With lead obesity drug Contrave (Bupropion SR/Naltrexone SR) undergoing four Phase III trials and a second obesity drug, Emphatic (Bupropion SR/Zonisamide SR), moving through Phase II, Orexigen Therapeutics Inc. padded its balance sheet with a $77 million public stock offering.

The San Diego-based company offered 7 million shares priced at $11 each, plus an additional 1.05 million shares to cover any overallotments. The offering price represents a slight discount to Wednesday's closing price of $11.41, and Orexigen's shares (NASDAQ:OREX) slipped 54 cents, or 4.7 percent, to close at $10.87 on Thursday.

"Had we seen the overall macro environment in the markets, we might have postponed [the deal] a little," Orexigen President and CEO Gary Tollefson told BioWorld Today. But the money raised will allow the company to reach important milestones including the completion of the Contrave Phase III program, the initiation of an additional Phase II trial with Empatic and the initiation of Phase II trials with two new compounds, he said.

Tollefson added that the new funding puts Orexigen in a strong position to negotiate with potential partners for its programs.

Most advanced is Contrave, which combines long-acting versions of naltrexone, an opioid blocker approved for opioid and alcohol addiction, and bupropion, a dopamine stimulator approved for depression and smoking cessation. That combination allows Orexigen to "target some core issues in obesity," Tollefson said, since naltrexone helps modify unhealthy eating habits by reducing the perceived reward associated with food addictions, and bupropion addresses both weight loss and depression, a frequent comorbidity condition of obesity.

Contrave is being studied in four Phase III trials, and data from the first trial are expected in December. The remaining trials should produce results in the first half of 2009, supporting a new drug application filing by the end of 2009.

Behind Contrave is Empatic, which combines long-acting versions of bupropion and zonisamide, a seizure drug believed to modulate sodium channels and enhance dopamine and serotonin activity. While Contrave is intended to induce sustained weight loss, Empatic would be used for more intense and rapid weight loss needed for severely obese patients. A Phase II trial will start later this year, and Phase IIb data presented earlier this month showed that Empatic reduced weight by 14 percent through 48 weeks.

That kind of data should allow Orexigen to hold its own in the increasing - and increasingly crowded - obesity market. In the U.S., options include the lipase inhibitor Xenical (orlistat, F. Hoffmann-La Roche Ltd.), the monoamine re-uptake inhibitor Meridia (sibutramine HCl monohydrate capsules C-IV, Abbott), and an over-the-counter, low-dose version of Xenical called Alli (GlaxoSmithKline plc). The cannabinoid-1 blocker Acomplia (rimonabant, Sanofi-Aventis Group) is approved in Europe but has yet to gain FDA clearance.

Approved obesity drugs often are criticized for reducing weight by just 5 percent to 10 percent and quickly hitting a plateau. But many other biotech and big pharma options are in development, including Vivus Inc.'s Qnexa (phentermine and topiramate) and Arena Pharmaceuticals Inc.'s lorcaserin hydrochloride, just to name a few.

Outside of the obesity field, Orexigen plans to begin Phase II trials by midyear with OREX-003, a combination of long-acting zonisamide and the antipsychotic olanzapine for mitigation of weight gain associated with antipsychotic therapy, and OREX-004, a combination of long-acting naltrexone and the antidepressant fluoxetine for obsessive-compulsive disorder.

Orexigen said in its prospectus that it expects to net $71.3 million from the offering. The company reported $98.1 million in cash, equivalents and available securities as of Sept. 30, after burning $15.6 million on operating expenses during the third quarter.

Merrill Lynch & Co. is acting as sole book-running manager for the offering, with Leerink Swann LLC serving as co-lead manager and JMP Securities LLC, Lazard Capital Markets, Canaccord Adams Inc. and Natixis Bleichroeder Inc. acting as co-managers.

In other financing news:

• Calypte Biomedical Corp., of Portland, Ore., agreed to sell up to $8 million of common stock to Fusion Capital Fund II LLC over the next two years. The shares will be sold at market price with Calypte determining the timing and amount of any sale. Proceeds will be used for commercialization of Calypte's HIV diagnostics. Separately, Calypte said Chinese regulatory authorities completed their technical review of the company's oral HIV test application and have moved to the final phase of the registration process. Shares of Calypte (OTC BB:CBMC) rose 5 cents, or 56.3 percent, to close at 13 cents, Thursday.

• Seattle Genetics Inc., of Seattle, closed its previously announced $103.5 million public offering of common stock. The company sold 11.5 million shares, including full exercise of the overallotment option, priced at $9 each. J.P. Morgan Securities Inc. and UBS Investment Bank acted as joint book-running managers, with RBC Capital Markets, Needham & Co. LLC and William Blair & Co. LLC serving as co-managers. Net proceeds of $97.5 million will be used for clinical trials of the company's antibody-based cancer and autoimmune disease drugs. (See BioWorld Today, Jan. 22, 2008.)

• Targacept Inc., of Winston-Salem, N.C., closed its previously announced $30.9 million public offering of common stock. The company sold 4.37 million shares, including full exercise of the overallotment option, priced at $7.07 each. Deutsche Bank Securities Inc. served as book-running manager, with Lazard Capital Markets LLC, Oppenheimer & Co. Inc. and Pacific Growth Equities LLC serving as co-managers. Proceeds will be used to advance the company's neuronal nicotinic receptor (NNR) modulators through clinical trials. (See BioWorld Today, Jan. 18, 2008.)

• Theravance Inc., of South San Francisco, closed its previously announced public offering of $172.5 million worth of unsecured, 3 percent, convertible subordinated notes due 2015, including full exercise of the overallotment option. The notes are convertible into common shares at a rate of 38.6548 shares per $1,000 principal amount of notes, or about $25.87 per share. Merrill Lynch & Co. and Goldman, Sachs & Co. served as joint book-running managers. Net proceeds of $166.7 million will be used for general corporate purposes.