Vivus, Arena shares jump on insurance coverage for diet pills
(Reuters) - Health insurer Aetna Inc (AET.N) said it would provide coverage for diet pills of Vivus Inc (VVUS.O) and Arena Pharmaceuticals Inc (ARNA.O), sending the obesity drugmakers' shares up.
The decision by the third-largest health insurer to provide coverage for Vivus' Qsymia and Arena's Belviq may boost adoption of the diet pills. link.reuters.com/kuq24t
"This is probably the simplest business decision on their plate in all of 2012, because to not reimburse this would have put them in the crosshairs of every single healthcare decision maker in the United States," WBB Securities LLC analyst Stephen Brozak said.
"Everyone acknowledges that we have a pandemic obesity problem, and to not be a part of a solution even if its a marginal solution, means you are part of the problem," he added.
Vivus faced problems as it reported lackluster initial sales of Qsymia earlier this month, citing a lack of reimbursement coverage.
Chief commercial officer Mike Miller said on a post-earnings conference call on November 6 that about 30 percent of patients chose not to fill after receiving Qsymia prescription due to cash outlay.
Although information about the level of co-pay after Aetna's reimbursement is still unavailable, Cowen and Co analyst Simos Simeonidis views the news as positive development for Vivus and for the obesity space.
The news is significant not only because Aetna is a major insurer, but also because it would now be easier for smaller players to make a move towards reimbursement of the weight-loss drugs, Simeonidis said in a note to clients.
Low sales of the much-hyped drug also prompted one of Vivus's biggest shareholders, QVT Financial LP, to demand the company sell itself. QVT owns 8.3 percent equity stake in Vivus and 1.2 percent in Arena.
Arena's Belviq was approved by U.S. health regulators in June, making it the first new weight-loss drug to gain approval in 13 years. Vivus's Qsymia was approved in mid-July.
Arena expects to launch Belviq by early next year.
Shares of Vivus were up 13 percent at $11.72 while those of Arena were up 3 percent at $9.19 on Wednesday on the Nasdaq.
Shares of Orexigen Therapeutics Inc (OREX.O), which is planning to re-submit the marketing application for its obesity pill Contrave, rose 9 percent to $4.73 on the same exchange.
(Reporting by Balaji Sridharan in Bangalore; Editing by Sriraj Kalluvila and Joyjeet Das)