FDA Delay Points to Blockbuster Approval

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VIVUS (Nasdaq: VVUS  ) will start bringing in revenue from its obesity drug Qnexa three months later than it could have, but it appears the drug is likely to get approved.

Yesterday VIVUS said the FDA delayed a decision on Qnexa by three months because the company turned in a Risk Evaluation and Mitigation Strategy, or REMS, within three months of the decision date. The Prescription Drug User Fee Act gives the agency the right to delay the decision by three months to review the additional information.

It seems reasonable to assume that the REMS is the only major issue at this point. If there were other problems in addition to the late submission, the FDA would probably have just rejected the drug next week (as it once did with MAP Pharmaceuticals (Nasdaq: MAPP  ) , which had manufacturing issues in addition to usability data that didn't get reviewed in time.

But that's just an assumption -- and you know what they say about those. It's not like the FDA came out and said an approval was imminent. While FDA delays usually foreshadow approvals, there are a few examples of a delay preceding a rejection. The decision on Merck's multiple sclerosis drug cladribine was delayed and eventually came out negative. It also happened to XenoPort (Nasdaq: XNPT  ) and GlaxoSmithKline's (NYSE: GSK  ) restless leg syndrome drug, Horizant.

Interestingly, Qnexa's delay to July 17 pushes the Qnexa decision beyond Arena Pharmaceuticals' (Nasdaq: ARNA  ) advisory panel for its obesity drug lorcaserin on May 10 and agency decision on June 27. If you assume the FDA was going approve Qnexa, the delay is likely a negative for Arena. Given the unknowns with lorcaserin's cancer risk, the lack of precedent will make it easier for the committee of outside experts to throw up their arms and just say there's too much unknown risk to justify approval.

While I think Qnexa will get approved, I don't see much reason to buy at this level. VIVUS has shot up to a $2 billion market cap, much higher than it was before the FDA made its first decision in 2010. There's room to go higher if you assume Qnexa shouldn't have too much trouble becoming a blockbuster in a few years, but the risk isn't zero and there's a lot of room to fall if the FDA makes a surprise rejection.

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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline. The Motley Fool has a disclosure policy.
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Read/Post Comments (8) | Recommend This Article (12)

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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 April 10, 2012, at 4:38 PM, jmarg2 wrote:

    given the headline I would have expected a bit more discussion of QNEXAS` blockbuster potential . Instead you give a grudging nod to eventual approval , warn of rejection and advise us not to take advantage of todays weakness to establish or add to position .Any thoughts on the impact of european approval , or the FDA approving before 7/17 ,not to mention Avanafil or a large pharma making a bid for the co . Time to re -think the title of your contribution how about " FDA delays QNEXA PDUFA what "

  • Report this Comment On April 10, 2012, at 6:38 PM, ATLnsider wrote:


    I agree with your opinion that the REMS are the only remaining major issue remaining before Qnexa is approved.

    I started researching how many times in the past has the FDA extended the PDUFA date so that they could conduct a thorough review of REMS submitted by the new drug sponsor.

    I have found the following new drug sponsor(s) and their respective new drug received a similar delay as did Vivus - Qnexa. Here is each New Drug - Sponsor(s):

    (1) Vandetanib - AstraZeneca

    (2) Tysabri - Biogen & Elan

    (3) Ampyra - Acorda Therapeutics

    (4) Abstral - Orexo & Prostraken Group

    (5) Ezogabine - GlaxoSmithKline & Valeant Pharmaceutical

    (6) Acthar - QuestCor

    In all 6 of these cases when the FDA extended or delayed the PDUFA date in order to review REMS, all 6 of these drugs were approved by the FDA.

    As you know, the relatively new REMS regulations, which gave the FDA much broader powers, were enacted in late 2007, and these rules became effective in 2008. I looked at the past history of delayed PDUFA dates, from 2008 to present, to try and find 1 new drug where the FDA extended or delayed the PDUFA date solely for the reason of reviewing the REMS submitted by the new drug sponsor. I have not found 1 example of where the new drug was not approved by the FDA.

    The 2 examples you gave of PDUFA dates that were delayed and the new drug was not approved are: Cladribine (Merck) and Horizant (XenoPort & GlaxoSmithKline). However, Cladribine was delayed due to the FDA needing more time for a full review of additional information provided under Merck's new drug application (NDA). The Cladrbine press release did not indicate that this information was REMS or REMS related.

    Horizant (XenoPort & GlaxoSmithKline) was delayed due the FDA needing more time to review the REMS that was submitted by the drug sponsors. Horizant was approved by the FDA.

    Based on the history of a PDUFA delay due to the FDA needing more time to review the REMS that are submitted by the new drug sponsor, I believe that Qnexa will be approved by the FDA on or before July 17, 2012.

  • Report this Comment On April 11, 2012, at 12:05 AM, PhillyDan wrote:

    Brian, are you part of the Adam Feuerstein club?

    "If you assume the FDA was going approve Qnexa, the delay is likely a negative for Arena. Given the unknowns with lorcaserin's cancer risk, the lack of precedent will make it easier for the committee of outside experts to throw up their arms and just say there's too much unknown risk to justify approval."

    There are no unknown's with lorcaserin's cancer risk. What an idiotic statement to make.

    There has never been one cancer signal related to the human studies, not one! You comments are totally biased and you do not state the facts correctly. Again, Brian so you can get it into your brain! There were no cancer signal therefore no risk for humans with lorcaserin.

