UPDATE 2-Vivus in talks with large pharma cos for diet drug tie-up; shares rise

Wed May 8, 2013 11:33am EDT

* First-qtr Qsymia sales $4.1 mln vs est $5.2 mln

* First-qtr loss/shr $0.53 vs est $0.51

* Qsymia to be available in retail pharmacies from mid-July

* Says talking with large pharma cos on commercializing Qsymia

* Vivus shares up 6 pct

May 8 (Reuters) - Vivus Inc said it has begun talks with large pharmaceutical companies to accelerate the marketing of its diet pill after coming under pressure from hostile investors over slow initial sales, sending its shares up 7 percent.

After reporting weak first-quarter sales for Qsymia, the first diet pill launched in the United States for 13 years, Vivus said the drug -- currently available only by mail order -- would be sold in thousands of retail pharmacies from mid-July.

The company will continue to add retail pharmacies throughout the year.

"We've begun discussions with large pharmaceutical companies to explore how we can significantly expand commercialization efforts for Qsymia," Chief Executive Leland Wilson said on a post-earnings conference call.

The company received a key regulatory approval for the drug's risk management strategy last month, clearing its way to begin talks with bigger drugmakers, Wilson said.

Vivus had faced intense investor criticism for the initial slow sales of Qsymia, with shareholders suggesting that it needed more experience on its board to effectively market the potential blockbuster.

The company launched its only drug on the market in September, but received regulatory approval to sell it through retail pharmacies only last month.

QSYMIA SALES DISAPPOINT

Qsymia sales for the first quarter were weighed down by continued reluctance of insurers to reimburse obesity treatments and the drug's retail unavailability.

Net product revenue, reflecting sales of Qsymia, doubled to $4.1 million from $2 million in the preceding quarter, but missed analysts' estimate of $5.2 million.

Despite the rising sales of the pill, first-quarter net loss widened to $53.6 million, or 53 cents per share, from $18.8 million, or 20 cents per share, a year earlier.

Analysts expected a loss of 51 cents per share for the quarter, according to Thomson Reuters I/B/E/S.

Increased marketing costs for the drug added $32.2 million to the company's first-quarter selling, general and administrative expenses compared to a year earlier.

COMPETITION CLOSES IN

Qsymia is one of only two obesity drugs approved by the FDA after a gap of more than a decade. The other drug Belviq, known chemically as lorcaserin, is made by Arena Pharmaceuticals Inc .

While Belviq was the first to win approval, its launch was delayed pending a final classification on its risk of abuse.

The determination was finalized on Tuesday and Arena said Belviq would be available once the classification becomes effective after 30 days.

Speaking of the impending competition, Vivus CEO Leland Wilson said that his company expects the "competitive efforts with disease education, payers and public policy will help grow the obesity category."

Both Qsymia and Belviq received approval after overcoming several regulatory roadblocks related to their safety and serious concerns related with previous diet drugs.

The checkered past of obesity drugs is often cited as a big reason why physicians and patients are cautious while taking up the use of Qsymia.

Shares of the Mountain View, California-based company rose 7 percent to $12.90 in morning trade on the Nasdaq.

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