Vivus Inc. (VVUS) suffered a major setback recently when the Endocrinologic and Metabolic Drugs Advisory Committee of the U.S. Food and Drug Administration (FDA) voted 10-6 against the approval of Vivus’ weight loss, once-daily pill Qnexa.
 
The FDA panel’s vote was based on one-year data on Qnexa. The panelists said that they would prefer data from a longer period of study in order to pass a favorable judgment on the drug. Data from a two-year study of Qnexa are expected to be released in the second half of 2010.
 
The panel voted that the risks of taking the drug outweighed its benefits. Although Qnexa was found to be efficacious for weight loss, several side effects like memory loss, depression/suicidal thoughts, birth defects, higher heart rates and other cognitive problems were associated with the use of the drug.
 
Qnexa is a combination of two drugs: amphetamine phentermine, which suppresses appetite, and topiramate, an anti-seizure drug sold by Johnson & Johnson (JNJ) as Topamax.
 
Vivus’ shares were down more than 60% in after-hours trading. The share price of other companies manufacturing anti-obesity drugs also fell subsequent to the panel’s vote. Shares of Arena Pharmaceuticals Inc. (ARNA) closed 8.4% down at $3.92, while shares of Orexigen Therapeutics Inc. (OREX) fell 10.0% and closed at $5.00 on July 15.
 
Both Arena and Orexigen will be facing FDA advisory committees later this year for their obesity candidate that are currently under FDA review. While Arena’s lorcaserin will face the FDA advisory panel on September 16, Orexigen’s Contrave will come up for FDA panel review on Dec 7.
 
The FDA panel’s negative recommendation is a major disappointment for Vivus’ shareholders, who were banking on the approval of Qnexa. The obesity market holds immense commercial potential and the approval of Qnexa would be a major boost for Vivus. The Centers for Disease Control and Prevention estimates that over 112,000 deaths each year are attributable to obesity. Moreover, Americans spend more than $30 billion annually on weight-loss products and services.
 
A final response from the FDA on Qnexa’s approvability is expected by Oct 28, 2010. Although the regulatory body is not bound to follow the advisory panel’s decision, it usually does so. Vivus intends to work with the FDA on the labeling and safety concerns raised by the panel.
 
We currently have a Neutral recommendation on Vivus. We expect investors focus to remain on Qnexa’s approvability status. We believe that the FDA will most likely require Vivus to conduct additional studies before granting final approval.
 
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