(VVUS) Vivus Seeks EU Nod for Qnexa

Vivus, Inc. (VVUS) recently announced that it has filed a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) seeking approval for Qnexa. The company is looking to get Qnexa approved in the EU for the treatment of obesity (in conjunction with a mildly hypocaloric diet), including weight loss and maintenance of weight loss.

Qnexa’s approval would be a major positive for Vivus. The obesity market represents huge commercial potential for Vivus. Obesity is a worldwide epidemic and is estimated to affect about 150 million adults in the EU. A smooth review process could result in Qnexa receiving EU approval in late 2011.

Currently available treatments for obesity include orlistat, sold by Roche (RHHBY) as Xenical and by GlaxoSmithKline (GSK) as Alli (available over-the-counter). A commercially available prescription product with better efficacy than existing products and lower side-effects has the potential to take sizable market share away from existing products.

However, the approval process for obesity drugs has been tough. Vivus itself has faced failure in gaining first-round approval for Qnexa in the US. On October 28, 2010, the US Food and Drug Administration (FDA) had issued a complete response letter (CRL) for Qnexa. Earlier in the year, the FDA’s advisory panel had voted against approving Qnexa. Arena Pharmaceutical’s (ARNA) lorcaserin suffered a fate similar to that of Qnexa.

Vivus continues to seek regulatory approval in the US and recently submitted a briefing document to the FDA in response to the agency’s CRL. The company said that the agency’s Endocrine and Metabolic Division will conduct a meeting in the second half of January 2011 to discuss the content of the proposed resubmission.

However, Orexigen Therapeutics’ (OREX) Contrave could beat Qnexa to the market. The FDA is expected to decide on Contrave’s approvability status by the end of January 2011. Contrave received a favorable opinion from the FDA’s advisory panel earlier this month.

Neutral on Vivus

We currently have a Neutral recommendation on Vivus, which is supported by a Zacks #3 Rank (short-term “Hold” rating). We expect investor focus to remain on Vivus’ future course of action for its erectile dysfunction candidate, avanafil, and Qnexa’s approval.

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