Orexigen Therapeutics: What Drove The Stock Higher on Wednesday?

The rally in shares of Orexigen Therapeutics, Inc. OREX that started on Monday, doesn’t seem to be coming to an end anytime soon. After taking a breather on Tuesday, the stock was again up by 15.87% on Wednesday. The stock is up by over 50% since its last Friday’s close.

Zacks Is Responsible for Today’s Move?

Even though one can’t give all the credit to analysts at Zacks for Wednesday’s rally in Orexigen Therapeutics as the share has been riding since Monday, the reiteration of ‘Neutral’ rating by Zacks definitely helped Orexigen’s stocks to move higher.

In their note to investors, analysts at Zacks wrote, “[…] the approval of obesity drug, Contrave is a major positive for the company given the huge commercial opportunity in this market. With Contrave already launched in the U.S., we expect investor focus to stay on the performance of the drug.”

On Monday morning, analysts at Wells Fargo & Co. had also reiterated their ‘Outperform’ rating on the stock.

Outstanding Third Quarter Results

Orexigen Therapeutics declared its third-quarter earnings results on Monday, November 10, which was better than what analysts were expecting. The revenue for the quarter came at $30.8 million, above analysts’ expectations of around $9 million and significantly above the $0.9 million revenue that the company posted for the same quarter last year.

The company outperformed market expectations on earning per share (EPS) front as well. Whereas the Street was estimating Orexigen to post an EPS loss of around $0.13, the company reported an EPS of $0.09, again significantly above the EPS loss of $0.19 it posted for the same period, last year.

The Good News from Europe

Orexigen also issued a press release on Monday in which it updated investors on the EU application for its weight control management drug, Contrave. Application for similar drugs from Arena Pharmaceuticals, Inc. (NASDAQ:  ARNA) and VIVUS, Inc. (NASDAQ:  VVUS) was disapproved by the EU. However, Orexigen recently had a favorable meeting with EU regulators following submission of its responses to the List of Outstanding Issues to the Committee for Medicinal Products for Human Use. According to the press release, the company also "believes the remaining issues are addressable."