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Orexigen Therapeutics, Inc. (NASDAQ:OREX)

Company and Light Study Update Conference Call

October 22, 2012, 08:30 a.m. ET

Executives

Heather Turner - SVP, General Counsel and Secretary

Mike Narachi - President and CEO

Jay Hagan - CBO

Preston Klassen - SVP, Head, Global Development

McDavid Stilwell - VP, Corporate Communications and Business Development

Analysts

Cory Kasimov - JPMorgan

Steve Byrne - Bank of America/Merrill Lynch

Marko Kozul - Leerink Swann

Simos Simeonidis - Cowen & Company

Jason Butler - JMP Securities

Lee Kalowski - Credit Suisse

Corey Davis - Jefferies

Operator

Good day ladies and gentlemen and welcome to the Orexigen Therapeutics Company and Light Study Update Conference Call. My name is Erica and I’ll be your coordinator for today. At this time all participants are in a listen-only mode. (Operator Instructions)

I will now turn the presentation over to your host for today’s call, Heather Turner, Senior Vice President and General Counsel of Orexigen. Please proceed.

Heather Turner

Hello and thank you for joining us this morning. I’m joined on this call by Mike Narachi, Chief Executive Officer; Jay Hagan, Chief Business Officer; Dr. Preston Klassen, Senior Vice President and Global Head of Development; McDavid Stilwell, Vice President of Corporate Communications and Business Development.

Please note that all of the information discussed on the call this morning is covered under the Safe Harbor provisions and Private Securities Litigation Reform Act. I caution listeners that during this call 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 company filed on August 9, 2012.

The content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast October 22, 2012. Orexigen undertakes 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 hand the call over to Mike Narachi, Orexigen’s Chief Executive Officer to provide an overview of today’s call. Mike?

Mike Narachi

Thanks Heather. This morning we issued a press release announcing that we have received a response to a formal dispute resolution request from the FDA Center for Drug Evaluation and Research. We also announced an update to enrollment in the Light Study. Each of these developments on its own has the potential to reduce the time to a resubmission of the Contrave NDA.

Given the recent regulatory progress with obesity therapeutics in the U.S. such as the general obesity at (inaudible) and two recent approvals of obesity therapeutics, Orexigen requested that Contrave be considered for approval on the basis on existing data together with a post marketing requirements to supply the interim cardiovascular outcomes status soon after approval. We either deny this request reaffirming that cardiovascular outcomes data from the interim analysis of the Light study is required part of the approval. However, CDER indicated that it was highly supportive of the exploration of the factor path to resubmission of the Contrave NDA. The procedural details have yet to be worked out. And we plan to engage with the agency as soon as possible to more fully define how this might be implemented.

I think it will be helpful if I read to you the relevant section of the brief letter from CDER that makes us optimistic that there may be a faster path to resubmission. This is from a section under the heading, “Recommendations for next steps. In the absence of an acceptable pathway to approval utilizing labeling, you have suggested another pathway for the review of Contrave in lieu of waiting for the interim results from the cardiovascular outcomes study to resubmit your application. You and OND have already begun important work to most efficiently use the data collected as part of the ongoing CVOT. The additional step You suggest it's a plan for a submission to be under review at the time of the interim analysis in order to be as prepared as possible to act soon afterwards represents a further refinement of that work. While there are procedural issues to be addressed, I’m highly supportive of discussions with CDER about this approach in this critical area of public health need”.

During the course of our engagement with FDA we have been impressed with the seriousness with which FDA is confronting the obesity epidemic as a public health problem and are pleased with ongoing dialogue we continue to have with FDA.

This morning’s press release also contained an update on the Light Study. As you know when we kicked off in Roman in June, we put in place numerous tactics designed to accelerate enrollment. Today we announced that we have enrolled more than 7,000 patients into the study after just 4.5 months. And we plan to enroll approximately 9,000 patients by the end of this year. With the resulting increase in observation time in the study the time to accrual of the 87 major adverse cardiovascular event that are needed to conduct the interim analysis should occur about two months sooner potentially as soon as the second quarter of 2013.

Of course, the actual timing of the 87th event will be dependent on the observed event rate in the study and at this time it's still too early to accurately estimate the event rate. We are happy that the FDA recognized the benefit of being prepared to act on contrary soon after the interim data are available so that we and our partner Takeda to bring what we believe is an important new medicine to patients as quickly as possible. And while we have much work ahead of us, I’m pleased with this amazing progress.

And with that we would be happy to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Cory Kasimov with JPMorgan. Please proceed.

Cory Kasimov - JPMorgan

Our first one is probably just more semantics anything else but, you indicated in your press release that 7,000 patients with your target enrollment for Light, however, clinicaltrials.gov listed target enrollment in nearly 10,000 patients. I’m just curious about the discrepancy there. And then I have a follow-up after that?

