals and an injectable
The cause of obesity is considered to be a combination of genetic, behavioral and environmental
influences and it is therefore not surprising that multi-faceted weight management programs, which
1
Prevalence of Childhood and Adult Obesity in the United States, 2001-2012, JAMA. 2014;311(8) 806-814.
Prevalence of Obesity and Trends in the Distribution of Body Mass Index Among US Adults, JAMA
2012;307(5), 491-497.
3
Journal of Health Economics, January 2012.
2
Orexigen Therapeutics | 14 December 2015
6
consist of medication, together with diet, exercise and behavior modification, have been shown to
work best – not only in weight loss but, importantly, in the ability to keep weight off. The human
body uses many chemicals and hormones to protect its stores of fat – a defense mechanism likely
useful to our ancestors when food was scarce – and a complete circumvention of this natural
protection of stored fat must therefore be multi-faceted and complex. Hence, new solutions in the
treatment of obesity rely more and more on combination drugs targeting multiple pathways. As
such, current obesity drugs on the market take differing approaches to enhance behavior
modification through various mechanisms, some with combination-complementary approaches, and
are showing reasonably good success.
The brain acts as a regulator to functions controlling weight including decisions about how much,
when and what we eat. In the obese, the brain becomes desensitized to signals to stop eating.
However, the brain is sensitive to any losses in weight, at which time metabolism slows and hunger
signals are communicated. Weight loss treatments therefore need to target the propensity for the
body to crave food and gain weight once pounds are shed. Current and potential anti-obesity drugs
may operate through various mechanisms, including appetite suppression (such as phentermine
and other amphetamine-based drugs and anti-depressants), the increase of metabolism or the
interference in the body’s ability to absorb certain components of food (such as orlistat or OTC fibre
supplements like glucomannan and guar gum). It is generally thought that the non-CNS approach,
which can initially induce weight loss, is susceptible to a weight loss plateau after several months or
a year of therapy, in the absence of treating the underlying behavioral mechanisms in the body.
In 2014 the total US market for obesity products was ~$220m and ~9.5 million prescriptions were
written as reported by Oregixen. We take the view that there is significant potential for the newer
obesity drugs to dramatically grow the market, particularly those that include a targeted approach to
CNS pathways. From a safety standpoint, none of the pivotal Phase III programs for the three
prominent obesity drugs or their outcome studies to date has raised serious adverse events signals
(although all had a relatively high all-cause dropout rate, which was unsurprisingly highest in
placebo groups owing to lack of efficacy). Main obesity treatments currently marketed in order of
launch are as follows:

Orlistat (Xenical/Alli, Roche): FDA-approved in 1999, Orlistat acts as a lipase inhibitor,
preventing the absorption of fats from the diet. Approved for long-term use, Xenical (as
prescription) and Alli (as OTC) have failed to make major inroads, with negligible prescription
share more than likely due to infamous side effects including oily stools, fecal incontinence,
stomach pain and flatulence. Orlistat has been found to modestly reduce blood pressure and in
a large randomized trial reduce the incidence of diabetes by nearly 40% in the obese. Sales of
Xenical and Alli were $17m and $107m respectively in 2014.

Phentermine/Topiramate ER (Qsymia, Vivus): phentermine alone, approved for short-term
use in 1959, was the mostly widely prescribed anti-obesity medication up to a few years ago.
Phentermine is a sympathomimetic amine that acts as an appetite suppressant and stimulant.
Topiramate is an anticonvulsant with weight loss properties (although the exact mechanism is
unknown). Launched in September 2012, Qsymia is the only recently approved obesity
treatment to show significant blood pressure benefits in Phase III trials but, conversely, was
denied approval in Europe in 2013 on cardiovascular and psychiatric side effects. Qsymia sales
were $79m in 2014.

Lorcaserin (Belviq, Arena/Eisai): lorcaserin, an oral pill, is the only new chemical entity (NCE)
of the newer oral obesity drugs. It works by promoting satiety through selective activation of 5HT2C receptors on anorexigenic pro-opiomelanocortin neurons located in the hypothalamus.
The compound was approved in June 2012 and launched in June 2013 following the
completion of additional studies after an FDA advisory panel recommended against approval in
2010 on cancer-causing concerns (in rats) and marginal efficacy. Lorcaserin has shown a
numeric but statistically insignificant benefit on blood pressure. The drug is DEA schedule IV
Orexigen Therapeutics | 14 December 2015
7
classified due to its hallucinogenic properties at higher than approved doses. Sales of Belviq
were ~$56m in 2014.

