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Orexigen Therapeutics, Inc. (NASDAQ:OREX)

Q2 2012 Earnings Call

August 7, 2012, 8:30 a.m. ET

Executives

Heather Turner – VP & General Counsel

Mike Narachi – President and CEO

Preston Klassen – SVP, Global Contrave Team

Jay Hagen – Chief Business Officer

Analysts

Charles Duncan – JMP Securities

Marko Kozul – Leerink Swann

Steve Byrne (Tazine) – BoA/Merrill Lynch

Christian Glennie – Edison Investments

Charles Duncan – JMP Securities

Operator

Welcome to the Q2 2012 Orexigen Therapeutics, Inc. earnings conference call. My name is Lorraine and I will be your operator for today's call. (Operator Instructions).

I will now turn the call over Miss Heather Turner. Miss Tuner, you may begin.

Heather Turner

Hello, and thank you for joining us to discuss the company's second quarter 2012 financial results. I am joined on this call by Mike Narachi, Chief Executive Officer, Dr. Preston Klassen, Senior Vice President Development, Jay Hagen, Chief Business Officer, and McDavid Stilwell, Vice President of Corporate Communications and Business Development.

This morning, we issued a press release that provides details of the company's second quarter financial results. Please note that all of the information discussed on this call this morning is covered under the Safe Harbor provisions of the Private Securities Litigation Reform act. I caution listeners that during this call, the company's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and the company's SEC filings including the form 10-Q the company plans to file this week.

The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 7th, 2012. Orexigen takes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

I will now had the call over to Mike Narachi, Orexigen's Chief Executive Officer to provide an overview of today's call. Mike.

Mike Narachi

Thanks, Heather. For the call today, I'll first provide a brief update on the progress we're making in the Contrave cardiovascular outcome study or what we call the Light Study. I'll also want to discuss the recent FDA approvals of two new obesity therapeutics and the implications of these approvals on an hour two late stage obesity product candidates, Contrave and Empatic. I'll then ask Preston to provide an update on the Empatic program. And finally, Jay will wrap up with the financial results for the second quarter, 2012. After that, we'll be pleased to take questions.

I'm very pleased with the progress our team has made in enrolling patients into the Light Study. As many of you know when we originally began planning this clinical trial, we were cautioned that industry experience would indicate that enrolling a large cardiovascular outcomes trial of 7,000 to 10,000 patients could take up to three years and may require international recruitment. When we closely examined historic reasons for such a protracted timeline, we felt we could do much better and focused our efforts on strategy to enroll the trial as expeditiously as possible.

We saw enrollment as something that was in our control and could speed the time to the interim analysis and potential approval of Contrave. Once we established our plans, we believed a reasonable estimate for enrolling this study would be 18 to 20 months. I'm pleased with the progress we've made. Early last month, we announced that more than 1,500 patients have already enrolled into the Light Study only five and a half weeks from the start of the trial with only 100 sites activated. Because of this incredible early progress, we updated our guidance for enrollment if 7,000 patients to be complete in the first quarter of 2013, as much as one year earlier than the original projections.

Since the last update, we have activated an additional 90 sites. And our prediction that we would achieve our enrollment goal in the first quarter of next year was predicated on the expectation that recruitment would slow down from the initial surge of patients. To date, enrollment has not slowed down, although we are not yet ready to update guidance on when enrollment will be complete.

Expedited enrollment does pull forward the time to interim analysis, which is planned once at least 87 MACE end points have been adjudicated. Exactly when the 87th MACE end point will occur is based on two key variables. The number of months of observation time for randomized subjects, and the actual observed annualized MACE rate. Using an assumption of 1.5% annualized MACE, we would need approximately 70,000 months of observation time. To date, we know enrollment rates and therefore have a pretty good idea of observation time in the randomized phase of the trial.

In order to accurately predict the time of the 87th event in the interim analysis that follows, we would also need to wait until the date a monitoring committee guides us on event rates to know how we are tracking. We would not expect to have a good estimate on event rate until enough end points have occurred to make a solid projection.

