VIVUS Gains on Pact With Express Scripts For Anti-Obesity Drug (VVUS)

Biopharmaceutical company VIVUS (NASDAQ: VVUS) announced that it has entered into an agreement with the largest Pharmacy Benefit Manager (PBM) in the US, Express Scripts (NASDAQ: ESRX), to offer anti-obesity drug Qsymia, which is currently available only through mail order.

The California-based VIVUS is currently developing therapies to address obesity, sleep apnea, diabetes and male sexual health. Qnexa, the investigational drug, has completed Phase 3 clinical trials for obesity treatment and Phase 2 clinical development for the treatment of type 2 diabetes and obstructive sleep apnea. VIVUS also has Avanafil in its portfolio of investigational drug candidates. Avanafil, the drug intended for erectile dysfunction, has completed Phase 3 clinical studies.

On July 17, 2012, the company received approval from the Food and Drug Administration for its new weight-loss pill, Qsymia. Arena Pharmaceuticals’ (NASDAQ: ARNA) anti-obesity drug, Belviq, received FDA approval earlier on June 27, 2012. However, FDA studies suggested that Qsymia is the more effective of the two. Moreover, Arena’s Belviq is yet to receive the classification scheduling from the Drug Enforcement Administration (DEA). VIVUS also has the complete marketing rights for Qsymia, unlike Arena. After a span of 13 years, the FDA granted approval for a weight-loss drug.

As part of the Qsymia Risk Evaluation and Mitigation Strategy (REMS) program, Qsymia is currently available only through the mail order branches of CVS Pharmacy and Walgreens. The agreement with Express Scripts enables VIVUS to widen delivery methods, thereby making it easier for patients to receive their prescriptions.

More than one third of the US population is obese. As per a rough estimate, the weight-loss drug market is worth $6 billion annually and analysts expect Qsymia to generate sales of about $1.2 billion in 2016. Following FDA approval for Qsymia, VIVUS share prices touched a peak of $30.00 in the month of July 2012. The company’s share price lost around 40% of its peak value in the next three months to reach a low of $18.00 per share. The drop includes the 12% fall on September 21, 2012, due to a press release from VIVUS stating that the European Medicines Agency would probably reject Qsymia.

On October 4, 2012, VIVUS announced that a class action lawsuit filed in November 2010 against it and two of its officers had been dismissed. Today, the announcement regarding the agreement with Express Scripts brought back investors who are aware of the potential it holds for VIVUS. After trading for two hours at around $18.82, the stock began its uptrend. By the end of the day, the stock had gained 10.2% to attain a price of $20.44 on an above average volume of 5.6 million shares.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.