Mike Narachi

The trial is an event driven trial, and the interim analysis requires about or at least 87 events and the final analysis is going to require about 371 events. So, the sample size is really an estimate or determined by the event. When you enroll patients faster you increase observation time in the study. And so for the interim analysis we need about 70,000 [months] of observation time using an estimate of 1.5% annualized MACE. So the sample size is floating a little bit here because when we are successful in enrolling patients faster you actually can reduce the sample size to get the same observation time and accrue those events.

Cory Kasimov - JPMorgan

But as you said in your comments also, You is still too early to say whether or not the actual event rate is in line with your modeling assumptions right?

Mike Narachi

That’s correct, but if we use that modeling than 9,000 patients which is what we would expect to be able to enroll by the end of this year could be sufficient for the overall trial. And part of the reason that we want to go to 9,000 now versus kind of a two stage enrollment which is what we originally anticipated with slower enrollment we anticipated 7,000 and then potentially adding patients at the end to get to that 10,000 estimate. Now leveraging this rapid enrollment we can reduce the overall time and cost of both the interim and the final analysis.

Cory Kasimov - JPMorgan

And then my last question is as far as an early resubmission of the NDA is concerned is there any type of additional data you could provide the FDA or anything that the FDA is asking for in addition to the Light Study or is at this point the Light Study and only the Light Study?

Mike Narachi

The Light Study data is the key to final evaluation of benefit risk in the FDAs mind, however there are many other smaller elements that would need to be part of a resubmission that were outlined in the original complete response letter, they were not part of approval deficiencies that they were more detailed things. Preston Klassen is on the line and he can go over our plan which are already underway to get that resubmission ready so that all of it really needs in the final analysis is the data from the Light Study. Preston?

Preston Klassen

Yes, the resubmission typically includes the final labeling, its worked out with the agency and then as Mike mentioned there are number of smaller items that are not approval efficiency in it of themselves they just need to get cleared off. We had additionally proposed certain (inaudible) programs, how that now plays out with respect of having cardiovascular trial data in hand of the time of resubmission that would change as well and so (inaudible) package and we just drop in the [CDLT] data when the interim analysis is ready.

Operator

Our next question comes from the line of Steve Byrne with Bank of America/Merrill Lynch. Please proceed.

Steve Byrne - Bank of America/Merrill Lynch

I’m curious as to what you have seen so far in terms of the duration of time between one of MACE then actually occurs and when is recorded in your program and then the time to adjudication. You have any general comments on that?

Mike Narachi

Typically in these studies that is a process that takes some time from when a MACE event occurs and then getting the data, the information whether it's admittance data, meds data etcetera to the adjudication committee. So, that they can then adjudicated. It's not because it take that much time to adjudicate for the committee, it's the process of getting all the information to them in a defined way. We are doing as you can see; we are doing everything we can to accelerate the timing of approval of Contrave that’s in our control. We believe that’s one of the things that is in our control and so we will do everything we can to shorten the time of getting the information to the adjudication committee so they can rapidly do that. Now doing that faster the first few events is not the critical part, the critical part is to make sure when the 87th event occurs, there is not a big lag time. So, I will take it's important how long it takes now what’s important is that when the 87th event occurs that it doesn’t take any ordinary amount of time to get that information to the committee and we are focused on that, so we will try to impress you with how fast we do that as well.

Steve Byrne - Bank of America/Merrill Lynch

And have you had discontinuations at that 16 week mark so far for either inadequate weight loss or blood pressure increases?

Mike Narachi

Just a handful of patients if you model out when we started the trial would have crossed that 16 week point and overall we are pleased with the conduct of the study, but I don't think we are going to go into the details there. We are not seeing anything that gives us changes our assumptions on modeling or observation time or protocol analysis etcetera. It's all going okay, but you can imagine with over 7,000 patients in the study so far, not very many of them have even hit week 16 yet.

Steve Byrne - Bank of America/Merrill Lynch

And just lastly can you comment on the demographic of the 7,000 relative to what you were targeting with respect to percent diabetics, smokers, minorities etcetera and overall risks?

Mike Narachi

Yes, we have been monitoring that very closely because where you are going I believe with your question Steve is that helps us understand are we getting the right kind of patient so that we are on track with our estimate [of an average]. And overall we are very pleased; the level of risk, the age demographics etcetera looks fantastic. We targeted ages of about an average of 64; the current age is about 61. But importantly we didn’t want too many people in the lowest five years in the male and female groups. Male can get into the study of their 45 and over; and female 50 and over. We have less than 14% of the total in that lower age segment. Gender we are hoping for 50-50 which will be terrific for an obesity trial. We are at about 44% men and 56% women. So, that’s looking good. Ethic minorities, we are hoping to get about 15%, we are over 20% so that fantastic, cardiovascular disease we targeted about 30% of the total population to have a history of CV disease or currently had about 35%. Diabetics, diabetes patients we expect over 70% we are at 87% and smoking status we expect to be little over 5% we are at about 9% right now. So, in general the demographic look right on target with what we are aiming at the beginning of the study and those information we used for modeling that said that we should be little north of 2% and epidemiologic data and haircut it down to 1.5 for planning purposes.

