Orexigen Therapeutics' (NASDAQ:OREX) 'Contrave' Recommendation Pushes Share Price Higher

Shares of Orexigen Therapeutics' (NASDAQ:OREX) skyrocketed Wednesday on the news they won the first U.S. panel recommendation for a prescription diet pill, which is their 'Contrave' offering.

Commenting on the positive step, Jefferies (NYSE:JEF) said, "We wouldn't bank on January final approval; there's likely a ways to go on REMS, labeling, and post-approval commitment negotiations. However, we're comfortable with 2011 approval and launch. OREX is substantially de-risked, and depending on the ultimate label, it could be an obvious partner takeout given hefty royalties and milestones."

There is no obligation on the part of the FDA to follow the recommendations of the panel, but definitely helps defuse concerns which have weight on the share price of Orexigen for some time.

EPS estimates for full year 2010 is $1.13, and for full year 2011, $1.22.

Jefferies maintains a "Buy" rating on Orexigen, which closed Wednesday at $8.77, soaring $3.90, or 80.08 percent. The daily 3-month average volume exploded from 1.5 million to 30 million. A price target of $17 is placed on them from Barclays, raising it from $12.