For now, we feel comfortable with our guidance that the 87th event will occur sometime in the second half of next year. According to the extensive epidemical modeling we've conducted, the population we are targeting would yield an event rate of approximately 2%. But because patients in clinical trials typically experience a slightly lower event rate than the models would predict, we based our assumptions on an estimate of 1.5% annualized mix.

Today, the demographics of the patients we have enrolled fit our targets in terms of age, gender, ethnicity, body mass index, smoking status, the prevalence of cardiovascular disease, diabetes, and other comorbidities. However, only after the date the monitoring committee has a good idea for how we're tracking on actual event rates would we be in a position to update and narrow the projected time to the 87th event.

We're also moving forward with a EU submission in our determining our best option to submit the marketing authorization application for Contrave. Based on input from EU regulatory bodies, we believe information from the interim analysis of the Life Study will be required for EU regulators to complete their review. We have started the pediatric investigation plan or PIP process. And a potential European approval would follow U.S. approval with the timing depending on whether we submit with or without the cardiovascular outcomes data at the beginning of the application process.

The past few months have been an exciting time for developers of new obesity therapeutics. We are pleased to see the FDA approve the obesity therapeutics from Arena and Bevis and we congratulate those companies. With two late state obesity therapeutics in our pipeline, we believe Contrave, or sorry, we believe Orexigen is also a beneficiary of the positively changing regulatory environment.

Let's talk a bit about commercialization and what we think it will take to be successful long term. In 2010, we conducted extensive market research, which we are now updated using product profiles from the approve labels of Lorcaserin and Phentermine/Topiramate. From our earlier conjoined analysis, it was clear that a rising tide would lift all boats. Peak sales would be reached if all three drugs are marketed with high levels of resourcing to drive adoption and penetration. The task of building the market beyond the 10,000 to 15,000 current high prescribers of obesity therapeutics will take some time. But healthcare providers are eager to have an effective means of addressing obesity.

We believe that in order to reach its broader potential, the market needs to be developed so that the 90,000 primary care physicians who actively treat comorbidities of obesity learn that pharmacotherapy enabled wave loss is an effective means of reducing or preventing those comorbidities.

For example, we believe that treating obesity will soon become a cornerstone of cardio-metabolic care. And physicians will begin to prescribe obesity therapeutics as a critical and complimentary step towards preventing and treating diabetes, managing hypertension, and improving lipid profiles.

The existing sales of obesity therapeutics are small relative to the market potential. There are approximately 7 million prescriptions written by primary care physicians and endocrinologists who actively treat obese and overweight patients today.

The market has suffered from few effective treatment options, limited promotion, and a lack of trust among the broader physician populations stemming from safety and tolerability issues and disappointing results from past approaches.

So people ask us how are we going to make this into a highly valuable category benefitting millions of patients. In our minds, it will take four key factors. One, awareness. Awareness that even modest weight loss translates into important long term health benefits. Data for this already exists, but the awareness needs to grow among patients, providers, and payers.

Two, realistic expectations. Realistic expectations of what's required for patient's success. We were pleased to see that the FDA has accepted the paradigm of incorporating a responder analysis into labeling. This keeps only appropriate patients who are benefitting from treatment exposed to a drug long term. And helps to set realistic expectations for patients taking these drugs by focusing them on more sustainable results at weeks 12 or 16 instead of a quick fix at one to two months. This approach should also help with pairs since only successful cases will continue on to long term therapy.

Three, effective patient support. Patient support programs are needed. We believe obesity therapeutics should be used alongside a rigorous diet and exercise program such as Weight Mate, the behavioral modification program currently being used in the Light Study. The combination of an effective therapy with a patient support program will enable more patients to achieve a higher degree of success.

And four, the launch of effective new therapies. Three novel obesity therapeutics launching over the next couple of years will supply a level of resources needed to drive education, awareness, and successful adoption. Should Contrave be approved, our partnership with Tekada is structured to deliver a high degree of regent frequency to the audience of primary care physicians that we believe is required to dramatically grow the market.

