Shares of Orexigen Therapeutics (Nasdaq:OREX) are getting demolished today on news the Food and Drug Administration (NYSE:FDA) rejected Contrave as an obesity drug.
Orexion shares dropped over 72 percent on the day as of this writing.
It was thought that if the FDA rejected Contrave it would effectively kill the so-called obesity drug market, and it probably has.
That may be bad news for Orexigen, but probably good news for the public, as the idea you can take a pill to control weight, is ludicrous at best, as rejections of all entries in the segment have proven.
Since October alone three obesity drugs have been rejected, including Contrave.
The bottom line for all of this is the benefit of a weight-loss drug at this time is far outweighed by the inherent risk included with them. Risks related to heart valves was of particular concern, as well as some cancer appearing in rats in studies.
It will be years, if ever, before the attempt to develop an obesity drug is attempted again, as the prohibitive costs and high bar to meet is beyond the will of most companies, and largely a waste of time and money.
Orexion was trading at $2.55, dropping $6.54or 71.95 percent, as of 2:24 PM EST.
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