Stock of San Diego biotech Orexigen Therapeutics, which produces a weight-loss product, Contrave, has had a full ride in a short time. The Food and Drug Administration (FDA) is irate over the company's release of information from a testing procedure for possible cardiac side effects of Contrave.
A Food and Drug Administration official has told Forbes magazine that the information released by Orexigen was probably "unreliable," "misleading," and "likely false." The company could face fines, civil penalties, and even the withdrawal of Contrave from the market.
On Monday, March 2, Orexigen stock closed at $5.79. On Tuesday, the company, in patent and Securities and Exchange Commission filings, stated that Contrave actually reduced the risk of heart attacks and cardiovascular problems. The stock zoomed, and by Wednesday, March 4, was up to $8.49. After the tongue-lashing by the FDA official, the stock dropped 5.65 percent today, and then another 17.48 percent in after-hours trading, down to $6.61. Now, investors are nervous over Orexigen's breaking of protocol requiring that interim analysis data must remain confidential, even within a company.
The case may be reminiscent of a 2009 misadventure by another local biotech, Sequenom. The company hyped its prenatal test for Down syndrome. But investigations revealed the company's testing procedures were flawed. The chief executive was fired, as was Elizabeth Dragon, senior vice president of research and development, and several other top executives. Dragon was charged by the Securities and Exchange Commission with lying to the public about the Down syndrome tests's accuracy. She died in 2011. The company settled a $14 million shareholder suit.
Note: In mid-February, Don Bauder entered the intensive-care ward of a hospital with a severe case of flu and pneumonia. After four days there, he spent five days in other hospital rooms. He wishes to thank all those who sent him messages. He may be convalescing for another month. He will resume submitting items regularly when he has fully recovered.