As we saw from the first meeting on VVUS Qnexa drug, the FDA advisory panel is holding weight loss drugs to higher standard. Unfortunately, ARNA Lorcaserin drug was not recommended for approval and the stock is down over 50% (and well off from $7+ a share to under $2).
I am surprised that OREX is not down more on ARNA rejection. OREX has less longer term data available for its drug Contrave. Since I do not think OREX Contrave will be recommended for approval at its the upcoming meeting December 7, 2010 I have decided to take a short position by selling Orex January 2011 calls.
I have decided to sell calls rather than short the stock outright as the stock is not available to borrow.
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