Vivus Inc. (VVUS) rose the most in almost five months after winning approval from U.S. regulators yesterday for its obesity drug Qsymia, the second medicine cleared to treat the condition within three weeks.
Vivus jumped 9.6 percent to $29 at the close in New York, for its biggest one-day increase since Feb. 24. The decision means overweight consumers can soon choose between Qsymia and Belviq, a diet drug from Arena Pharmaceuticals Inc. (ARNA) and Eisai Co. (4523) approved on June 27.
Vivus, based in Mountain View, California, plans to begin selling Qsymia -- a combination of the appetite suppressant phentermine and the antiseizure drug topiramate -- in the fourth quarter, said President Peter Tam by telephone. The drug, which will carry a warning about potential heart and birth-defect risks, may generate $1.2 billion in sales in 2016, according to the average of five analysts’ estimates compiled by Bloomberg.
“The majority of obese patients wanting to try drug therapy will end up seeing both drugs, regardless of which one they take first,” said Simos Simeonidis, a Cowen & Co. analyst, in a note to clients today. “This assumption, together with the large potential market opportunity, makes us believe that there is room for at least two, if not more, sizeable drugs in this space.”
More than 78 million U.S. adults are obese, according to the U.S. Centers for Disease Control and Prevention. The condition raises the risks of diabetes, heart attacks and stroke, and costs the U.S. economy an estimated $147 billion a year in medical expenses and lost productivity, the Atlanta- based agency says on its website.
Qsymia and Belviq are the first pills sanctioned in the U.S. for obesity since Roche Holding AG’s Xenical in 1999. The shares of San Diego-based Arena fell 9.7 percent to $9.98 for its biggest drop since June 28.
Vivus has “worked tirelessly over the last 10 years to make this happen,” Chief Executive Officer Leland Wilson said on a conference call today. “This is an accomplishment that will help patients who need help losing weight.”
The drugmaker has had “positive discussions” with health plans and employers about getting Qsymia covered by insurance, Michael Miller, the company’s chief commercial officer, said on the call.
About 30 percent of weight-loss prescriptions are paid for by insurers and Vivus’ goal is to have coverage by a year after the drug is introduced. The company declined to discuss details of pricing before an investor conference scheduled for August.
The warnings in Vivus’s packaging may benefit Arena and Eisai’s Belviq in the marketplace, said Atsushi Seki, a health- care analyst at Barclays Plc in Tokyo. The market for obesity treatments will probably reach $6 billion a year, and Barclays expects annual sales of Belviq to peak at $1.5 billion, he said.
“The new addition will expand the overall market,” Seki said. “Vivus will have some restrictions to sell Qsymia as the drug is very effective, which also means the side effects will be stronger.”
The U.S. Food and Drug Administration in 2010 rejected on safety concerns both the Vivus drug and the Belviq treatment from Arena and Eisai, which is based in Tokyo. The companies re- applied with the agency after completing further testing.
Vivus’s Qsymia will carry a warning on its label about the possibility it will increase heart rate. Use of the treatment will also be tied to a risk-management strategy that warns women of child-bearing age of the need to use contraception, Tam said. Topiramate has been linked to oral clefts in the children of women on the therapy.
The potential complications make the FDA’s approval of both Qsymia and Belviq “reckless,” according to a statement today from Public Citizen, the Washington, D.C.-based advocacy group. The group cited past diet drugs cleared and then taken off the market because of side effects.
“It is magical and delusional thinking for anyone to believe that a drug will turn off hunger without hitting other targets where it will do harm, usually to the cardiovascular system,” Sidney Wolfe, Public Citizen’s director of health research, said in the statement.
The American College of Cardiology welcomed the drug yet warned about the need to evaluate the potential hazards. “Weight-loss drugs have the potential to help manage obesity, which is a major health problem, but it is most important to understand the impact the medications may have on long-term cardiovascular health,” William Zoghbi, president of the Washington-based medical society, said in a statement.
Vivus must conduct 10 studies while Qsymia is on the market, including a long-term trial to assess the risk for cardiac events such as heart attack and stroke, the FDA said.
Arena and Eisai, in securing approval for their drug, agreed to conduct six post-market studies to assess Belviq’s safety and effectiveness, including a long-term cardiovascular outcomes trial to assess the drug’s risk for major cardiac risks such as heart attack and stroke.
At the same time, “we are talking to companies we believe are capable of supporting our product outside of the U.S.,” he said. “There are quite a few.”
Qsymia was formerly known as Qnexa. The FDA rejected the original name because too many other drugs ended in the same letters and it would have caused confusion, Tam said.
Vivus plans to sell the pill at first through mail-order pharmacies, though the company is working with the FDA to broaden access to retail drugstore chains, Tam said.
“This is a very large market,” he said. “There aren’t a lot of treatments that are working.”
Orexigen Therapeutics Inc. (OREX), which is also developing a weight-loss pill called Contrave with Osaka, Japan-based Takeda Pharmaceutical Co. (4502), agreed in September to conduct a two-year study of the medicine’s heart risks.
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