Operator

The next question comes from the line of Marko Kozul with Leerink Swann. Please proceed.

Marko Kozul - Leerink Swann

I wanted to ask if you could lay out for us maybe the timelines associated with the process. What happens next, when might you meet with the FDA again and when can we expect further updates?

Mike Narachi

The most important thing is for us to continue to focus not only rapidly but with excellence, execution of the Light Study. So, getting this final push here this year get the right patients into the study. The next piece of information we should know them from our data monitoring committee is, how do they predict then the timing based on their information and looking at actual MACE. We have already continued our dialogue with FDA and we will have more information on next step, but the important meeting to work out details is critical here and that should occur probably early next year. That meeting will then define exactly what is submitted in the absence of the cardiovascular outcomes data and then exactly what kind of interim information is needed during the review. The general idea here is that we would submit or resubmit our NDA (inaudible) that we would soon thereafter have an interim analysis of the Light Study. So, as in the quotes that I read, this is another means of more efficiently using the data. So, we don't have to wait all the way until the interim analysis just to start the review process. So, the data can be dropped in during the review, whether that data can be dropped in at the end of the review or in the middle of the review or early end of the review those details needs to be worked out.

Operator

Our next question comes from the line of Simos Simeonidis with Cowen & Company. Please proceed.

Simos Simeonidis - Cowen & Company

I was wondering whether today’s news and FDAs recent comments about potentially shortening the time to decision or approval for obesity drugs may have an impact on the timing either initiation or what you have to do for Empatic?

Mike Narachi

I think in general we should all interpret this as positive momentum on recognition of the scale of the unmet need in obesity and then the balance of benefit and risk in the agency’s inclination to work with sponsors and being somewhat creative in the regulatory sense to how to be efficient in our pursuit of safe and effective drugs in the space. So, I think in general I think it's positive. I don't see anything in this specifically reads onto Empatic but we are separately in the process of clarifying a few key issues in questions on the development of Empatic. We are in the process of doing that separately. In the past we have updated you and we had something important to talk about their and we will do the same in the future.

Operator

And our next question comes from the line of Jason Butler with JMP Securities. Please proceed.

Jason Butler - JMP Securities

Just wondering if there has ever been any questions either from FDA or your first channel about the potential for increased risk with increased duration of therapy. And whether there were any request from FDA to have a certain duration of therapy for a certain proportion of patients in the Light Study?

Mike Narachi

In general the complete response to that long-term exposure was the concern. The concern is not around short-term exposure in fact in several of our discussions the agency said that they have lots of data with changes in blood pressures specifically that doesn’t indicate short-term risk. And I think the example that was used if you are very comfortable taking patients with hypertension off med and putting on placebo for several months for placebo control trials in hypertension. So, it was the long-term exposure to potentials theoretical cardiovascular FX effects of sympathomimetics that led to the design of the Light Study. There are not specific requirements for exposure times in the Light Study but with specific modeling that we used we talk with the agency about how much duration on study drug we expected at both interim and final and those were acceptable measures.

Jason Butler - JMP Securities

And then so given your enrollment has progressed faster and you are enrolling more past now, you may have an interim sooner, you may have a shorter duration than you originally predicted, is that a meaningful difference from your originally modeling assumptions?

Mike Narachi

I think it does shorten the total time on study drug a little bit but not meaningfully for the interim and for the final I think we are going to be fine, we are going to still be well within those ranges.

Operator

Our next question comes from the line of Lee Kalowski with Credit Suisse. Please proceed.

Lee Kalowski - Credit Suisse

I just to clarify, I believe you had said that if you are meeting early next year, so just to be clear nothing would likely be filed until early next year is that correct?

Mike Narachi

Yes, that’s the good assumption. Again the spirit of this is that the resubmission would occur prior to the data and data would be added. So, the first thing that we need to other than working out those details assuming that paradigm gratified in a full detailed agreement with the agency. We need to know when we are going to have interim analysis. So, we wouldn’t want to submit and then have the interim analysis seven months later.

Lee Kalowski - Credit Suisse

And then I guess when I think the way this is often done when data is added to an application. I guess I think of it is sort of a statutory 90 day extension. Have they said anything that they could do it quicker, I mean I guess there is a lot of 9,000 patients they are going to be going through, but have they said anything that might make you think it can be quicker than 90 days?

