Vivus Sinks as Obesity Drug Sales Slower Than Anticipated

Vivus Inc. (VVUS), maker of the recently approved obesity drug Qsymia, sank the most in more than two years after the company reported a larger third-quarter loss than analysts expected and investors feared slow uptake of the medicine.

Vivus dropped 21 percent to $11.82 at the close in New York for the biggest decline since July 2010. The shares of the Mountain View, California-based company have gained 21 percent this year.

The company told investors today that some patients are abandoning prescriptions at the pharmacy on discovering they must pay a large portion of the cost out-of-pocket, Andrew Berens, senior health-care analyst with Bloomberg Industries, said in a telephone interview. Investors have also started to question the company’s strategy of targeting specialty doctors rather than primary-care physicians, who may be the most likely to prescribe the drug, he said.

“The street expects the drug to be a blockbuster, but it looks like a very slow launch,” Berens said. Investors “are not sure their strategy makes any sense.”

The net loss for the quarter widened to $40.4 million, or 40 cents a share, from $8.6 million, or 10 cents, a year earlier, the company said today in a statement. Analysts had expected a loss of 32 cents, the average of 13 estimates compiled by Bloomberg. Revenue was $41,000, the amount received from pharmacies that had delivered the drug to patients, Vivus said.

FDA Approval

Qsymia was approved by the Food and Drug Administration in July, the second weight-loss drug of two to be cleared this year for sale in the U.S. Last month it failed to gain the backing of European drug regulators concerned about potential side effects.

Selling, general and administrative expenses rose to $31.3 million from $5.2 million a year earlier, while research and development costs increased to $9.3 million from $3.7 million, Vivus said. The increased expenses were due to marketing costs of the obesity drug and post-approval studies on Qsymia and Stendra, Vivus’s drug for erectile dysfunction that was approved in April.

The company may need to offer coupons to patients to help them pay for Qsymia, Berens said. Vivus indicated on a conference call today with investors and analysts that it may pursue such options, Berens said.

“It sounds like they’re considering strategies to offset out-of-pocket expense,” he said.

Potential Partners

Vivus may also need to seek a partnership with a larger drugmaker that has an existing sales force geared toward primary care doctors, he said. Companies such as London-based GlaxoSmithKline Plc (GSK) and AstraZeneca Plc (AZN), which have other drugs prescribed by primary-care physicians including those for diabetes or hypertension, may be good candidates, he said.

“Any of the large pharma companies that have a large sales force that details to primary-care doctors would make sense,” he said. “You want to have more than one drug in your bag when you go into their offices. They’re very busy.”

Vanessa Rhodes, a spokeswoman for AstraZeneca, and Melinda Stubbee, a spokeswoman for Glaxo, declined to comment.

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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