Biotech investors salivate over the thought of an instant double. The overnight riches when a binary event breaks just right is the lure of the sector. VIVUS
Why? An FDA advisory panel overwhelmingly recommended approval of its obesity drug Qnexa by a 20-2 vote. This is a huge improvement over 2010's 10-6 vote against approval. Efficacy was never the issue for VIVUS, nor for its two obesity drug competitors Arena
Qnexa contains phentermine(the "phen" in fen-phen, likely the cause of the elevated heart rate seen in some patients), but the birth defect -- oral clefts -- was courtesy of another ingredient: topiramate, the active ingredient in Johnson & Johnson's epilepsy drug Topamax. The FDA and VIVUS agreed to narrow the label down to women who can't become pregnant and men, before loosening the requirement to women "who are not nor intend to become pregnant." With a reduced side effect profile, one FDA advisory panel member confidently declared the "potential benefits of this medication seem to trump the side effects."
Shares of Arena and Orexigen also popped 17% each after hours, likely assuming the FDA has lightened up on the obesity fighters. I think that is potentially foolhardy. Qnexa's garnering of the advisory panel's overwhelming support doesn't mean the FDA will agree. It also doesn't mean the other two drugs' more-serious side effects, ones that can't be mitigated by removing a segment of the population, have nothing but clear skies ahead.
These drugs do have potentially serious side effects, while diet and exercise don't, so the FDA is going to be cautious. Do not confuse this with triglyceride fighter Amarin
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