Vivus Hopes FDA Approval Will Lead to Fat Profits
Earlier this week, Vivus announced that it had resubmitted an NDA for its weight loss drug, Qnexa, to the FDA. Qnexa was issued a CRL earlier in the year, and Vivus is now hoping to have it approved under a more narrow indication, which would exclude obese women that have the potential to bear a child. The resubmission comes after Vivus and the FDA reached an agreement on filing strategy in September. The market potential for such a drug remains promising, as more than two-thirds of American adults are overweight or obese.
However, Vivus may miss out on a large part of the market if it cannot sell to young women. Leerink Swann analyst Steve Yoo stated that more than 50% of the likely market could be comprised of women of childbearing age. More women than men are also believed to be willing to pop a diet pill. Yoo also notes that in Qnexa Phase III trials, 70-83% of the participants were women, a figure that's typical for obesity treatments.
Qnexa is made of a combination of two different treatments, topiramate and phentermine, both of which have been on the market for several years. Vivus had hoped that the drugs' record of safety would help guide Qnexa through the approval process, however, a new issue appeared. Qnexa patients showed an increase in heart rate, and the FDA expressed concerns that this lead could lead to cardiovascular issues.
Despite these setbacks, Qnexa has proven to help patients lose weight. In three clinical trials, Qnexa patients lost 30 lbs on average over a one year span, nearly 5 times what patients who took the placebo lost. It is clear that the FDA will focus on safety, rather than on efficacy in its reevaluation of Qnexa. In July 2010, an FDA panel met to discuss the approval prospects of Qnexa and voted against 10-6. One of the panel members, Abraham Thomas, stated that, "In terms of efficacy, it's far superior to anything on the market."
One major concern arose over the validity of the clinical trials, as 18% of participants suffered minor side effects such as constipation and headache. Nearly 40% of participants also did not complete the study. Some experts believe more research is needed. "Just because these compounds don't have the same chemical mix doesn't mean they can't cause long term harm," says Joanne Ikeda, former co-director of the Weight and Health Center at UofC Berkley. "I think we should demand long term safety studies for these drugs."
Given the high standards that the FDA has set for weight loss drug approval, trading Vivus in the runup to the PDUFA date could be risky. Competitor Orexigen Therapeutics nearly doubled in the runup to its date, before crashing nearly 75% after its rejection. While Vivus has other drugs in its pipeline to protect it from such a dramatic move, it is likely that the FDA will set a high barrier to approval. Traders may want to consider options to hedge their positions, as the PDUFA date looks to be a classic high-risk, high reward trade.
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