Switching gears to Empatic, our second program, Empatic may now be a highly valuable asset given the approval of Phentermine/Topiramate, a combination weight loss drug that also contains an anti-convulsive. Empatic is a fixed dose combination of Bupropion and Zonisamide that is 100% owned by Orexigen. We are including Empatic in our Contrave rest of world partnership discussions. But plan to keep Empatic U.S. rites at this time.

I'll now turn the call over to Preston for a fuller discussion of the Empatic clinical profile. Preston.

Preston Klassen

Thanks, Mike. Before deciding whether to advance Empatic into phase 3 clinical development, Orexigen awaited completion of the FDA review of another weight loss combination drug containing an anti-consulsant, Topiramate. Orexigen believes that the recent approval of the Phentermine/Topiramate combination and the details of that drug's REM's program demonstrates the value of Empatic.

In clinical trials, Empatic has shown robust weight loss with favorable effects on cardio metabolic parameters including blood pressure. In its 729 patient base 2B clinical trial, those patients who completed 24 weeks of Empatic therapy lost 9.9% of their baseline body weight or 22 pounds compared to 1.7% for placebo patients.

Of patients who completed 24 weeks of therapy, 83% lost at least 5% of their baseline body weight. And 48% lost at least 10% of their baseline weight compared to 19 and 6% of placebo patients respectively.

These improvements in weight were accompanied by improvement in weight circumference and other cardio metabolic measures such as insulin resistance, various lipid parameters, and inflammatory markers.

Hemodynamic improvements were also noted with favorable reductions in both systolic and diastolic blood pressure compared to placebo. And no increase in heart rate compared to placebo. Clearly, the mild [inaudible] effect of Bupropion on blood pressure was compensated for by the hemodynamic lowering effect of Zonisamide in this phase 2B trial. The general safety and tolerability of Empatic was consistent with that of the individual components Bupropion and Zonisamide.

Importantly because many anti-convulsant therapies are associated with depression and reductions in memory and cognizant function, we specifically tested these aspects in the phase 2B clinical trial. And found no clinical meaningful differences between the high dose of Empatic and placebo on measures of cognitive function, depression, suicidality, or anxiety.

We are in the process of re-engaging with the FDA to discuss the Empatic clinic development program. In light of the emerging importance of evaluating cardiovascular risks in obesity drug development programs, we will seek confirmation from the agency that Empatic will not need a pre-approval cardiovascular outcomes trial. Based on earlier correspondence and in light of the recent approval of Phentermine/Topiramate, we would expect not to be required to conduct a pre-approval cardiovascular trial for Empatic. And it may also be possible that the Light Study, which serves as an appropriate cardiovascular assessment for Empatic since both contain the same dose of Bupropion. We will update you after we have completed these discussions with FDA.

And with that, I'll now turn the call over to Jay who will cover the financial results and related matters. Jay.

Jay Hagen

Thanks, Preston. During the course of our discussion, we will be referring to today's press release and the attached statement of operations and balance sheet prepared in accordance with generally accepted accounting principles. Please refer to these documents for precise figures. I will be rounding numbers for the purpose of this call.

For the three months ended June 30, 2012, Orexigen reported a net loss of $16.7 million or $.25 per share as compared to a net loss of $7.6 million or $.16 per share for the second quarter of 2011.

Total operating expense for the second quarter of 2012 were $17.6 million compared to $18, excuse me, $8.3 million for the second quarter of 2011. This overall increase in operating expense reflects an increase in research and development costs principally associated with the conduct of the Light Study.

As of June 30, 2012, Orexigen had $67.4 million in cash and cash equivalents. And an additional $58.8 million in marketable securities for a total of $126.2 million.

On the investor front, we'll be presenting at several conferences in September, including a Sydney sponsored healthcare event in Boston, the BioCentury Newsmakers Conference, the Rodman and Renshaw Conference, and the Morgan Stanley Conference.

