UPDATE: Obesity drug developer (OREX) crashed after regulatory update

In today’s conference call, Orexigen Therapeutics (OREX) revealed FDA’s request of a new 2-year, ~16,000-patient clinical trial, assessing Contrave’s (Orexigen’s experimental obesity drug) cardiovascular risks.  Management did not signal moving forward with conducting this additional study in the US and suggested that Contrave’s development of Contrave may only continue in foreign markets outside of the US.  This essentially marked the end of Contrave’s marketing path in the US and Orexigen’s stock (OREX), which had rallied more than 16% 2 days ago on news of the regulatory update, was punished heavily, tumbling more than 30% in early trading.  Meanwhile, put options holders pocketed overnight 100%+ profit (e.g. June $3.5 puts @ 1.4 from 0.6 (133% gain)) from OREX’s falling share price.  Congrats to those successfully spotted the downside trading opportunity of Orexigen!