Mike Narachi

Yes, absolutely. The quote that I read from the letter in my opinion again the spirit is let’s find the way to do this fast. And I wouldn’t assume that this is necessarily going to be a statutory 90 day addition of new information. Now there are lot of details to work out of how this information is compiled and received by the FDA it is the formal amendment or not etcetera. So, you have to bear with us, you know what we know that’s why I read the paragraph. In everything else the speculation on our part though we have that meeting and ongoing dialogue with the agency. Again the spirit is, okay let’s work together and find a way to be efficient with the information so that the resubmission would substantially it's going to boil down to a handful of numbers.

Lee Kalowski - Credit Suisse

Given how quickly that this is enrolled and that you are planning on enrolling more patients than you had anticipated this year and so forth. Do you think that given these trends you would be able to do anything in terms of looking for anything in the data beyond what FDA had asked for in terms of so not just excluding out of certain risk but potentially even showing a benefit?

Mike Narachi

There is a superiority test in analysis plan for the study, one would typically look after looking for a non-inferiority look to see typically if you can test for superiority. So, that’s definitely in the protocol that’s what typically done. Preston I don't if you want to add any color to that ability to test for superiority?

Preston Klassen

No, I think you stated it well, the primary test is for non-inferiority and pass that hurdle you have statistically to go to take the next step into a superiority test.

Operator

(Operator Instructions) And next question comes from the line of Corey Davis with Jefferies. Please proceed.

Corey Davis - Jefferies

At what level is this occurring within the agency right now. Like who do you appeal to for that dispute resolution and at what level was the actual division that’s going to be doing a review involved in one the dispute resolution and number two, the writing of that letter that you read. I’m just trying to get a sense for whether or not there is lots of different layer in between, who wrote the letter and who is actually going to be doing the review?

Mike Narachi

If you recall the last time that we updated investors from a formal dispute resolution process, we quoted from a letter that was from the office of new drug the director of the office of new drugs. This request went to the Head of the Center for Drugs, Dr. Woodcock. So this was heard as center level this request and this response came from the deputy director of the Center, Dr. Throckmorton. So we are at the top of the Center for Drugs all the way down. So, everyone has been involved from the director for the office of drugs, drug evaluation all the way down to the review division.

Corey Davis - Jefferies

So, the formal answer to your request was a no, and we all heard what you read which just says okay, we just need to work together, just trying to match those two ideas, is really all they need is more information on the timing of the interim data so that it follows closely from when you file the resubmission?

Mike Narachi

Yes, and again essentially you are correct and not to make sure we get that part right. We continue since getting the CRL to argue that Contrave could be assessed for benefit risk now and the absence of data and the data could come post approval as of post marketing requirement. With the recent approvals and the general obesity outcome, we thought had merit to ask the same question. Could Contrave be approved now without cardiovascular outcomes data? The general answer was no, you are going to get the information soon, we still thinks it critical to our overall evaluation of benefit risk, however, let’s work out of half way, so that you could resubmit prior to having that data and the data could be added during the review cycle. So, you are right, what we need to know now is the specifics of how that would be done procedurally and let’s get the timing right. We wouldn’t want to under the spirit of this agreement we wouldn’t want to submit the Contrave application and not have the interim data come during that what we anticipate to be a six months review. So, we need a little bit more information on timing then we can say okay we are going to resubmit and some months later we will drop in the data from the Light Study.

Corey Davis - Jefferies

Is this data the interim data that would be ready at the time of the final approval, something that you would anticipate showing up in the label?

Mike Narachi

Again those details need to be worked out. In general disclosure of interim results is round upon from a study conduct prospective it's best to minimize that information while the study is ongoing because it's still a blinded study. And the final analysis is critical. The interim data would be used for the review and the level of detail of disclosure from the interim data is still need to be worked out.

Corey Davis - Jefferies

With some of the negative comments coming from the European regulators, is that damping your enthusiasm on getting an EU partner for either one of your products any time soon?

Mike Narachi

Your read of the recent CHMT opinion was if they had several issues with the drug that was under review. One of those is something that’s common I think, commonly shared across all of the drugs under review, and that’s theoretical cardiovascular risk. And we feel we are in a good position there to address that concern with data from the Light Study. And so we expect to have important data from the Light Study next year and as we said earlier our submission to European authorities is either going to include that information or that information could be supplied during the review.

Operator

We have no further questions at this time, I will now turn the call back over to Mike Narachi for any closing remarks.

Mike Narachi

Thank you very much for joining us on the call today and thanks for your interest and support in Orexigen.

Operator

Thank you for your participation in today’s conference. This concludes the presentation, everyone may now disconnect. And have a great day.

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