With that, I will turn the call back to Mike.

Mike Narachi

Thanks, Jay. So we hope this has served as a useful update and with that, we'd be happy to take any questions you might have.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator instructions). And our first question comes from Charles Duncan from JMP Securities. Please go ahead.

Charles Duncan – JMP Securities

Hi, guys. Thanks for taking my question. I had just two quick clarifications and then I wanted to ask you a strategy question. First of all, you mentioned the enrollment in Light and we’re characterizing the type of patients that we’re enrolling. You said that they’re fitting your assumptions. Was that for an assumption of a 1 1/2% annual event rate in terms of the types of patients or a 2% annual event rate?

Mike Narachi

Yeah, thanks for the opportunity to clarify. So the demographic of the patients that are enrolling in the study fit our projected target demographics. And when we take those targets, which are the same from when we started the study and the same for the kind of people that are enrolling in the study now, in epidemiologic models, it would yield an annualized MACE rate of around 2%. And then we have then haircut that assumption because of the typical observation in clinical trials that patients experience a lower rate than the modeling.

So it fits our target and it fits the modeling, so nothing’s changed from when we started this study in terms of the assumptions.

Charles Duncan – JMP Securities

Okay. And then regarding the MAA, you said that timelines would be dependent on whether or not you submitted with or without the CBOT results. When are you going to make the decision as to the direction?

Mike Narachi

Well, the critical path element is the pediatric plan. So that’s started. So we got that in motion and we’ll take a little bit more time to discuss the strategy with some of the regulators. We’ve been over now and talked with three individual countries and so we don’t need to make that decision immediately and probably sometime in the first quarter we’d be able to update you on our submission strategy.

Charles Duncan – JMP Securities

And then Mike, with regard to the strategy question, I wanted to ask, I’m sure most people on the line have been through the IP at length as have we several years ago. But I’m wondering if you could review with us the fundamental observation that would suggest or support bupropion and naltrexone from being synergistic combination for weight loss?

Mike Narachi

Yeah, thanks. A quick overview of the intellectual property for Contrave. This is not a case of combining two drugs, two generic drugs in a combination that had well-known and well-characterized weight loss attributes. This is a case where our founder and our founding intellectual property was based on a discovery at Oregon Health Sciences University. There’s a well-known and characterized pathway for satiety and downstream energy expense in the brain, the MC4 pathway. And what they discovered was that on the (promolanticorton) cells in the hypothalamus, that when you stimulate those cells, there’s typically a very rapid demission of that signal. And they found a functional new opioid receptor on those cells and hypothesized that if you blocked that new opioid receptor from it’s sort of off switch simultaneously with stimulating the on switch, you could have potentiate the signal.

And so it’s typical to stimulate the signal, you get satiety and energy expense signals that drive some weight loss and what they said, very simply, was hey, there’s a functional receptor here, if we simultaneously block the off switch, stimulate the on switch, block the off switch, you should get a greater effect. That turned out to be true in the in vitro studies and then all the ex vivo and in vivo studies and that was the founding IP for combining bupropion as the on switch and naltrexone to block the off switch.

So it was not expected in a very novel finding. There is no weight loss with naltrexone alone and there was no prior [inaudible] or any of the things that were even closely related. [Inaudible] has got all those patents in our portfolio. So we think that our patent state for Contrave is very strong.

Charles Duncan – JMP Securities

That’s helpful. Thanks for the added color.

Operator

Thank you. And our next question comes from Marko Kozul from Leerink Swann. Please go ahead.

Marko Kozul – Leerink Swann

Hi, good morning, and congrats on your progress.

Mike Narachi

Thank you.

Marko Kozul – Leerink Swann

You know, I wanted to ask you if Contrave and Empatic were to gain market approvals, can you talk a little bit about your latest market research and you know, what it says about how these compounds might be used in different patient segments and how you envision the overall market dynamics?

