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Europe May Reject Diet Pill From Vivus (NASDAQ:VVUS)

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The drug maker says it doesn't expect EU officials to approve its weight-loss drug. Setback may hinder company takeover, analyst says.

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MINYANVILLE ORIGINAL It doesn't look like Vivus' (NASDAQ:VVUS) diet pill is going to be approved in Europe anytime soon and that may be bad for a potential takeover of the company, according to at least one analyst.

Vivus said Friday that a panel considering approval of the company's weight-loss drug is likely to issue an opinion against recommending EU clearance for sale of the product. Last week, Vivus said it began selling Qsymia, the first new diet pill in the US in 13 years. Vivus also was hoping to sell the drug in Europe under the name Qsiva.

Cowen & Co. analyst Simos Simeonidis said the biggest impact of the news is that it may hinder a possible takeover of the company. Some investors believe Vivus is a potential acquisition candidate because, unlike two of its closest rivals, it doesn't have a big pharmaceutical company partner to help sell its drugs. Arena Pharmaceuticals (NASDAQ:ARNA) and Orexigen Therapeutics (NASDAQ:OREX) both have partners for their diet-pill marketing and development. Arena won US approval for its drug, Belviq, this summer but hasn't started selling it. Orexigen is still testing its unapproved diet pill for safety.

"The largest impact on Vivus is that it may remove at least some of the acquisition premium assigned by some investors since lack of ex-US revenue makes an acquisition by a large pharma less likely, albeit possible," Simeonidis says.

Shares of Vivus fell 11% Friday on the news. The stock fell 2% to $20.65 in early trading Monday morning. The shares more than doubled this year.

(See How Much Can Vivus, Arena Pharma Charge for Diet Pills?)

Twitter: @brettchase

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