Bupropion/Naltrexone (Contrave, Orexigen/Takeda): launched in the US in October 2014
and approved in Europe in March 2015, Contrave is a new formulation of two active
ingredients. Bupropion, approved as Wellbutrin since 1985, increases dopamine activity
thereby reducing appetite. Naltrexone, first approved in its injectable form in 1984 for addiction,
inhibits addictive behavior by blocking opioid receptors. In Q215 market sales of Contrave were
$16.0m.

Liraglutide (Saxenda, Novo Nordisk): a double-dose version of Novo’s blockbuster type 2
diabetes treatment Victoza, Saxenda was launched in April (approval in December 2014) for
chronic weight management. The GLP-1 receptor agonist was evaluated in more than 4,800
patients with and without weight-related conditions. We expect Saxenda to be positioned as a
niche product (there is considerable overlap between type 2 diabetes and obesity populations)
given the drug’s high pricing ($1,068 per month), as well subcutaneous injections.
Exhibit 5: Competitor comparisons
Company
FDA approval
date
Non-US
approvals
Indication
Mechanism
Administration
Bupropion/natrexone
(Contrave)
Orexigen
Oct-14
Phentermine/topiramate
(Qsymia)
Vivus
Jul-12
Lorcaserin (Belviq)
Orlistat ( Xenical/Ali)
Liraglutide (Saxenda)
Arena/Eisai
Jun-12
Roche
1999
Novo Nordisk
Dec-14
EU approved March 15.
N/A
Approved S. Korea 2015
EU approved 1999
EU March 15
Obese adults (BMI 30 or
greater) and overweight
adults (BMI 27 or greater)
min 1 comorbidity.
Bupropion increases
dopamine activity in the brain
reducing appetite, increasing
energy expenditure.
Naltrexone blocks opioid
receptors, inhibits reinforcing
aspects of addictive
substances.
Oral 2x daily.
Obese adults (BMI 30 or
greater) and overweight
adults (BMI 27 or greater)
min one comorbidity.
Phentermine, a
sympathomimetic amine, is
an appetite
suppressor/stimulant.
Mechanism of
anticonvulsant topiramate
not fully understood but
has weight loss properties.
Oral 1x daily in the
morning.
150
Planned large-scale CVOT
AQCLAIM.
1,230-patient PIII (I) study
(ITT-LOCF) 67% high dose
45% low dose (17% PLA)
achieved at least 5% body
weight loss at 1 year;
2,448 patient PIII (II) study
62% high dose, 70% low
dose (PLA 21%) 5% or
greater wt loss at one year.
Dry mouth, tingling, altered
taste, constipation.
Obese adults (BMI 30 or
greater) and overweight
adults (BMI 27 or greater)
min one comorbidity.
Believed to decrease food
consumption/promote
satiety by selectively
activating 5_HT2C
receptors on anorexigenic
pro-opiomelanocortin
neurons in the
hypothalamus.
Oral 2x daily.
Obese adults (BMI 30 or
greater) and overweight
adults (BMI 27 or greater)
min one comorbidity.
Pancreatic lipase inhibitor,
reduces intestinal fat.
Obese adults (BMI 30 or
greater) and overweight
adults (BMI 27 or greater)
min one comorbidity.
Long-acting analogue of
the GLP-1 hormone.
Delays gastric emptying
promoting a feeling of
fullness.
Oral 3x daily.
320
12k patient 5-yr CVOT
CAMELLIA to 2019.
3,182-patient PIII BLOOM
study (ITT-LOCF) 48%
(20.3% PLA) patients
achieved at least 5% body
weight loss; 4k patient
BLOSSOM study showed
3.6% placebo adjusted
weight loss over one year
at high dose.
Infrequent depression,
anxiety and suicidal
ideation.
N/A
N/A
Subcutaneous injection 1x
daily.
500
Five-year 9k-patient
LEADER CVOT to 2015.
SCALE program. Pivotal
PIII (1) showed 62% lost at
least 5% of body weight vs
34% on placebo at 56
weeks, PIII (2) 49% of
patients lost at least 5% vs
16% placebo.
N/A
DEA scheduled as may be
abused/lead to drug
dependence.
# sales reps
Outcome
studies
Summary of
clinical data
900
9k-patient CVOT to
commence end 2015.
982-patient PIII COR I study
(ITT-LOCF) 48% (16.4%
PLA) achieved at least 5%
body weight loss at 56
weeks; 1,158 patient COR II
study showed 50.5% (PLA
17.1%) 5% or more weight
loss over 56 weeks.
