Vivus: Consensus Calls For FDA Approval, But Watch For Label Restrictions
The Prescription Drug User Fee Act (PDUFA) or FDA 'Action' date for Vivus' (NASDAQ:VVUS) obesity drug, Qnexa, is July 17th - an event that's been widely anticipated by Wall Street and Main Street alike. While the consensus among analysts is that the drug will be approved next week, Vivus shares are likely to trade higher on approval if prescribing restrictions for use are not too onerous. Assuming that, post-approval, Qnexa can be prescribed to patients similarly to Arena's recently approved obesity drug 'Belviq', investors will shift focus to the question of 'who might acquire Vivus'. Hence, shares could edge higher on speculation of a buy-out.
However, IPQ Analytics, an independent research firm, warns that there are "risks that exist which are not currently being factored into expectations" and that the drug may not do as well as analysts are modeling if the drug's label (prescribing instructions) is more strict than Belviq. For reference, most Wall Street analysts believe Qnexa has the potential to achieve annual sales of a billion or more at peak. A risk management program is expected to accompany approval of Qnexa, and while Belviq was approved without such a program, analysts believe that a 'REMS' program for Qnexa will be relatively benign. According to IPQ, "restrictions on prescribing Qnexa to women of childbearing age and/or those with cardiovascular risk could reduce the market potential of the product, depending on how limiting those restrictions are and how they are implemented".
Dr. Michael Liebman, Founder of IPQ Analytics, notes that the FDA could have concerns over how the drug may get used in a real world setting, and that the agency could "restrict the drug by using a patient registry to protect against abusive use of the drug, combining the drug with other obesity treatments prior to clinical evaluation, or prescribing Qnexa to the wrong patients leading to abuse of the product". In fact, IPQ notes that the patient criteria for testing Qnexa in clinical trials changed over time, and that the patients tested may represent a significant difference from those in the real world because of lack of consideration of obesity as a complex disorder requiring personalized diagnosis and treatment. Watching for these kinds of restrictions is key to investors following the obesity market and the manufacturers of next generation treatments.
A severely restrictive label, such as a patient registry, would be devastating to the outlook for Qnexa (and consequently Vivus shares), but benefit companies like Arena Pharmaceuticals (NASDAQ:ARNA) and Orexigen Therapeutics (NASDAQ:OREX). Based on current intelligence, however, the bet is that Qnexa receives the FDA's blessing next week, and as long as the drug can be freely prescribed, the next trade is up into speculation of a take-out.
IPQ Analytics is offering a complimentary copy of their report on the risks pre and post-approval for Qnexa.
Click Here to request a copy of IPQ Analytics' report on Vivus' obesity drug-candidate Qnexa.
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About IPQ Analytics
IPQ Analytics, LLC provides risk assessment solutions and decision analytics to constituents in life sciences and healthcare. The company's proprietary ontology-based analytics engine enables customers to Identify, Prioritize and Quantify unexplored dimensions of knowledge and associated risk within the clinical, the molecular and the commercial domains. IPQ Analytics helps customers to make better informed decisions about managing their healthcare assets and the associated risks.
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