VVUS Qnexa disapproved by FDA committee

FDA Panel Vote
Results from the highly anticipated advisory panel are finally out: 6 YES vs. 10 No for recommendation of the approval of Qnexa, VVUS' experimental obesity drug. After all, safety still trumps efficacy when it comes to introducing new drugs to patients. The 10-12% weight loss offered by Qnexa no longer weighs favorably in the face of potential cardiovascular risks. VVUS' share price bled an excruciating 56% in after market trading as frightened share holders dump their ownership of the company.

Trading Strategy
The way to capitalize on biotech catalysts is to get in early before a significant date (e.g. FDA panel, PDUFA, clinical results, major presentations...etc.) and exit just before the actual event. VVUS' story is a prime example of the unpredictability of the FDA's decision and the outcome of an NDA. If timed right, however, a majority of investors can still pocket a handsome return despite negative FDA/advisory committee remarks. In the case of VVUS, investors could still have gained a potential earning of as much as 42% in a 2-week window just prior to the panel meeting (July 1 - 14). Do REMEMBER though, it is always much much less risk-laden to exit BEFORE the date of interest as advised in a previous post to avoid getting burned on bad news.

So, now that the excitement about Qnexa is over, let's move on the next players in line. Stay tuned!