Orexigen Therapeutics Falls 6% on Profit Taking

Shares of Orexigen Therapeutics

have lost around 6% on Friday to $5.55 on very heavy volume. Yesterday, the stock surged on heavy volume after an analyst at JP Morgan upgraded it to Overweight with a $10.00 price target. Orexigen has been extremely volatile in recent days surrounding the FDA approval of Arena Pharmaceuticals' weigh-loss drug locaserin. Orexigen also has a weight-loss drug called Contrave, which has completed Phase III trials and a drug called Empatic which has completed Phase II clinical trials. Shares have been soaring since an FDA advisory panel recommended approving Arena's lorcaserin, and the drug's subsequent approval which came on Wednesday. Traders are using OREX to play the developments unfolding at Arena Pharmaceuticals. The collective view of the market is that Arena's success bodes well for Orexigen's future. The loss in the stock today is likely due to profit taking from traders who were long OREX going into the FDA's decision on lorcaserin. Over just the last 5 trading sessions, OREX shares are up more than 37%. Year-to-date, the stock has soared nearly 247%. Another name that has been volatile surrounding drug approval for Arena is Vivus, Inc.

, which also has a weight-loss drug, Qnexa, that has been recommended for approval by a FDA advisory panel. That decision came back in February, and has triggered a 192% gain in VVUS in 2012.