Side effect
profiles
Nausea, headache,
constipation vomiting.
Label
restrictions
Black box warning suicidal
thoughts/behaviors,
neuropsychiatric reactions.
Pooled data from five
clinical trials (ITT-LOCF)
57% (31% PLA) patients
achieved at least 5% body
weight loss over one year.
Frequent, oily bowel
movements, stomach pain,
flatulence rare cases of
severe liver damage.
N/A
Nausea, diarrhea,
constipation, vomiting, low
blood sugar.
Black box warning of
thyroid c-cell tumors or
some high-risk patients.
Source: Edison Investment Research
Drugs in development
We see little immediate threat to the recent triumvirate of oral obesity drugs currently marketed in
the US. There are number of candidates in the pipeline for the treatment of obesity, most of which
have yet to start Phase III. The most advanced compound is beloranib (Zafgen), which has shown
Orexigen Therapeutics | 14 December 2015
8
impressive efficacy vs currently marketed anti-obesity drugs to date. However, the compound is
subcutaneous and its lead indication is to treat patients with Prader-Willi Syndrome, a rare disease
that causes binge eating due to a non-stop intense craving for food.
Exhibit 6: Select obesity treatments in later stages of development
Company
Product
Therapy class
Status
Zafgen
Beloranib
(ZGN-440)
Subcutaneous methionine
aminopeptidase 2 inhibitor
Phase III
recruiting
Targeted
enrolment
102
Administration
Notes
2x weekly
subcutaneous
injection
Prader-Willi syndrome results 2015 primary
outcome - change in total body weight and
hyperphagia-related behavior as measured
by questionnaire at week 29.
Results 2015 primary outcome - % change
from baseline to 12 wk in visceral fat area
measured by CT.
Results July 16 primary outcome - decrease
in body weight from baseline and 5% weight
loss, to day 171.
Results Oct 16 primary outcome - effect on
weight loss, energy expenditure and safety
in non-diabetic obese people over 24
weeks.
Results 2015 primary outcome - % chg from
baseline in body weight at week 26.
Results 2015 primary outcome - % chg from
baseline in body weight at week 20.
Angio Lab
ALS-L1023
Hanmi Pharma
Melissa leaf (Lemon Balm) Phase III
ethyl acetate dried extract recruiting
400
Oral 2x daily
Gelesis
Gelesis100
Phase III
168
Device: Gelesis 2x
daily
Astra Zeneca
Dapagliflozin &
Exenatide
(Forxiga & Byetta)
Device: super absorbable
hydrogel that expands in
the stomach
Glucagon-like peptide 1
receptor agonist
Phase II
recruiting
48
Oral 1x daily and
subcutaneous
injection 1x weekly
344
Oral 1x daily
300
1x weekly
subcutaneous
injection
1x daily
subcutaneous
injection
Janssen
Canagliflozin/
Phentermine
Hanmi Pharma LAPS CA- Exendin4 (HM1126OC)
Rhythm
Metabolic
RM-493
Sodium-glucose cotransporter
Glucagon-like peptide 1
receptor agonist
Phase II
recruiting
Phase II
(not yet
recruiting)
Small peptide melanocortin Phase II
4 receptor agonist
(not yet
recruiting)
36
Prader-Willi syndrome results 2015 primary
outcome - change in total body weight and
hyperphagia-related behavior as measured
by questionnaire at week 10.
Source: clinicaltrials.gov
Contrave marketing and forecasts
Contrave was approved in the US on 9 September and launched in October 2014 as an adjunct to
2
a reduced-calorie diet and increased physical activity in adults with a BMI of 30kg/m or greater
2
(obese) or 27kg/m or greater (overweight), with one weight-related comorbid condition. As of June
2015, Contrave became the most widely prescribed weight loss treatment in the US. Unlike
lorcaserin, Contrave is not DEA scheduled, although packaging does include a black box warning
owing to the class-wide risk of anti-depressants increasing risk of suicidal thoughts and behaviors in
adolescents, as well as bupropion’s association with serious neuropsychiatric events when used for
smoking cessation. In the US the company is partnered with Takeda, retaining the rights to the
marketing in subsegments to select specialist physician groups. Takeda provides Orexigen with a
large and experienced salesforce, as well as commercial and managed care experience. Orexigen,
together with Takeda, is aiming to create a large-scale prescription market for weight loss by
detailing high-prescribing primary care physicians and endocrinologists. Takeda is targeting
~75,000 physicians in the US with the first large-scale salesforce detailing obesity comprising 900
sales reps, thereby aiming to increase the appreciation of obesity as a chronic disease. Market
coverage is well beyond that of competitors, with Novo Nordisk’s 500-strong salesforce for Victoza
the next largest of the currently marketed obesity treatments. Detail has focused on educating
targeted physicians on Contrave in the first six months or so after launch, including sampling, with a
focus on high prescribers of metabolic and diabetes drugs. We anticipate the pilot testing of a
broader marketing program to increase patient awareness in the coming months, including DTC
advertising (digital, print and TV).
