Orexigen Therapeutics, Inc. (NASDAQ:OREX) Continue 3-Day Drop

Orexigen Therapeutics, Inc. (NASDAQ:OREX)

Orexigen Therapeutics, Inc. (NASDAQ:OREX) opened at $4.00 on March 30 and closed at $3.89 on volume of158,000. On March 31, OREX opened at $3.82, and closed at$3.44 on volumes of 800,300. Yesterday, OREX opened at $3.40, and closed at $2.83 on volumes of 1,000,000 shares. Today OREX opened at $2.90, and is currently trading at $2.82 on volumes of just 45,000. The current price level has not been seen since late 2016. Unsurprisingly, OREX’s relative strength figure is in “oversold” territory – just over 26. Over 20% of OREX’s float is represented by short positions.

Orexigen Therapeutics, Inc. (NASDAQ:OREX) has had a rough 2017 not only in price action, but also in the analyst’s forecasts. Since February 23, 2017 five investment firms have downgraded their rating on OREX to Neutral or “Market Perform”. Their price targets have decreased from as high as $5.00 to a price between $0.60 and $1.00.

The likely catalyst for the drop in price and analyst confidence was a weak financial report and a March 30, 2017 8-K SEC filing in which Orexigen Therapeutics, Inc. (NASDAQ:OREX) announced its intention to sell, through Cantor Fitzgerald, $20 million worth of its shares. Cantor Fitzgerald may sell these shares in a public offering or through a private placement but must sell “at the market” price. Cantor Fitzgerald will earn a 3% commission on all sales.

On March 28, 2017 Orexigen Therapeutics, Inc. (NASDAQ:OREX) announced financial results for Q4 and the year ended December 31, 2016. Q4 EPS was a loss of -$1.69 which was $0.51 worse than expectations. Q4 revenues were $13.88 million which was worse than expectations by $70,000. 2016 revenues increased to $33.7 million from $24.5 million in 2015. Revenues would have been higher but Orexigen had a $4.7 million decrease in royalty payments and an $8.1 million amortization expense from the acquisition of Contrave – a prescription weight-loss drug. For the year, Orexigen Therapeutics, Inc. (NASDAQ:OREX) had a net loss of $24.5 million (-$1.68/share). This was a marked improvement over 2015’s net loss of $68.7 million (-$5.24/share).

Looking into 2017, Orexigen Therapeutics, Inc. (NASDAQ:OREX) is aiming to expand global net sales through the recently acquired Contrave/Mysimba brand. Some important highlights for Orexigen are its launching of a telemedicine pilot program for physicians. This platform can assist in diagnosis, prescription issuance and fulfillment. Orexigen also signed partnerships across 37 countries. Lastly, Orexigen reduced its debt by retiring a $35 million 2.75% convertible note.

Ticker Symbol OREX
Last Price a/o 10:13 AM EST  $                      2.77
Average Volume                    785,290
Market Cap (mlns)  $                    42.34
Sales (mlns) $33.70
Shares Outstanding (mlns) 14.96
Share Float (mlns) 14.46
Shortable Yes
Optionable Yes
Inside Ownership 0.10%
Short Float 20.68%
Short Interest Ratio 3.81

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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