Mike Narachi

Yeah, we can talk a little bit about the market research that we’ve done. The new way of research is going to be quite detailed. It’s something that we just kicked off and we do not yet have those results. It will take some time. It’s a detailed conjoint analysis that we’re updating, so we don’t have results from that yet, but the – the basic structure of that research is to take the profile of existing products, recently approved products, and then Contrave and some extent Empatic and then test for preference, market preference share and which attributes drive those choices of preference amongst several classes of physicians.

First, we’ll be testing amongst physicians that are primary care endocrinologists and OB GYNs and then we’ll also be breaking those into categories of people who write a lot of current weight loss RXs as well as people who write some or low amounts of weight loss RXs and then amongst those physicians who write no RXs because you can imagine different adoption profiles amongst those physicians groups.

So the last time when we did this in 2010, we did it in a robust way to help us with our North American partnering process so that we could come into those partnering dialogs with great information to help convince prospective partners of the potential for Contrave in the market and now we’re updating that with better information on what some of the other drug profiles will look like based on their labels and we expect that to be very rich information for patterns of adoption and total RX growth and preference shares for all the products.

Marko Kozul – Leerink Swann

All right, perfect. Very helpful. Thanks.

Operator

Thank you. And our next question comes from Steve Byrne from BoA. Please go ahead.

Steve Byrne (Tazine) – BoA/Merrill Lynch

Hi, guys, it’s Tazine in for Steven Byrne today. I just had a couple of questions. Still on Empatic, if you do receive approval from FDA for a design plan for Phase III, would you be able to advance that on your own without having to sign a partner first? Secondly, do you think that this is something that you could incorporate into your partnership with Takeda as you talk to the different partners that you’re looking at for it? I’ll have another question on another topic as well.

Mike Narachi

Yeah, thanks, Tazine. Our base case assumption right now based on the discussions we’ve been having for Contrave with the rest of the world is that partners are interested in the Empatic profile as well, particularly in light of the recent approval of phentermine/topiramate. So they, you know, in those discussions, where we focused on Contrave, those prospective partners have said we’d also be interested in taking a license to Empatic. So the way we envision structuring the development in financing would be to give a substantial portion of the Phase III program funded through that rest-of-the-world partnership. And as we said on the call today, you may not have caught it, at this time, we’d expect to keep the U.S. rights. So [inaudible] can participate in the Contrave – or sorry, the Empatic development program but we would not want to fund the entire Phase III program on our own, we would want to try to secure partnership funding for a large portion of that Phase III program.

Steve Byrne (Tazine) – BoA/Merrill Lynch

So does that mean that you would have a potential sales force involved if this were to be commercialized in the U.S. at all?

Mike Narachi

I think that’s a decision we would put off until later. I think the time – we wouldn’t need to sell the rights to Empatic right now. If we put it into a rest-of-the-world partnership, we’d be able to then take it through Phase III and wait until we could build more value from the program before we made that decision.

Steve Byrne (Tazine) – BoA/Merrill Lynch

Okay, thanks. And then going back to Contrave, since the approval of the other two obesity drugs have taken place have you had discussions with the agency about your own application in addition to the light trial and rolling very quickly do you think there could be additional ways for you to shorten the time period between now and when you respond to your CRL?

Mike Narachi

Yes, thanks for that question. A lot of people have asked this so, why does Contrave have to do a outcomes trial when the other later stage obesity therapeutics did not have to? And it’s a very good question and it’s a question I can tell you I’m very determined to get an answer to. And we have reengaged with the agency since the recent approvals, but we don’t want to update you on a blow by blow basis of that dialogue and those interactions with the agency. But we have reengaged and are seeking whether there is a possible shorter path to approval or something that’s improved from our current path, which we’re comfortable with, which we said again is feasible and we’re executing very well on. But we are reengaging with the agency to explore our options.

Steve Byrne (Tazine) - BoA/Merrill Lynch

Okay, and then the last question is with regards to being able to classify Contrave as an NCE. Would that require a change in the way FDA looks at drugs? If so, do you think that would be an extended process? And if it is, do you think it would not really be applicable to Contrave?