Orexigen/Takeda remain discreet as to the details of their pricing policy for reasons of
confidentiality. However, we believe the pricing strategy for Contrave remains largely competitive
with Belviq’s and Qsymia’s. Under one program, patients with insurance coverage pay $55 for the
first two months of treatment and $45 each month thereafter and those with no cover pay $70 per
Orexigen Therapeutics | 14 December 2015
9
month for the first two months and $60 per month thereafter. Sales in Q315 reflect seasonality of
the obesity market, but also suggest strong out-of-pocket sales and discounting. Transparency is
limited as Orexigen is contractually prohibited in its agreement with Takeda to provide more
transparency on sales including inventory build and other one-time events. The cost of the program
for all patients includes support with an app called Scale Down, which encourages a daily weigh-in
on a wireless scale (provided), giving personalized feedback from the app on the weigh-in, and
weekly emails giving advice on healthy lifestyle.
Progress on Contrave since launch is encouraging and the drug is showing the most positive
momentum in its category, a trend that could continue given its high level of sales and marketing
support. Eight months following commercial launch Contrave was the leading branded weight loss
treatment. Chief focus has been on those obese and overweight patients with comorbid conditions,
particularly those being treated for diabetes. Takeda reports good success so far, both with doctors
who have prescribed obesity medicines in the past (~50% of sales calls) and non-prescribers
(~50%). This is borne out by current scrip data showing new and total weekly prescriptions
surpassing Belviq and Qsymia despite a relatively latent launch. We note that while sales of antiobesity treatments tend to flatten in second and third quarters, scrip growth traditionally resumes
following Labor Day in early September.
Exhibit 7: Weekly total NEW Rx count (52 weeks)
Exhibit 8: Weekly TOTAL Rx count (52 weeks)
20,000
16,000
18,000
Weekly TOTAL Rx count
Weekly NEW Rx count
14,000
12,000
10,000
8,000
6,000
4,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
21/11/2014
16,000
2,000
21/01/2015
CONTRAVE
21/03/2015
21/05/2015
BELVIQ
21/07/2015
QSYMIA
Source: Bloomberg
21/09/2015
SAXENDA
0
21/11/2014
21/01/2015
CONTRAVE
21/03/2015
21/05/2015
BELVIQ
21/07/2015
QSYMIA
21/09/2015
SAXENDA
Source: Bloomberg
In Europe, the compound was approved in March 2015 under the name Mysimba following a strong
majority vote of 31 to two by the CHMP in December. Mysimba is currently positioned for launch as
the first significant new obesity treatment in nearly a decade in markets with historically low levels
of penetration, but where prescribing and doctor acceptance is starting to take hold.
We currently forecast sales of Contrave to reach $590m worldwide by 2024 (of which $430m is in
the US), after which time the key method of use patent expires. While we do not risk-weight our
revenue in Europe and South Korea, we have been deliberately conservative in rendering potential
upside after signing of partners. We do not include potential RoW sales or potential sales to the
overweight (vs obese). Our forecasts do not explicitly include potential sales for additional
indications being explored, including depression and smoking cessation in obese patients. We
model a 0.57% penetration rate of the obese population in the US and significantly less in Europe
at 0.29% penetration where reimbursement lags and uptake of weight loss treatments is
traditionally lower. Milestones from Takeda to Orexigen comprise two more $15m anniversary
payments in 2016, and 2017 and eligibility for another $880m in sales and regulatory-based
milestones. We assume these will be received in full with no risk adjustment. Royalties on sales in
the US range from 20-35% on a sliding scale based on increasing levels of revenue. We note
incremental changes in penetration rates create huge swings in our forecast sales, as explored in
our sensitivity analysis on page 13.
