Hot Off the Press: VIVUS' Appeal for EU Approval Denied

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Days after launching its obesity drug Qsymia in the U.S. last September, VIVUS (NASDAQ: VVUS  ) revealed that the Committee for Medicinal Products for Human Use (CHMP) -- which essentially approves or denies drugs in the EU, much like the FDA in the U.S. -- wouldn't be giving its drug the green light. The official rejection that followed indicated that the regulatory agency had concerns over the drug's long-term risks on the cardiovascular and central nervous systems.

This evening, a VIVUS press release stated that the company's appeal for approval based on existing clinical trial data was also denied by the CHMP. It looks like Qsymia, which VIVUS aims to brand Qsiva in the EU, will need to be tested in a cardiovascular outcomes study before VIVUS can reapply. These trials can be both lengthy and costly, so we'll have to see how the company decides to proceed.

You say potato, I say potato...
If Qsymia was approved by the FDA, why doesn't it also win approval in Europe?

We can actually look at another drugmaker, Novo Nordisk (NYSE: NVO  ) , to shed some light on this complex process. Novo's new diabetes drug Tresiba was actually approved in the EU and Japan, but rejected by the FDA last week. Why? Well, according to Novo Nordisk's press release "the FDA requests additional cardiovascular data from a dedicated cardiovascular outcomes trial" before the company can try to gain approval again.

This bizarre parallel to VIVUS' situation underscores an important lesson for biotech investors: An approval or rejection by the FDA doesn't always translate across the pond, because each organization has unique criteria and review processes. The FDA may believe that the benefits of a drug outweigh the risks, while the CHMP may take the opposite point of view.

What will the market think?
This is a very tough call to make. According to Yahoo! Finance, shares are down almost 3% in after-hours trading, but considering that VIVUS' stock tumbled a hefty 20% back in September when the company first revealed that an EU rejection was on the cards, I would wager that this decision is already baked into price.

VIVUS' chief competitor, Arena Pharmaceuticals (NASDAQ: ARNA  ) , is also trying to persuade the CHMP that its obesity drug merits approval. The company's therapeutic Belviq is still under review, but Arena will have to respond to a list of outstanding questions that relate to the drug's risks, and we'll have to wait a few weeks to see whether it can win the much coveted stamp of approval in the EU.

Who will win the obesity drug market?
Can VIVUS pick up its lagging sales and fend off the competition, or will Arena Pharmaceuticals reign supreme in the obesity space? If you're in the dark, grab copies of The Motley Fool's premium research reports on VIVUS and Arena Pharmaceuticals to stay up to date. Senior biotech analyst Brian Orelli gives investors the must-know information, including an in-depth look at the obesity market, and reasons to buy and sell both stocks. Click now for an exclusive look at Arena and VIVUS -- complete with a full year of free updates -- today.

Read/Post Comments (5) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 21, 2013, at 8:13 PM, steamoil wrote:

    run don't walk to sell vvus

  • Report this Comment On February 22, 2013, at 6:51 AM, RSRdriver wrote:

    If this news says anything it is that Belviq does not stand a chance of EU approval!

    Arena surely has already sent their best and only answers to the CHMP and can only resubmit the same ones, possibly with more spin. The 2C serotonin receptor issues which are now being investigated by the FDA at the bequest of the experts who complained during and after the schedule process must also be a factor. (research 2C serotonin receptor drugs in Europe).

    U.S. MD's obviously rely more on results than safety and will reject Belviq because it barely works WHERE IT COUNTS! The 11% number thrown around to gullible Areniacs is also of no consequence where it counts- the real world!

    Last time I looked (last week) , Arena had under$100k in operating capital! IMO, Eisai's performance based incentive deal will spell bankruptcy for Arena in the near future!

  • Report this Comment On February 22, 2013, at 3:52 PM, biogemfinder wrote:

    Bafoon speaks again!! $100K in operating capital? Clearly you live in a reality which is out of this world. I hope you are still around and all of us ARENIACS would love to hear your spin when ARNA is above $25 and VVUS talks about need to raise capital to fund all those post-approval trials and no partenr to show for.

    You have become so blind with your own spin, that is it is not even entertaining as it used to be.

  • Report this Comment On February 22, 2013, at 3:54 PM, RSRdriver wrote:

    Instead of the typical Areniac response, prove me wrong!

  • Report this Comment On February 23, 2013, at 6:12 AM, RSRdriver wrote:

    Before you start grunting and jumping up and down, "FDA" is a typo. I meant DEA. Sorry.

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