Today FDA's decision was released: Orexigen's obesity drug was rejected by the FDA. It seems this news was a huge shock to most traders and the OREX share price dropped by 70% today. On Dec 2, 2010, I bet that the FDA advisory committee would not vote in favor for OREX. However, I was wrong as on Dec 8, they actually voted positively for it. In my follow up blog I said I still doubted the FDA would approve it. Here was what I wrote on Dec 8, 2010:
However, given the information as well as the fact that the final decision is in the hands of the FDA, I still doubt highly that the FDA will give a straightforward approval. More likely it may be either a very restrictive indication which will mean much less commercial value for the company or an approvable letter requesting more data or even studies before final approval. If that happens, it will be a huge blow to the stock price, which is currently priced in a full approval outright.
This is exactly what happened: the FDA asked for more studies before it can be satisfied for an approval. This is really brutal for a company with only one drug waiting to be approved. Hope you were not hoaxed in by the hype and put your money into this stock.
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