Orexigen Therapeutics | 14 December 2015
10
Exhibit 9: Contrave forecasts – US and Europe*
US$m
US market
Market sales
Royalty revenue
Milestones (not risk adjusted)
Total US revenue
European market
Market sales
Royalty revenue
Milestones
Total European revenue
Contrave market sales (US and EU)
2015e
2016e
2017e
2018e
2019e
2021e
2024e
2025e
2027e
56
12
22
35
108
29
49
77
136
41
107
148
192
60
167
227
249
80
167
247
335
117
127
244
427
149
67
217
252
88
7
95
134
47
0
47
56
32
8
8
140
37
9
9
173
41
10
15
25
233
77
34
15
34
326
118
45
15
45
453
145
36
36
572
74
18
18
326
62
16
16
196
Source: Edison Investment Research. Note: *Does not include forecasts for South Korea, for which we forecast $18m at peak.
Canvassing the global market
In August Orexigen announced the completion of a distribution agreement with South Korean
pharmaceutical company Kwang Dong for the commercialization and related expenses of Contrave
in South Korea. Terms of the deal include a recently paid $7m upfront by Kwang Dong, payment of
35-40% royalties on pills supplied, sales-based milestones and other fees. Sales of Contrave are
targeted to commence in the second half of 2016 contingent on marketing approval (Contrave was
filed on 1 October 2015 with the Ministry of Food and Drug Safety). Kwang Dong has a 500-strong
salesforce with which to market Contrave, which is currently detailing pharmaceutical products and
health foods. We forecast peak sales of $18m for Contrave in this market, which we believe is
conservative given that sales of anti-obesity treatments in Korea reached $61m in 2014 on high
obesity rates in the country: 38% in men and 26% in women.
During its Q3 conference call management provided detail as to its plans for marketing Contrave in
RoW. Following a comprehensive assessment of ex-US territories, the company intends to take a
market-by-market approach with the goal of launching in much of Europe and other major countries
in H216. The recent $60m raised via private placement to Baupost is intended to enable leverage in
the way of a funding cushion for the retention of increased ownership and more value in certain
markets outside the US as it continues discussions with potential partners, where deals will be
made with more local players. The company has veered away from market expectations of regional
deals, where Orexigen points to the diversity of individual markets, as well as the concentration of
decision makers, which gives the company a more hands-on and therefore lucrative part in the
sales process. Orexigen established a wholly owned Irish subsidiary to be used as a platform for
the sale and marketing of Contrave outside the US. A more comprehensive plan will be forthcoming
with additional detail on the ex-US strategy, expected in the early part of 2016 as deals in individual
territories begin to unfold.
Orexigen continues to explore opportunities for marketing the approved Mysimba in European
countries, which it targets for the second half of 2016. It plans to seek pricing approval in select
European countries while developing relationships with prominent specialists, as well as supporting
clinical research. The company also plans to file for regulatory approval in other countries. We
expect reacquired rights from Takeda for the commercialization of Contrave in Mexico and Canada
to provide added leverage in conversations with potential international partners. Other markets
earmarked as tier one are Australia, Brazil, China, MENA and Russia.
Patent coverage and Paragraph IV filing
In late April Actavis filed an ANDA challenging select Contrave patents (as well as those for Vivus’s
Qsymia), resulting in Orexigen’s receipt of a Paragraph IV certification. Under the Hatch-Waxman
Act the company will receive the procedural 30-month stay following the intended lawsuit filing
against Actavis by Orexigen and Takeda. We believe Actavis is positioning itself ahead of the queue
Orexigen Therapeutics | 14 December 2015
11
for an eventual generic listing and take the stance that Orexigen’s current patent estate is sound,
which corresponds with market expectations. We highlight that the efficacy of Contrave is derived
from the unique combination of bupropion and naltrexone, whereby naltrexone taken alone does
not result in weight loss and bupropion alone results in only around half of the weight loss of the
combination. Therefore, the company’s proprietary formulation looks to be a novel discovery.
Orexigen holds numerous patents for its proprietary controlled-release combination of bupropion
4
and naltrexone. Key patents are the Weber/Cowley composition patent (7,375111) expiring in
March 2025 and Weber/Cowley methods patent (7,462,626) expiring in July 2024. The company
also holds multiple additional patents covering composition of matter and use for Contrave in
obesity in the US (seven Orange Book listings). In Europe the company has exclusive rights to
many patent applications including those related to compositions, methods of use and formulations.
Sensitivities
Orexigen is subject to the risks typical of a pharmaceutical company in the early stages of a major
product launch. This includes the commercial decisions by its partners or potential partners and the
level of success of its competitors. The company is also vulnerable to any undesirable effects
arising post launch not made evident in its large Phase III clinical program. With a European
approval and intended global launch, future sales of Contrave (ex-US) also expose the company to
currency fluctuations. We also highlight stock-specific issues.