    Rats are not humans, the last time I looked, maybe you need to take an class on the difference between rats and humans.

    But more importantly, do you read? I don't think so!

    A Working Pathology Group of five independent pathologists selected jointly by the FDA and Arena submitted a report of their finding of their re-adjudication of the female rat slides:

    The control group had more malignant tumors versus the 7X and 24X dosage group. The 82X group did have more malignant tumors versus the control group. Therefore based on scientific standards that you choose to ignore, the safety margin is 24X and I would debate with you anytime that the safety margin is higher than 24X when the next dosage group is at 82X.

    Are you saying that the WPG's report is wrong? Come on, I want an answer from you on this. Are you going to deny that five independent pathologists that formed the WPG selected by the FDA, let me mention it again to be clear, the FDA and Arena is wrong or didn't know what they were doing?

    Did you also know that the FDA combining tumor types goes against the research done by very credible cancer researchers.

    Here is my recommendation for you, one as a Motley Fool member, I want an answer from you on my question directed at you above.

    Two, I recommend that you let the advisory committee meet and have Arena present the results of the WPG group and the results of the MOA studies before making a hasty rush to judgement. Again, there were no cancer signals in the human studies. None, zippo, nada, you get the message.

    Completer patients taking lorcaserin averaged 8.2% weight loss for a single-agent drug. In addition, there were no increases in HR or BP and other cardio markers were improved. In addition, type 2 diabetic patients in the Bloom DM study showed a drop of ~ 1% in A1C levels and -27% in FG.

    You are supposed to be a smart person, but I don't think you paid one bit of attention to the Bloom-DM results, the WPG report results, the MOA study results, the astrocytoma exposure margin results, etc. Before you jump on the astrocytoma (brain tumor) issue, there was no issue with brain tumors in the male rats. The concern the FDA had was in the estimated exposure safety margin. Arena performed a FDA approved study with human volunteers and their estimate compared to a control group of male rats is that the exposure margin is 70X.

    Factual and objective reporting is all we ask, but you Matt Herper, Gekko and Adam Feuerstein are all in cahoots against Arena. Don't tell me I'm all wet, because Adam writes an article today, Gekko tweets and now this article from you. Totally bogus and fraudulent reporting on your part. Take me to court for those comments, I would love nothing better.

  • Report this Comment On April 11, 2012, at 12:06 AM, techperson wrote:

    What "unknowns with lorcaserin's cancer risk"? Didn't the tumor reclassification by 5 independent pathologists approved by the FDA show no cancer risk at less than 82x the human dose?

  • Report this Comment On April 11, 2012, at 11:22 AM, nm10066 wrote:

    I agree with most of your article, but the part about the upside potential. A lot of money is one the side lines waiting after the turn down these drug got the first time even though one of them got Advisiory board approval. Secondly, Qnexa has another almost sure blockbuster indication coming not long after the initial approval. The sleep apnea indication is also a mulitibillion dallor market. I'm just amazed so many of the bloggers in this space have such a narrow focus in evaluating the value of biotech investments. If VVUS does not have a posin pill this company should be bought out for north of $50.00, when you consider they likely have another approval coming up the same month in erectal disfunction.

  • Report this Comment On April 11, 2012, at 12:05 PM, AlanPithy wrote:

    I disagree with the potential. The REMS packet submitted by VVUS suggests that they limit the distribution of Qnexa to just a handful of specialist pharmacies. This fits well with the fact that they do not have a distribution partner in the USA. The lack of distribution/sales team and the limited availability to mostly mail order houses makes this a tough sell to end users. The company can't sell it and when they do the patient has to work hard to find it.

    In addition, one potential problem with the REMS packet is the wide availability of the generic components. As most who follow the drug know, Qnexa is not a novel compound, it is just an amalgam of 2 widely available generic drugs. Any doctor could recreate these results by prescribing generic Topamax and generic Phentermine - virtually identical to strength of the mid dose Qnexa - and pick them up for about fraction of the cost at WalMart or Walgreen.

    Since the REMS packet submitted by VVUS is so restrictive it may actually encourage doctors to go around the REMS and prescribe the generics. And because doctors are sympathetic to the cost, would a doctor ask his patient to spend $150 a month when she could get nearly the same in generic form for a whole lot less at a local pharmacy? This could be one reason for the delay. How will the FDA and Qnexa actively monitor a REMS program when it is so easy to circumvent? Unless they can come up with an answer, it makes the REMS (s stands for strategy) comically weak. A REMS packet that can be so easily circumnavigated is as strategically sounds as the Maginot line.

  • Report this Comment On April 11, 2012, at 12:39 PM, helpmesav wrote:

    more trash - avoid this writer

  • Report this Comment On April 11, 2012, at 4:05 PM, nm10066 wrote:

    Alan, yours is a very well thought out reply, but I have very good reason to believe you've overlooked on a couple of key points. First, REMS is a good thing for third party payers. As you may be aware 3rd party payers are for the most part not going to pay for treating simple obesity. Just use diet and exercise. But metabolic disorders related to obesity will be covered and this will be the focus of REMS. More doctors will be willing to write this product under conditions that protect them from lawsuits which REMS provides. Also, the dose cannot be duplicated or the release form by using the two drugs already on the market. That was one rational by the Advisory board for saying the benifits outweight the risk. Patients will ask for this drug and if they fit the medical profile layed out in REMS it will be a no brainer. At this point we don't even know for sure what VVUS has agreed to in total in the REMS agreement. BOTTOM LINE: REMS will help drive the drug in the medical community.

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