Just 12,500% More Growth for an Obesity Blockbuster

Talk about huge sales growth! Net sales of VIVUS' (NASDAQ: VVUS  ) Qsymia in the fourth quarter were up 4,800% over the third quarter .

Of course, that's kind of like talking about an huge gnat. I'm sure they probably exist, but you're working from such a small base, that the added size doesn't amount to much. The large increase on a percentage basis only resulted in sales of about $2 million in the fourth quarter.

Just 12,500% more to go until the drug becomes a blockbuster.

Most of the time, investors in rival drugmakers should be cheering when a competing drug launch gets off to a slow start, but I think VIVUS' troubles should be worrying investors in Arena Pharmaceuticals (NASDAQ: ARNA  ) and Orexigen Therapeutics (NASDAQ: OREX  ) more than giving them confidence.

Yes, VIVUS has challenges that Arena's and Orexigen's obesity drugs won't face, mainly distribution limited to mail-order pharmacies because the drug can't be used in women that might become pregnant. But even if you want to conservatively assume that's knocking down sales ten-fold, it's not like Qsymia is flying off the shelves.

Instead Qsymia sales in its first full quarter on the market show how hard it is to sell an obesity drug. Arena and Orexigen have big pharma marketing partners -- Arena has a partnership with Eisai and Orexigen is linked up with Takeda -- which might help a little, but whoever is doing the footwork, there's a lot of it to be done. Insurance companies have to be convinced to cover the drug. Doctors have to be convinced that the benefits of taking the drug are worth the risks. Patients have to be convinced it's worth paying for the drug even when it only produces modest weight loss.

VIVUS spent $50 million on selling, general, and administrative expenses to generate those $2 million in product sales. It's going to have to be a lot more efficient to turn a profit anytime in the near future. With around $215 million in the bank, VIVUS' runway isn't that long at the current burn rate.

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