Orexigen is a one-product pure obesity play. While the potential for Contrave remains
significant, the company is highly dependent on its success as the sole source of income. This
risk is mitigated by the successful launch of Contrave into the market in October of 2014, as
demonstrated by its good progress to date by Takeda’s salesforce in garnering growing sales
both from existing and new prescribing doctors. Additionally, Orexigen is poised for launch in
Europe following regulatory approval earlier this year and South Korea, where approval is
pending.

The FDA has requested an additional large-scale and long-term outcome study focusing
specifically on potential CV risk. Negative results from this trial could require modifications to
Contrave’s label or, in a worst case, its withdrawal from the market. While trial results remain
an uncertainty, the interim analysis of the LIGHT trial at the 50% study timeframe, as reported
by the Cleveland Clinic, revealed that Contrave did not show any increased risk of MACE
events. However, data were top-line only and we await detailed results on the full data set,
although the uncertainty could potentially lead to complications in the negotiation process with
possible European partners.

Orexigen is also subject to IP risk, as highlighted by the recent Paragraph IV application by
Actavis. Current market expectations are that the patents will withstand impending litigation,
although the ultimate judgment is not guaranteed.
Valuation
We value Orexigen at $1.09bn, or $7.49 per share, based on a risk-adjusted net present value
(rNPV) analysis. The breakdown of our DCF model, which uses a 10% discount rate, is shown in
Exhibit 10. Our valuation includes the company’s estimated net cash holdings of $133m at 30
September. We model cash flow for Contrave through to loss of market exclusivity in 2025 in the
US when key patents expire, forecasting a loss of 60% of sales in the first year and tailing off until
4
Eckard Weber and Michael Alexander Cowley were founding partners of Orexigen and Eckard Weber has
been chairman of the board of directors of Orexigen since 2004.
Orexigen Therapeutics | 14 December 2015
12
2030. We currently model sales in the US, South Korea and European markets only, therefore
launches in additional territories including Brazil, Mexico and Canada offer upside to our fair value.
We note that our base case rNPV represents considerable upside to Orexigen’s current market
capitalization of $329m ($2.62/share), which saw a drop from a market cap of ~$860m (~$6.85 per
share) at the time of the termination of the LIGHT study and the announced private placement of
Baupost. As stated, we believe the extent of the share price drop was an overreaction and
anticipate the renewal of shareholder confidence on the back of an expected continuation of
positive scrip trends for Contrave vs its peers. Additionally, the announcement of a partner for the
launch of Mysimba (in Europe) and ongoing communication regarding partnerships for Europe and
RoW should provide support to the shares.
Exhibit 10: Orexigen valuation and key assumptions
Product
Launch Peak sales ($m)
Contrave US
Oct-14
427
Contrave Europe
2016
144
Contrave S. Korea
2016
5
PV costs inc taxes
Net cash (end Q315e)
Overall valuation (per share based on 145.4m shares outstanding)
Royalty rate
20-35%
25%
37.5%
NPV ($m)
1,217
209
27
(511)
146
1,089
rNPV/share ($)
8.37
1.44
0.19
(3.51)
1.01
7.49
Source: Edison Investment Research
Sensitivity analysis
Given the size of the obesity market and corresponding possible sales volumes (based on relatively
marginal penetration rates), we also include an analysis of share price potential based on various
market penetration rates in the US and Europe, also indicating the peak sales that correspond to
these assumptions (Exhibit 11). We note the relatively wide band of calculated fair value for
Orexigen, ranging from $6.59 per share to $7.82 per share, on small changes in penetration rates.
