Why VIVUS Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotechnology company VIVUS (Nasdaq: VVUS  ) sank 12% today after management said it expects its obesity drug Qsymia to be denied in Europe.

So what: VIVUS shares have more than doubled over the past year on the blockbuster promise of Qsymia, which is already approved in the U.S., but being denied access to Europe naturally lowers the drug's peak sales and market share potential. In fact, Arena Pharmaceuticals (Nasdaq: ARNA  ) , which markets competing weight loss treatment Belviq, saw its shares climb 5% today on VIVUS' regulatory setback.

Now what: While today's news is certainly disappointing for VIVUS, management fully intends to meet any additional requirements leading to Qsymia's approval in Europe. "We will work closely with the [Committee for Medicinal Products for Human Use] to address the Committee's concerns," President Peter Tam reassured investors. "VIVUS is committed to making this important medication available to obese patients in Europe." So while VIVUS remains just too speculative for average Fools, today's double-digit drop -- the stock is now off 30% from its 52-week high -- might be an attractive opportunity for biotech-savvy contrarians.

The battle of the obesity drugs is heating up, so get to know one of its key players: Arena Pharmaceuticals. Sign up today for our premium research report and get a detailed comprehensive write-up, as well as regular future updates for no additional cost! Just click here to get started.