Orexigen Therapeutics, Inc. (NASDAQ:OREX)

On May 12, 2015 Shares of Orexigen tanked by 13% after the company reported that the cardiovascular outcome study had to be terminated early. The “LIGHT” study recruited up to 9,000 patients to determine if patients taking Contrave have an increased risk of cardiovascular issues. The mess up occurred because the early preliminary results were supposed to be kept confidential instead the company had incidentally released these results. As you can imagine the FDA was not quite happy with Orexigen because of this and now relationship with the FDA is somewhat strained.

Back on March Orexigen released preliminary results detailing some preliminary evidence that by patients taking Contrave they showed a 41% reduced risk of heart attacks, strokes, and death. The FDA was upset, first of all because the company shouldn’t have disclosed early preliminary data and also because the FDA claimed that you can’t draw too much of a conclusion from only 25% of the overall data.

Now Orexigen will have to run a new “Light” study that should probably complete sometime by 2019 or later. Had Orexigen not had this problem occur, then it would have been able to complete the light study by 2017. Now the trial will have to be dragged out many more years leaving a lot of disgruntled investors. Now Both Orexigen and partner Takeda Pharmaceuticals will have to run a new trial. It wasn’t a good move for Orexigen to release early results because unfortunately the FDA was right. That is because The Cleveland Clinic responsible for the trial released new data that was quite worse than the initial data released prematurely.

The new data showed a 12% reduced risk of heart attacks, strokes, and death. This compares to the previous preliminary data which showed a larger reduced risk of 41%.This news was devastating but to make matters worse things got a little bit more of a drag in after-hours trade the very same day. That is because shares of Orexigen fell an additional 15% after their partner Takeda announced that it would not pay for the new “LIGHT’ study. This puts Orexigen in another bad place because now it has to avoid going to arbitration against its partner and hopefully settle matters without using the court system. In addition if it has to run the trial on its own it will have to probably raise money through dilution which would really affect current shareholders.

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)

On May 12, 2015 shares of Vertex were up 7% in after-hours trade after the company reported that the FDA panel had approved Orkambi for Cystic Fibrosis patients. Before this panel approval there were some people at the FDA that were skeptical of Orkambi because of the risk/benefit profile. This is because the new combo cystic fibrosis drug passed its primary endpoint in a clinical trial, but was not far superior as compared to Vertexs’ prior drug Kalydeco. Despite this the panel vote was won by a huge landslide of 12 “for” votes and 1 “no” vote.

The new Cystic Fibrosis combo drug mixes Kalydeco and the company’s new Cystic Fibrosis drug known as lumacaftor. Kalydeco was the company’s first Cystic Fibrosis drug approved by the FDA back in 2012 but that drug only targeted a smaller patient population of cystic fibrosis patients. The amount of people targeted by Kalydeco was 2,000 patients age 6 and older so a limited market. Still Vertex has been doing quite well as it has been charging about $300,000 dollars per year per patient for Kalydeco treatment.

The new combo Cystic Fibrosis drug, Orkambi, will target a bigger patient population of approximately 8,500 patients that are age 12 and older. All clinical trials that deal with Cystic Fibrosis patients measure the efficacy by determining how much of an improved lung function occurs in these patients. The previous efficacy problem mentioned above occurred because Orkambi obtained a 2% to 3% lung function improvement. Which is good because it was able to meet the primary endpoint, but the problem is that Kalydeco was able to improve patient lung function by 10%. That is why some panel members had a discrepancy of the Orkambi drug but still it was no question that the FDA panel was going to approve the drug regardless because the other subset Cystic Fibrosis patients have no other viable therapy options.

As mentioned above this vote was only an FDA panel recommendation approval. Now this finding will go the real FDA which will ultimately decide if the drug should be approved by July 2015. The FDA doesn’t have to take into consideration the FDA panels’ vote but more likely than not it will. If approved Orkambi is expected to make around $5 billion dollars at its peak value, which should bring in a substantial amount of revenue for the company.

Puma Biotechnology Inc (NYSE:PBYI)

On May 14, 2015 shares of Puma Biotechnology fell as much as 19% after it announced additional breast cancer results that were disappointing for analysts and wall street. These results will be presented this month May 29, 2015 – June 2, 2015 at the American Society of Clinical Oncology — ASCO. These results come from a phase 3 trial that recruited up to 2,821 patients who are HER2 positive in breast cancer. These patients being enrolled in the trial were treated with previous HER2 treatment that may not have been successful.

One of the reason for Puma’s decline was that only some patients in the study saw an improvement in disease-free survival. In addition those patients that did see an improvement in disease-free survival only increased their survival time frame by 2.3 months which is good but not as much as expected by wall street. Also because the company disclosed that in a previous study patients increased disease-free survival by 33%.

Each patients was split into two different dosing groups to determine if Neratinib, Puma’s Drug, could be combined with standard of care — SOC — treatment and be stronger than SOC alone. After 2 years in the trial the patients saw a 93.91% survival, compared to placebo that saw a 91.6% survival. A second reason for the drop was that analysts and many others on wall street were expecting a 3% difference between the drug combo and the SoC combo. Instead Puma only saw a 2.3% difference and that’s what was another contributing factor the tumble.

If that wasn’t bad enough there was a third reason for the tumble the very same day. That is because 40% of the patients had severe diarrhea when taking the drug combo which is a pretty devastating side effect. Now the company will have to go into talks with the FDA to determine the next course of action for Neratinib’s approval path. It may be highly probable for FDA approval of Neratinib but the key will be how well the drug will do on the market with its serious side effect profile.