Mike Narachi

Yes, our base case is that it wouldn’t be applicable. I think that it would require a change in the way they look at it. Remember we filed under a 505B2 application. So to say we are a 505B2 application, but also an NCE or seeking the exclusivity of an NCE I think it would require a change. Probably something more in the regulatory reform category than in a legitimate short-term strategy.

Steve Byrne (Tazine) - BoA/Merrill Lynch

Okay, thanks.

Operator

Thank you. And our next question comes from Christian Glenny from Edison Investments. Go ahead.

Christian Glenny - Edison Investments

Hello, just wondering what impact, if any, there might be from the launch later this year of [Inaudible] to recruitment obviously into the light study, whether you’re expecting any impact from that.

Mike Narachi

Yes, I’ll let Preston take that since he’s driving the light study.

Preston Klassen

I think from a timing perspective we’re enrolling, as Mike mentioned, at a very vigorous clip and so depending on the timing of the launch of those products and where we are it may not even be as much of a theoretical question to address. But I think there are a few other factors. We’ll have to see what the uptake is. The other component is the patient population that we’re recruiting may not necessarily be a population that is targeted or seeking of those pharmacotherapies, depending on the reimbursement status etcetera. So we’re very comfortable with our projections that have always included, as Mike mentioned, almost an expectation of a slowdown. You always have an initial surge enrollment and that’s typically followed by a bit of a bend in the curve so to speak. We’ve been looking for that bend and we have not seen that bend thus far. So we’ve updated our guidance in terms of the enrollment, we continue to take a look at it and we’ll provide additional updates as it becomes more clear. But right now the path that we have started on is the path that we continue on and that’s very encouraging.

Mike Narachi

Yes, I’ll just add to that. One of the strategies we employed to accelerate enrollment is to target centers for the trial for the light study, where the propensity for patients to enroll was high. And that ended up being in geographic locations where access to health care was relatively low. I think the target counties for most sales forces for obesity therapeutics start in different locations. So places where people have higher access to health care. So socioeconomic A and B category counties, top quartile counties, and where the light study is predominantly focused is in lower socioeconomic county strata, where to propensity to enroll is much higher. Remember the light study’s offering a lot of things to patients. Primarily it’s offering a state of the art internet based interactive counseling weight loss program that we call WeightMate. And then second is the chance to be on a weight loss therapeutic, Contrave or placebo. So the value proposition of the trial is enormous I think and that’s what driving in part this rapid enrollment rate. And that shouldn’t change. So it’s a free program and a chance to get Contrave and people are attracted to that proposition. And as Preston said it may actually be a moot point, the enrollment’s going fast enough that the launches and the enrollment may not overlap.

Christian Glenny - Edison Investments

Sure, okay. That’s very helpful. Just to confirm on the sort of potential regulatory timeline, you’re obviously talking about the interim analysis in the 2nd half of 2013 and NDA submission soon after, that’s sort of best case FDA approval in 2nd half 2014. Is that what we should be thinking?

Mike Narachi

I think under that 2nd half 87th [Inaudible] and [Inaudible] that would put the approval in the 1st half. It should be a six month [Inaudible] clock on the resubmission.

Christian Glenny - Edison Investments

Okay, okay. Thank you.

Operator

Our next question comes from Charles Duncan-JMP Securities. Please go ahead.

Charles Duncan-JMP Securities

Thanks guys for taking this follow-up. I had a question on Empatic. It may seem like I’m jumping way ahead, but I’m wondering, I believe the IP on Empatic is based on a composition of matter patent. If you’d just clarify if that is the case.

And secondarily, I’m wondering if you think there’s any chance that say, a Qnexa combination or Qsymia combination, if it were to become genericized if that could impact the market potential for Empatic, or do you think that there is some clear differentiation from an Empatic versus a Qnexa that could provide clinical value and give you some pricing power?

