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EU Approval? Fat Chance!

By Brian Orelli, PhD – Updated Apr 7, 2017 at 12:52PM

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VIVUS says the EU is likely to reject its obesity drug.

In general, there's a little lower threshold for getting a drug approved by the European Medicines Agency than there is for approval by the Food and Drug Administration. Merck's (NYSE: MRK) Cordaptive, Cell Therapeutics' (Nasdaq: CTIC) Pixuvri, and InterMune's (Nasdaq: ITMN) Esbriet were all approved in Europe, but were -- at least initially -- rejected in the U.S.

But gaining FDA approval isn't a guarantee that its EU counterparts will follow suit. There are certainly some examples of the EMA finding something that it wasn't comfortable with that the FDA signed off on. It looks like we'll be able to add VIVUS' (Nasdaq: VVUS) Qsymia to that list. Or rather Qsiva, the name the biotech plans to use if it can ever get the drug approved in the EU.

VIVUS announced Friday that, after discussions with the EMA's Committee for Medicinal Products for Human Use, it believes the committee will give the drug a negative recommendation. As a reminder, the CHMP is essentially equivalent to the FDA, with the EMA just giving a rubber stamp, so its decision is fundamentally the final one.

Once the rejection is handed down next month, VIVUS could appeal the decision or it could resubmit a new application later if it thinks more data will help it gain approval.

The rejection probably shouldn't come as much of a surprise. VIVUS got around the FDA's concern that Qsymia increases the risk of birth defects if pregnant women take the drug by setting up a risk evaluation and mitigation system to track doctors prescribing the drug and offering it only through mail-order pharmacies. The EU doesn't have an equivalent system, which is the main reason that GlaxoSmithKline's Avandia was pulled from the market there, but the FDA allowed Glaxo to continue selling it stateside with severe restrictions.

Figuring out how this will affect other obesity drugmakers is difficult. If the issue is specific to Qsymia/Qsiva, it's likely good news for Arena Pharmaceuticals' (Nasdaq: ARNA) Belviq since it won't have competition in Europe if it can get approved. If it's more of a worry about obesity drugs in general, then it's clearly bad news. We'll have to wait and see the ruling to know which one for sure.

That isn't stopping Arena's investors from speculating which one it will be. They seem to be seeing this as moderately bullish news -- shares were up about 4% on Friday -- which I think is reasonable given that Belviq's safety profile is much cleaner than Qsymia's.

Want more details behind the Belviq vs. Qsymia battle? Check out The Motley Fool's new premium report on Arena Pharmaceuticals. It outlines the key opportunities and risks facing the company -- plus what investors should be monitoring. Click here to receive your copy now!

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool has a disclosure policy.
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Stocks Mentioned

VIVUS, Inc. Stock Quote
VIVUS, Inc.
VVUS
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$86.12 (-0.60%) $0.52
Arena Pharmaceuticals, Inc. Stock Quote
Arena Pharmaceuticals, Inc.
ARNA
InterMune, Inc. Stock Quote
InterMune, Inc.
ITMN.DL
CTI BioPharma Corp. Stock Quote
CTI BioPharma Corp.
CTIC
$5.82 (3.38%) $0.19

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