Vivus Sinks After Diet Drug Ingredient Linked to Oral Clefts

Vivus Inc., maker of an experimental weight-loss pill, plunged the most in 17 months after an ingredient in the medicine was shown to be associated with oral clefts in babies whose mothers took it in pregnancy.

Vivus dropped 17 percent to $8.68 at the close of trading in New York, for the biggest decline since July 2010. The shares of the Mountain View, California-based company are down 7.4 percent this year.

The U.S. Food and Drug Administration asked Vivus earlier this year to use existing databases to determine the risk of oral cleft in children whose mothers took topiramate. The drug is used to prevent migraines and seizures, and is marketed as Topamax by New Brunswick, New Jersey-based Johnson & Johnson. Vivus’s diet pill, Qnexa, combines topiramate with the appetite suppressant phentermine.

The analysis, dubbed Fortress, found the risk of cleft palates or cleft lips was as much as 5.44 times higher for the group in which mothers had taken topiramate alone or in combination with other anti-seizure drugs in the first trimester of pregnancy, Vivus said yesterday in a statement.

“This leads us to be cautious on the FDA approving a broad label for Qnexa,” Thomas Wei, an analyst with Jefferies & Co. in New York, wrote in a research note. “The data may even affect Vivus’ limited indication filing, as the FDA may need to consider the risk of birth defects in determining the strictness of the risk management program to put into place.”

Oral Clefts

There were five oral clefts in the group of 1,740 children whose mothers had taken topiramate alone in the first trimester of pregnancy, for a prevalence rate of 0.29 percent, compared with a rate of 0.16 percent in the group whose mothers had taken anti-seizure drugs, including topiramate, before pregnancy, Vivus said.

Simos Simeonidis, an analyst with Cowen & Co. in New York, said the data “look OK,” in a note to investors today. The risk ratio of 1.88 to 5.44 times is “within the known range for topiramate,” he said.

“We view the data disclosed as mostly in-line with investors’ expectations and as ranging from neutral to incrementally positive for Vivus,” Simeonidis said. He has a “neutral” rating on the shares.

The company is preparing for an advisory committee meeting expected in the first quarter of 2012, said Peter Tam, Vivus’s president.

“The prevalence ratio for oral clefts in Fortress is within the recently reported range for topiramate from several large studies,” Tam said in the statement. “We have shared these results with the FDA.”

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