Mike Narachi

Thanks for the follow-up questions Charles. First, yes, the types of patent that are the primary (inaudible) patent on Empatic are both pharmaceutical composition patent and the method of use patents. So, those two are the primary patents that kind of anchor the portfolio right now.

I think your second question was around, how does the profile stack up against Qsymia, and if there were a generic Qsymia on the market in the short term, you know, how do we see that affecting the prospects for product with a profile like Empatic?

I think the profile for Empatic is quite differentiated. If you think about it from basic structures, 1) The target dose for Qsymia is the mid-dose, and as Preston indicated, the highest dose that we tested with some detailed titration if you will, of the doses of zonisamide. We didn’t see issues in the Phase II-b with some of the classic side effects of the anticonvulsant on cognition deficit, depression et cetera. That may be because of the dose of bupropion, the dose of zonisamide that were tested kind of countered out some of those side effects. So, I think that the dose maybe (inaudible) in the mix instead of phentermine.

The antidepressant is not scheduled, so if you just compare market research a scheduled drug with the profile versus an unscheduled drug, you’ve already got some differentiation there. We can quantify that for you. Our prior market research showed that amongst those two choices it would be about a 40% increase in preference share for an unscheduled drug versus a DEA scheduled drug. But we’re updated in that market research with this resent round.

And then last, I think the fact that there is an antidepressant, the antidepressant attributes a bupropion I think are attractive to the market and there’s high degree of comfort with bupropion in the market.

So, we’ll look at that, and if there’s a low cost generic, I think it would depend on how much lower that cost was per patient versus the alternative. So, if it was covered under a copay et cetera. But I do think there are challenges for generics in this space, if there are REMS programs such as element to assure safe use. I think people are speculating whether or not intellectual property for our colleagues is strong enough to withstand some of the threats that are likely to occur in all pharmaceutical development. I think people do have to think about the complexities of generics coming on with these REMS programs in place, and how much time that would take for the FDS to sort out.

Charles Duncan-JMP Securities

That makes sense to me. Hitting on the bupropion component, which actually, you know, basically is important not only for Contrave, but also Empatic. Let me ask you, I know you have the responder analysis in the CVOD, that seems to make sense, probably going to be important. You can tell me if this is the case in the commercial setting. But does bupropion and stabilization on a bupropion effectiveness help to make that product more sticky, should it not have an antidepressant component. It would seem to me that that generally antidepressants wants people to feel comfortable with them working, they stay on them.

Mike Narachi

Yes, that’s an interesting question, and something we’re trying tease out in the marketplace. So, if people are selecting either Contrave or Empatic as not only a therapy for weight loss, but also to either augment or treat symptoms of depression, that could be the case. So, it depends on how they’re working Contrave into the treatment of the comorbidity of depression. And so, we do get some feedback already in market research on that. That when we ask physicians: If you have a patient who is not only obese but also depressed or have depressive symptoms, perhaps on an SSRI or on bupropion, how are you going to incorporate Contrave into their regiment? And I think those are the situations where your question is relevant, which of course, we know it’s the majority of the obese population. Up to 2/3 are either depressed or have depressive symptoms. So it’s an important question, and I think history tells us that once physicians cycles – physicians and patients cycle through a handful of choices of anti-depressant regiments they do tend to be fairly sticky on the ones that they like and the ones that they are comfortable. And bupropion’s used in the majority. It’s a selected therapy for the obese/depressed. So, we’ll so more market research on that.

Of course Contrave is going to be indicated for obesity, and this isn’t something that we’d be able to directly promote, but physicians are comfortable with the profile of bupropion and most of the primary care audiences got quite an experience writing bupropion.

Charles Duncan-JMP Securities

Thanks Mike for the added color.

Operator

Thank you, and I’m showing no further questions at this time.

Mike Narachi

Okay, well thank you very much for joining us on the call today, and we look forward providing progress reports on upcoming analyst calls, and investor meetings. Thanks again for your interest and support of Orexigen.

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