Vivus Inc. (VVUS) - unfinished battle for Qnexa

Vivus surged on Friday despite FDA's issuance of a complete response letter (CRL) to the company's experimental obesity drug, Qnexa.

The reasons for the substantial spike in Vivus' share price are the following:

1) Vivus' follow-up data package, ready to be submitted in 6 weeks (no lengthy additional trials needed)

2) FDA's seemingly 'neutral' stance on the possibility of approving a new diet pill (based on their response to Arena's angry investors)

3) Renewed investor confidence/interest after Arena's failure to obtain FDA's approval (potentially 'larger' market share for Vivus)

4) Qnexa's impressive efficacy in inducing weight loss (12-15% compared to placebo)

5) Qnexa's additional efficacy in diabetes
6) Qnexa's relatively mild side effects (non-tumor associated, unlike Arena's Lorcaserin)

Based on their interpretation of the CRL, JP Morgan upgraded VVUS from neutral to overweight and shifted the price target up from $13 to $16.  

It's a NO: FDA rejects Arena Pharmaceuticals' diet pill after all

FDA's decision
A CRL (complete response letter) was issued to Arena Pharmaceuticals by the FDA this morning regarding the biotech's experimental medicine, Lorcaserin, citing the following concerns:

1) Tumor-related incidents in preclinical female rat studies
2) Marginal efficacy in obese patients
3) Lack of data to support the irrelevancy of the correlation between increased tumor incidents and Lorcaserin in human patients
4) Incomplete assessment of Lorcaserin's benefit-risk profile


Arena press release


Coincidental jump in Arena's stock
As predicted, the FDA was slightly delayed in their drug assessment announcement of Arena's weight management drug, Lorcaserin.  Coupled with a letter sent from FDA to the firm addressing shareholders' complaints about the absence of toxicologists in the advisory panel, which could have represented an unbalanced and biased review of Locaserin during the panel meeting, it almost seemed as though there might have been a chance that the drug could gain an approval despite the unfavorable recommendation forwarded to the FDA.  The coincidence boosted ARNA as high as 26% at one point before closing at +11.64%.  This was a completely unexpected event and should not be treated as a lost opportunity!  Watch what happens when the market opens on Monday.  It is very likely that the stock would suffer a 30-50% cut as soon as trading opens.  

Arena Pharmaceuticals (ARNA) - Lorcaserin's fate to be decided today

The FDA is anticipated to announce its decision on the New Drug Application of the weight management treatment developed by Arena Pharmaceuticals.  The drug received a 9-5 vote against its approval by FDA's advisory committee on Sept 16, 2010.  The general sentiment is that the drug will NOT receive FDA's nod this time around.  However, additional studies are already underway at Arena to shift the focus to diabetes patients.  If encouraging results are seen, the company may be able to jump back into the game in late 2011-2012.  While shares may seem extremely CHEAP post FDA's decision today, it may still be a while until we see another pop in ARNA's shares due to the expanded timeline for the company's ongoing studies.  We may just sit out and watch this time!  *FDA is notorious for delaying, so don't be surprised if we don't hear anything concrete today*

The obese is waiting...

Cerus Corp (CERS) - 3Q earnings report Oct 28, 2010

Cerus Corp (CERS) is scheduled to release its earnings report next week on Oct 28, 2010 AFTER the closing bell.  A live webcast will be hosted by the company at 4:15 pm ET.  The blood component-separation specialty biotech has been on a rising trend due to positive large-scale clinical study results and consistent expansion in product sales.

    "This [latest] study demonstrates that INTERCEPT can be implemented into routine practice, providing protection against transfusion-transmitted pathogens, without impacting either platelet or red blood cell utilization. This observation confirms previous data indicating that the treated platelets are functioning similarly to untreated platelets," said Dr. Laurence Corash, Cerus' chief medical officer.

"Post-earnings boost"
What followed each financial statement release in the past 4 quarters interestingly was always a 'post-earnings boost' in Cerus' stock as investors became more and more confident of the company's product market potential (read more about Cerus' INTERCEPT blood system).

With the next quarterly statement due next Thursday, today's 4.45% dip may represent a discount for those desiring to catch the pre-earnings ride.

Orexigen Therapeutics (OREX) - light volume behind rising share price (strong buying interest??)

While a drastic jump in Orexigen Therapeutics' stock (OREX) was not seen (due to many factors) after OREX's close competitor, Arena Pharmaceuticals (ARNA), received a negative review by FDA's advisory panel of the company's obesity drug candidate, a 'modest' gain of > 7% was sufficient to support the idea that investors have not completely given up on the company.  What's more interesting is the light trading volume behind the climbing share price, signifying a strong interest in the stock and a potential run in the near term.  Could encouraging 'insider information' have leaked to a small group of people to prompt the buying momentum?!?!  Perhaps.  Investors should be cautious, however, about hanging on to the stock too long as ARNA and VVUS' PDUFA dates quickly approach (rejections may cause OREX to swing dramatically in either direction.  *OREX was recommended post ARNA's 70% tumble after hours on Sept. 17, 2010*