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Vivus Inc. (VVUS - Analyst Report) reported a loss of 40 cents per share in the third quarter of 2012, wider than the Zacks Consensus Estimate of a loss of 33 cents and the year-ago loss of 10 cents per share. Higher selling, general and administrative (SG&A) expenses for pre-commercialization activities for obesity drug, Qsymia, led to the wider loss.

The company’s net product revenues of $41,000, reflecting the shipment of 656 Qsymia prescriptions, were far below the Zacks Consensus Estimate of $1 million. The company did not record any revenues in the prior-year quarter.

During the quarter, research and development (R&D) expenses shot up 148.8% year over year to $9.3 million. The increase was attributable to the initiation of post approval studies for both Qsymia and erectile dysfunction (ED) drug Stendra (avanafil).

SG&A expenses increased to $31.3 million compared to $5.2 million in the year-ago period. The huge rise in SG&A expenses was due to higher pre-commercialization expenses for Qsymia.

Qsymia Update

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.

Vivus is working on increasing access to Qsymia and submitted an amendment to the Risk Evaluation and Mitigation Strategy (REMS) to the FDA for the same.

On the third quarter conference call, the company stated that 4,904 Qsymia prescriptions were dispatched in October 2012 (until October 26, 2012).

Meanwhile, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended against the approval of Qsiva (proposed trade name of Qsymia in the EU). The CHMP arrived at this decision in October.

The CHMP rendered a negative opinion due to concerns over the potential cardiovascular and central nervous system effects associated with the long-term use, teratogenic potential and use by patients for whom Qsiva is not meant.

Vivus plans to appeal the decision and has communicated the same to the CHMP. A new decision in expected in the first half of 2013.

The company is looking for a partner to commercialize Stendra in its territories, which includes the US.

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 Arena Pharmaceuticals Inc. (ARNA - Snapshot Report) is preparing for the launch of its obesity drug Belviq along with its partner Eisai and Co Ltd. (ESALY), which got FDA approval in June 2012. Orexigen Therapeutics, Inc. (OREX - Analyst Report) is also developing a candidate, Contrave, targeting the lucrative obesity market.
 

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