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Better Buy Now: Arena vs. Vivus

In today’s video, I look at new developments in biotech pharmaceuticals. Shares of Arena Pharmaceuticals (Nasdaq: ARNA  ) soared this week after the company received FDA approval for its weight loss drug, which will be marketed under the name Belviq. In the video, I’ll explain why I think investors should let the approval buzz die down before jumping into this name. I also lay out the case for rival drug maker Vivus (Nasdaq: VVUS  ) , which I’ve given an outperform rating on my profile in Motley Fool CAPS.

Similar to Arena, Vivus also developed an anti-obesity drug known as Qnexa. While shares of Vivus traded higher on Arena’s good news, I think the stock will continue to go up if, and when, the FDA clears its Qnexa drug by July 17. The likelihood of Qnexa getting the green light looks good, considering an FDA approval back in February. 

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Fool contributor Tamara Rutter owns shares of both Arena Pharmaceuticals and Vivus. Follow her on Twitter using the handle: @TamaraRutterfor weekly stock picks and other Foolish insights. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (10) | Recommend This Article (12)

Comments from our Foolish Readers

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  • Report this Comment On June 29, 2012, at 10:48 PM, heather070707 wrote:

    If you did your research, would know

    - 34% of patients lost over 10% by taking ONLY loraserin, not a combo drug like orexigen and VVUS. Orexigen and VVUS basically just took 2 generic drugs and combined them to come up with their drugs. Orexigen used haltexone and buproprion which are an appetite suppresor and a weight loss burner. VVUS used two generics called topiramite and phentermine, an appetite suppressor and weight loss burner.

    Arena did their research just on lorcaserin and nothing weight burner like the other two companies. Why would Arena do all this researh and spend all this money...which by the way is substantial,...... with no weight burner?????? Because the FDA asked them to. Lorcaserin is a new chemical entity and the FDA wanted a trial of it alone. It was very risky, but locaserin met the FDA standards....This drug could do even better if they added the weight burner drug, like VVUS and Orexigan did. You're seeing the results just on Locaserin and nothing else. There was a 5% result in some of the patients, but there were even better results in others.......again.......................without the weight burner that VVUS and Orexigen are using in their results.. Heck, those 2 companies aren't even FDA approved yet. Arena is. Arena already has over 1 billion pills made, a partner and a plan that's ready to go. VVUS does not have this, they don't have a sales force like ARNA either. Please do the research

  • Report this Comment On June 29, 2012, at 11:22 PM, humbledoc wrote:

    Asa doctor, I have to say that the Qnexa is not a good drug to invest in .I have beed written to patient phentermine and topamax to take together , why do i need to write Qnexa ? which is just thecombination of 2 generic meds?

    and the Belviq is new and you have no limit of 3 months to take ... what do you think !!! so, I think Tamara is wrong .

  • Report this Comment On June 30, 2012, at 1:15 AM, genesis667 wrote:

    So you think VVUS is a better buy, even though their market cap is twice that of ARNA, Who already has their approval in hand.

    What makes VVUS twice as valuable? Is it the fact that women won't be allowed to take QNEXA between ages 18 and 45? Is that the big selling point, to exclude the primary weight loss target market?

    It seems to me with Belviqs much better risk profile, it will be most doctors 1st choice.

    Jeffries is predicting sales of Belviq to top $2 billion in the U.S by 2020. Throw in sales from EU and ASIAN countries and you have a worldwide blockbuster in Belviq.

    Throw a 10 X sales multIple on ARNA and you are looking at a market cap well in excess of $20 billion in 8 short years....That's a 10 bagger from todays closing price on ARNA....I'll pass on VVUS and hold ARNA until it hits $100 plus by 2020....

  • Report this Comment On June 30, 2012, at 2:45 AM, boom500 wrote:

    Fun to watch her read that scripted teleprompter written by Cramer and his Street cronies. "Buy into VVUS as we short it and slowly build a long position in the viable candidate ARNA" Ridiculous

  • Report this Comment On June 30, 2012, at 10:34 AM, keahou wrote:

    Ask any doctor which drug they would prescribe. The ones I have asked would only recommend Bilviq. They are concerned about the CV and birth defects with VVUS's drug.

  • Report this Comment On July 01, 2012, at 12:21 PM, biogemfinder wrote:

    The fact that

    1. the two articles (SA and MF) shedding a positive light on ARNA have not been published in Yahoo

    2. the PPS of Orex and VVUS keep climbing, despite the fact that former is at least 2 years from approval and the lattter is not yet approved.

    3. ARNA will be the first to market and if effective can be taken indefinitely

    4. the shorts and their stooges have cried fowl no matter what ARNA did:

    when CRL was submitted (they said rat cancer and valvopathy issues remain) --- WRONG!!

    before FDA panel (they said it would never get the vote)----- WRONG!!

    before FDA approval (they said its going to be delayed and will get REMS) ------ WRONG!!!

    Now they say it won't sell and won't be a blockbuster? ---- what do you think the answer is with that kind of track record??

    Therefore this is what I AM going to do:

    I am going to raise cash in my portfolios by selling all stocks that are in red

    Coming Monday before the 4th of July, I will buy ARNA at market PPS

    I will total up all my ARNA shares with $40 and figure out how much money I stand to gain in less than a year. Folks its not that complicated. This is an opportunity of your lifetime and with all this manipulation and games being played by shorts, hedge-funds and the so called Market Destroyers (MMs), the PPS of ARNA remains at 10/share, right after the biggest drug approval (perhaps ever!). Rather than regretting, and saying that oh had I done this or that I could have been a millionaire ...and crying over it..I am just going to act. I am just going to load up and wait. I would never invest in biotech if my profits in ARNA is not more than 50% by the year end!! And that's the minimum.... Its quite possible it will be 40-50 range by Jan of 1013!

    Folks, its time to act and put your money where your mouth is. Yes we should petition the SEC, we should point out the scare tactic that is ongoing and all of that. But the best way to beat the crooks at their own game is keep buying more, and tell your friends and neighbors to buy arena shares. There is NO downside in ARNA at $10 PPS, only upside moving forward. Let the games begin.....

  • Report this Comment On July 01, 2012, at 7:42 PM, Foreeverlong wrote:

    Very nice summarization. I agree with you. The game with Orex and Vivus will end soon. The bad guys will get repositioned soon, and Arena will take off!

  • Report this Comment On July 01, 2012, at 9:47 PM, tm8710 wrote:

    When did MF desert the honest, small retail investors that it was supposedly created to help------and become a shill for hedge funds and predatory naked short sellers who don't actually own the shares they trade?

    Another poorly-researched blog that is more interested in protecting the MM's than in true innovation and results, and novel products that an real investor can believe in---but cannot be rewarded for because of what Wall Street---now aided and abetted by wirters like this------has come to be.

  • Report this Comment On July 02, 2012, at 9:18 PM, jibberbibber24 wrote:

    I’m thinking all ARNA and VVUS holders have lost their mind buying into a stock that’s up 200% and 400% YTD with real long term threats from Chromadex. Can someone explain the reason to buy after such appreciation and with Chromadex right on the tail with a natural product?

  • Report this Comment On July 02, 2012, at 9:18 PM, jibberbibber24 wrote:

    I’m thinking all ARNA and VVUS holders have lost their mind buying into a stock that’s up 200% and 400% YTD with real long term threats from Chromadex. Can someone explain the reason to buy after such appreciation and with Chromadex right on the tail with a natural product?

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