Shares of Vivus experienced an unexpected ~8% loss today after Lazard Ltd's analyst William Tanner downgraded shares of Vivus to "hold" from "buy," citing the risk of an unfavorable panel review taking place on July 15, 2010. The change in opinion arose out of concerns about the potential side effects, such as minor memory impairment and cardiovascular risk, previously linked to topiramate (Topamax) and phentermine, the two constituents of VVUS's weight loss drug candidate. The company has already addressed this issue by quoting results from clinical trials which showed that Qnexa, at low doses, actually improved some risk factors for heart disease, including decreasing blood pressure, bad cholesterol and triglycerides. At higher doses, Qnexa was associated with increased heart rate.
Entry point?
Basically, little has changed since the release of final phase, pivotal trial data which demonstrated a promising outlook for Qnexa and generated lots of excitement in the medical community. The drop in VVUS share price may have simply been a short term reaction to an analyst's opinion. Vivus is still a solid firm with 1 product (MUSE) on the market, 1 in Phase III, and 2 in Phase II development in addition to Qnexa. Besides the opinion of a few, many remain hopeful to see Qnexa become an FDA-approved weight loss medication on pharmacy shelf. The commercialization of Qnexa will contribute to cutting down many risk factors correlated with obesity, and hopefully alleviate the costs of treatment associated cardiovascular diseases/stroke, diabetes, and cancer.
The fall in VVUS shares may represent a discount for investors to ride the surge before the July 15 FDA panel.
Open: 11.37
High: 11.65
Low: 10.84
Close: 10.95
Volume: 11,750,800
Avg vol: 4,414,060
Disclosure: Long VVUS
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