(VVUS) Vivus Expects European Setback

Vivus Inc. (VVUS) recently announced that it expects the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) to recommend against the approval of its weight-loss drug, Qsiva, next month. The company’s expectation was based on a preliminary feedback provided by the CHMP. The news impacted Vivus’ shares negatively.

Vivus stated further in its press release that if its fears do materialize then it might either resubmit the marketing authorization application (MAA) for the drug to the EMA at a later date or may ask for a re-examination of the CHMP’s negative opinion.

We note the drug is already available in the US under the trade name Qsymia. Qsymia was approved by the US Food and Drug Administration (FDA) in July 2012. The FDA cleared Qsymia as an adjunct to a healthy diet (low on calories) and increased physical activity for chronic weight management in obese (Body Mass Index, or BMI – 30 or more) or overweight (BMI – 27 or more) adults suffering from at least one weight-related co-morbid condition.

Approval was granted with a Risk Evaluation and Mitigation Strategy (REMS) and post-marketing requirements. The REMS will keep doctors and pregnant ladies informed about the risks associated with Qsymia to the unborn baby.

Just as the path leading to European approval is not expected to be hiccup-free for the weight loss drug, US approval too did not come easily. Vivus did not taste success in its first attempt to gain FDA approval for Qsymia.

The US regulatory body issued a complete response letter (CRL) to the company in October 2010 in response to the new drug application (NDA) submitted in December 2009. The FDA accepted the re-submitted NDA in the final quarter of 2011 and assigned a target date of April 17, 2012.

In February 2012, an advisory panel of the FDA voted 20-2 in favor of approving Qsymia on the basis of a favorable risk-benefit profile of the drug. The action date was pushed back by three months following Vivus’ submission of the REMS for Qsymia in the first week of April. The REMS was a major amendment to the NDA. Qsymia was subsequently approved in July by the FDA. The drug was launched in the US earlier this month.

Neutral on Vivus

We currently have a Neutral recommendation on Vivus. The stock carries a Zacks #3 Rank (Hold rating) in the short run. We note that rival company Arena Pharmaceuticals Inc. (ARNA) is preparing for the launch of its obesity drug Belviq along with partner Eisai and Co Ltd. (ESALY), which got FDA approval in June 2012. Orexigen Therapeutics, Inc. (OREX) is also developing a candidate, Contrave, targeting the lucrative obesity market.

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