Exhibit 11: Per share valuation up/downside on US and Europe penetration
European penetration
0.19%
0.29%
0.39%
US penetration
0.37%
6.59
6.74
6.83
0.57%
0.77%
7.35
7.49
7.60
7.58
7.72
7.82
Source: Edison Investment Research
Exhibit 12: Per share valuation up/downside on US and Europe peak sales ($m)
European sales
98
144
191
277
6.59
6.74
6.83
US peak sales
427
577
7.35
7.49
7.60
7.58
7.72
7.82
Source: Edison Investment Research
Financials
We forecast solid top-line development for Orexigen in the coming quarters and years on the rampup of Contrave following the successful debut in its first 12 months on the market to September
2015. We model a steadily growing top line derived from tiered royalties received from Takeda (2035% on an upward sliding scale), deferred revenue on previous milestone payments (~$100m),
potential anniversary milestones ($30m more in two instalments) and sales-based milestones (up to
$880m to be received in 2016-24). In Q3 Contrave sales by Takeda of $12.8m ($16.0m in Q215)
led to $2.6m in royalties for Orexigen. Sales dipped from the prior quarter despite the increase of
Orexigen Therapeutics | 14 December 2015
13
10% in prescriptions sold and, with little information from management on these trends (due to
confidentiality agreements with Takeda), we believe a combination of inventory fluctuations and
price discounting led to the discrepancy. A net loss in Q315 of $11.1m (Q314 $11.3 profit) was
reported. For the full year 2015 we forecast revenue of $32.4for Orexigen growing to $85.6m in
2016 as Contrave continues to make inroads in the US and is launched in Europe and South Korea
next year. We model R&D costs at $60.2m and $66.2m in 2015 and 2016 respectively, factoring in
the $210m in costs, as incurred, for the new CVOT trial in the coming years. On 10 September,
Orexigen announced the private placement of 20m shares and the raising of $60m of common
stock and warrants (common shares at $3 and $0.25 per warrant exercisable at $6) to funds owned
by the Baupost Group. The additional cash is intended to help support the commercial launch of
Mysimba in Europe and regulatory requirements in other targeted markets. As at 30 September
2015, Orexigen carried $87.0 in convertible debt on its balance sheet. In December 2013, it issued
$115.0m in aggregate principal amount of 2.75% convertible senior notes due in 2020 in an
offering. Orexigen holds the option to settle the 2020 notes with cash, shares or a combination, at
the company’s election. The estimated implied interest rate of 8.69% resulted in a fair value
calculated as the PV of implied future payments based on the $115m principal. While we do not
assume conversion of this debt into shares, if converted the dilution would amount to an additional
14.0m shares. Cash holdings of $233m at 30 September should be sufficient to carry Orexigen into
mid-2017, at which time, on our forecasts, the company will become profitable.
Orexigen Therapeutics | 14 December 2015
14
Exhibit 13: Financial summary
2013
US GAAP
2014
US GAAP
2015e
US GAAP
2016e
US GAAP
2017e
US GAAP
3,428
0
3,428
(56,748)
(23,878)
(77,292)
(77,198)
0
0
(77,198)
(473)
0
(77,671)
(77,671)
0
0
(77,671)
(77,671)
55,521
0
55,521
(57,412)
(28,639)
(30,669)
(30,530)
0
0
(30,530)
(6,995)
0
(37,525)
(37,525)
0
0
(37,525)
(37,525)
32,365
0
32,365
(60,166)
(43,502)
(71,524)
(71,303)
0
0
(71,303)
(7,423)
1,612
(78,726)
(77,114)
0
0
(78,726)
(77,114)
85,641
0
85,641
(66,183)
(45,677)
(26,500)
(26,219)
0
0
(26,219)
(7,611)
0
(33,830)
(33,830)
0
0
(33,830)
(33,830)
157,267
0
157,267
(69,492)
(47,047)
40,437
40,727
0
0
40,727
(7,832)
0
32,895
32,895
1,776
0
34,672
34,672
96.5
(0.80)
(0.80)
0.0
118.2
(0.32)
(0.32)
0.0
131.8
(0.59)
(0.59)
0.0
148.3
(0.23)
(0.23)
0.0
151.3
0.23
0.23
0.0
BALANCE SHEET
Fixed Assets
Intangible Assets
Tangible Assets
Other
Current Assets
Stocks
Debtors
Cash
Other
Current Liabilities
Creditors
Short term borrowings
Long Term Liabilities
Long term borrowings
Other long term liabilities
Net Assets
1,839
0
630
1,209
178,282
0
0
176,996
1,286
(22,853)
(22,853)
0
(115,406)
(80,031)
(35,375)
41,862
1,655
0
857
798
211,326
1,198
2,571
205,537
2,020
(29,714)
(29,714)
0
(160,923)
(83,908)
(77,015)
22,344
2,493
0
940
1,553
227,812
11,068
4,560
209,406
2,778
(35,447)
(35,447)
0
(171,637)
(87,732)
(83,905)
23,220
2,522
0
969
1,553
204,038
11,068
4,560
185,632
2,778
(35,447)
(35,447)
0
(165,838)
(90,248)
(75,590)
5,275
2,550
0
997
1,553
249,988
11,068
4,560
229,806
4,554
(35,447)
(35,447)
0
(160,942)
(92,836)
(68,106)
56,149
CASH FLOW
Operating Cash Flow
Net Interest
Tax
Capex
Acquisitions/disposals
Financing
Dividends
Other
Net Cash Flow
Opening net debt/(cash)
HP finance leases initiated
Exchange rate movements
Other
Closing net debt/(cash)
(70,817)
0
0
(640)
0
1,337
0
29,682
(40,438)
(137,403)
0
0
0
(96,965)
26,828
(3,119)
0
(246)
0
2,734
0
(1,533)
24,664
(96,965)
0
0
0
(121,629)
(59,887)
0
0
(304)
0
64,030
0
(3,843)
(4)
(121,629)
0
(655)
704
(121,674)
(23,463)
0
0
(311)
0
0
0
(2,502)
(26,276)
(121,674)
0
0
(14)
(95,384)
44,493
0
0
(319)
0
0
0
(2,575)
41,598
(95,384)
0
0
(13)
(136,969)
Year-end 31 December
PROFIT & LOSS
Revenue
Cost of Sales
Gross Profit
Research and development
General & administrative
EBITDA
Operating Profit (before GW and except.)
