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What's Weighing on Obesity Drug Makers Vivus and Arena?


Struggling to keep the pounds off? Try keeping your share price up.

Obesity drug makers have looked, well, weighed-down lately. Vivus (NASDAQ:VVUS) is feeling the pressure, down 23.6% this year, while Arena (NASDAQ:ARNA) has fallen 34.2% in 2013. Bearishness is so high that the short float on ARNA is around 28.5% and 31.6% on VVUS. Could the share prices for these companies improve any time soon?

Lowered Optimism

Charles Duncan, an analyst at Piper Jaffray, reduced his target price on Vivus. Worried about patent expirations, Duncan lowered his target price to $14, down from $20.

Waiting for Qsymia Approval in Europe

Vivus is seeking approval for its drug Qsymia in Europe, and submitted a request asking for advice on gaining approval under the centralized procedure. Its study, AQCLAIM (A Qsymia CardiovascuLAr morbIdity and Mortality), is among the post-marketing requirements for the obesity drug.

Launched last year in the US, Qsymia has FDA approval for weight management in overweight and obese patients, when combined with a healthier diet and exercise.

Sales Growth Through Advertising

Tepid prescription growth for Arena's option for weight control, Belviq, may be tempering its share price. On the week ending September 13, the prescription count was 3,314, growing a negative 14% week-over-week. Arena and partner Eisai Co. (OTCMKTS:ESALY)even began running full-page ads in O, The Oprah Magazine to raise awareness of its obesity drug.

Stock Performance of Arena and Vivus

The weight-loss business is massive, and is estimated to be worth over $60 billion. Weekly script data could fluctuate wildly for Arena in the short term, and it will take time before Belviq ads are viewed and potential customers respond. It's hard to know if Arena will be able to ramp up sales, but investors who missed the last run up could be rewarded. Makers of new drugs can be seen as investments that take time to prove themselves. Just like that diet we keep saying will start. Tomorrow.

Charts powered by Kapitall. Sourced from Zacks Investment Research.

Editor's note: This story by Chris Lau of Kapitall was written exclusively for Minyanville.

Kapitall's lists break complex concepts down to their basics, offering education and investing ideas to novices that double as a refresher course for more seasoned investors. Inspired by video game design, Kapitall's revolutionary brokerage platform combines a graphical user interface with tools that make it easy to build portfolios, share ideas and execute trades.

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Author Chris Lau has position in ARNA
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