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VIDEOVivus Has Faith in Qnexa, But Analysts Waver
The biotech is optimistic about the prospects of its obesity drug, but analysts and investors don't share the sentiment.
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Yet, Vivus management was optimistic that it can still work with the FDA to get Qnexa approved by the October 28 approvable date currently set by the agency.
"Obviously, we were surprised and disappointed by the advisory committee outcome and rightfully view this as a setback in the approval process," said Vivus Chief Executive Leland Wilson in a conference call with investors on Monday night. "Based on the comments of each of the voting members, however there may be reason to believe that individual decisions were close and that at least some of the reasons for no votes can be rectified by the PDUFA date."
Wilson believes that only four factors could negatively affect the Qnexa approval -- "the potential risk for suicide and teratogenicity; the potential for rapid market uptake and resulting large exposure" – although the panel made clear that cardiovascular risks were also a concern.
Vivus has reason to be upbeat, despite all the negativity surrounding the obesity drug now. Data from a two-year study of Qnexa patients, that wasn't included in the New Drug Application, is expected to be released in the third quarter. The new data will add further evidence to the safety and efficacy profile of the drug, although it may not address all of the concerns that the panel expressed -- especially cardiovascular risks and issues surrounding pregnancy.
Over the course of the last few weeks several analysts have downgraded the stock, citing the negative panel vote and the unclear regulatory path that's now before Qnexa. The most recent downgrade came from Brean Murray Carret analyst Jonathan Aschoff on Tuesday, who changed his rating to Sell from Hold.
"After considering the panel outcome further, we are downgrading Vivus to sell due primarily to the absence of longer-term data and difference in rates of dropout due to adverse events among treatment groups," Aschoff wrote. "In our view, a post-marketing outcomes study is too risky of an experiment in obesity, given the appeal of a drug that can result in such a high percentage of weight loss and thus the propensity of individuals to take higher-than-tested doses."
One of the key points that came up during the advisory committee meeting was the issue of side effects getting worse as dosages get higher. Aschoff makes a valid point that wasn't made during the panel meeting; that is, that patients are likely to abuse the drug and take beyond the recommended dose.
Leerink Swann analyst Steve Yoo believes that Qnexa could still reach approval -- with an extended timeline -- if Vivus withdraws the highest dose form the New Drug Application. "A potential path forward for Qnexa may be to remove the highest dose from the NDA filing to give the FDA enough wiggle room to go counter to the advisory panel's recommendation," writes Yoo.
Vivus' stock continues to lose traction. It fell the most it ever has since its IPO in 1994, about 55%, the day after the advisory meeting. It's down 6% on Wednesday to linger near $5.40. The next catalyst for Vivus will be the two-year Sequel data that will likely be released in late August or early September. But it's still unclear if this data can act as a band-aid for the damage that was already done.Twitter: @biowriterchik
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