San Diego’s Orexigen Therapeutics looked like just another biotech on the verge of collapse at the beginning of the year. Its CEO was diagnosed with a terminal case of leukemia and soon died. Three other senior executives had just quit. The company halted development of two experimental drugs to conserve cash.
Orexigen (NASDAQ: [[ticker:OREX]]) sought salvation from a long-running clinical trial, and didn’t find it. Results from a 793-patient study of obese patients on its experimental weight-loss drug fell short of what Wall Street was expecting, and the stock dropped 15 percent the next day to $5.10.
Then Mike Narachi saw something the market didn’t see at the time. Narachi, a former vice president in charge of Amgen’s multi-billion dollar anemia drug business, heard about the Orexigen CEO opening and decided to think about it. He spent six weeks doing his homework on the obesity market, Orexigen’s pipeline, competition, and its clinical trial results.
The market potential is clear. Obesity is one of the nation’s biggest public health problems, with two-thirds of U.S. adults considered overweight or obese. There’s not a lot of great pharmaceutical competition—Big Pharma has been gun shy about this field since Wyeth was burned so badly by the multi-billion legal settlements related to fen-phen heart damage, and Sanofi-Aventis failed to win approval two years ago for a drug that was linked to rare instances of suicidal thinking. In contrast, the Orexigen drug looked like a contender. It was made through a novel combination of two existing drugs with decadelong safety records, with no evidence of heart trouble or suicidal thinking. Orexigen owned 100 percent of the worldwide rights to a drug in the final phase of clinical trials.
He came to a conclusion: I want this job.
“Here was a company that needed leadership for a product in late-stage development that can address a huge unmet medical need,” Narachi says. “Most people misunderstood it. I saw it as a unique opportunity.”
The announcement of Narachi’s hiring crossed the wire March 31, when the company was limping along at $2.61 a share. Since then, Orexigen has looked like a different company.
