VIVUS (Nasdaq: VVUS ) investors may have breathed a sigh of relief after the company's obesity drug, Qsymia, gained approval from the Food and Drug Administration this summer -- but passing this regulatory hurdle was only the beginning of the challenges facing this up-and-coming pharmaceutical company. Shares of VIVUS plunged recently after the company reported lackluster sales from Qsymia's launch. The company will clearly have to deliver better results next quarter, but what are the other risks that VIVUS may have to overcome?
To help answer this question, our senior biotech analyst has created a premium research report on VIVUS that covers the company's opportunities, threats, and both compelling reasons to buy in to the VIVUS story and to stay away from this biotech stock. Below is a small sample from the full report.
- Branded competition:
There's undoubtedly a huge market for obesity drugs, but Qsymia isn't the only one trying to help patients shed the pounds. Roche's (OTC: RHHBY) Xenical has been on the market for years. It's never been a really large seller because of unpleasant side effects that are triggered if the patient eats fatty foods.
Arena Pharmaceuticals' (Nasdaq: ARNA ) Belviq is likely to be Qsymia's biggest competition. The drug is already FDA approved, but hasn't launched yet because it's waiting for clearance from the Drug Enforcement Agency. In clinical trials, Belviq didn't produce nearly as much weight loss as Qsymia, but Belviq is considered safer.
Further down the road, there could be competition from Orexigen's (Nasdaq: OREX ) Contrave. The drug appears to have intermediate weight loss somewhere between Belviq and Qsymia, and the side effect profile falls somewhere between the two as well. The FDA delayed the approval of Contrave because the agency was worried about heart complications and asked for an outcomes trial that measures heart attacks, strokes, and the like. Assuming Contrave passes that trial, it seems likely the FDA would approve the drug. At that point, it'll be the only company that can point to solid data proving that its drug doesn't cause heart problems.
Even longer term, a private company named Zafgen has a drug called beloranib that investors should keep a keen eye on. The drug has only completed phase 1 trials, but the data there is nothing short of amazing. After just four weeks on beloranib, patients at the lower dose lost 4.7 kg, or 4.5% of their body weight. Patients taking placebo gained 0.2 kg.
Beloranib is years away from getting on the market, and a lot can happen as it progresses through clinical trials. In fact, it appears that, at least at the higher dose, the drug has side effects that make it intolerable; two of five patients dropped out of the study because of side effects.
- Post-approval trials:
VIVUS is required to run 10 post-approval studies as a condition of Qsymia's approval. Any of the trials could theoretically pop up safety signals that could derail the drug. The largest of which -- in terms of size, cost, and risk -- is a cardiovascular outcomes study.
An increase in heart attacks and strokes would mean the end of Qsymia. While it remains a big overhang on the stock, VIVUS hopes the opposite might happen. Because patients taking Qsymia have lost weight, they'll actually have fewer heart issues than those patients taking placebo.