Intangible Amortisation
Exceptionals/Other
Operating Profit
Net Interest
Other (includes change in fair value of warrants)
Profit Before Tax (norm)
Profit Before Tax (FRS 3)
Tax
Deferred tax
Profit After Tax (norm)
Profit After Tax (FRS 3)
Average Number of Shares Outstanding (m)
EPS - normalised fully diluted ($)
EPS - FRS 3 ($)
Dividend per share ($)
$000s
Source: Company reports, Edison Investment Research
Orexigen Therapeutics | 14 December 2015
15
Contact details
Revenue by geography
3344 N. Torrey Pines Court, Suite 200
La Jolla, CA 92037
US
+1 858 875 8600
www.orexigen.com
%
100%
US
Management team
CEO: Michael Narachi
Chief Commercial Officer: Thomas Cannell
Michael Narachi has been CEO of Orexigen since 2009, coming from
biotechnology firm REN Pharmaceuticals, where he served as CEO from 2006 to
2009. Previously, he held various positions over a number of years at Amgen,
including general manager of Amgen’s anemia business, director of clinical
operations, VP of development and head of corporate strategic planning. He
currently serves on the board of directors of Celladon Corporation and
Ultragenyx Pharmaceuticals, as well as PhRMA (Pharmaceutical Research and
Manufacturers of America) and BIO (Biotechnology Industry Organization).
Thomas Cannell recently joined Orexigen following a long tenure at Merck,
where he held various positions. He has considerable experience in global
commercialisation, consumer marketing, and sales operations and management.
Positions held at Merck include president of Merck Canada, head of marketing
and strategy for MSD Japan and general manager roles for a US sales division
and as leader of a Merck business unit, managing a multi-billion dollar product
portfolio. He also designed and successfully piloted the commercial model for
Merck’s US business.
Chief Business and Financial Officer: Joseph Hagan
Head of Global Development: Preston Klassen
Joseph Hagan joined Orexigen in 2008 as senior VP, corporate development,
strategy and communications, before taking on the role of chief business officer
and acting CFO in 2011. Before joining Orexigen he was a founding partner of
the biotechnology consulting firm, GroundSwell Advisors, which provided
operational guidance and execution in corporate strategy. Mr Hagan also worked
in various roles for Amgen including founder and MD of Amgen Ventures and
head of corporate development.
Preston Klassen has been global head of development at Orexigen since 2009,
joining from Amgen where he was therapeutic area head for nephrology and
executive medical director, leading global development efforts for the renal
franchise. His experience includes global regulatory filings, development and
execution of large CV outcome trials, and oversight of clinical commercialisation
activities with EPOGEN, Aranesp and Sensipar. Before joining Amgen he was a
faculty member at Duke University Medical Center in the Nephrology division.
Principal shareholders
(%)
Baupost Group
State Street Global Advisors
Fidelity Management and Research
Domain Associates
BlackRock Institutional Trust Company
Franklin Resources
T. Row Price Associates
Samlyn Capital
17.75
8.10
8.01
7.81
5.42
4.68
4.46
4.24
Companies named in this report
Takeda; Vivus; Arena; Eisai; Roche; Novo Nordisk
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Frankfurt +49 (0)69 78 8076 960
Schumannstrasse
34b
Orexigen Therapeutics
60325 Frankfurt
Germany
London +44 (0)20 3077 5700
280 December
High Holborn
| 14
2015
London, WC1V 7EE
United Kingdom
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16