Vivus shares gain weight as patients slim down

When a pharmaceutical company announces strong results in late stage studies for a drug for a yet untapped market estimated to be worth billions, the Street reacts. Drugmaker Vivus Inc. (VVUS) found out exactly what's that like when it announced Wednesday its obesity drug candidate Qnexa helped patients lose weight and its shares rocketed about 70 percent.

Vivus said that the trials for the experimental weight-loss drug Qnexa met key weight loss goals in two late-stage studies. Patients taking Qnexa reduced their weight by up to 14.7 percent (with the full dose), on average, in one trial comprising more than 3,750 patients.

Mountain View, California-based Vivus said the results support the company's plan to file for Food and Drug Administration approval by the end of 2009 and seek a partnership to sell the drug in late-2010 at the earliest.

Not the only company in the race to find a safe "diet pill", the positive late stage trial results could give Vivus an advantage to win FDA approval first, which means it could be first to reach this potentially $10 billion market. Analysts believe Qnexa could easily then reach blockbuster status with estimates ranging from $1.5 to $3 billion a year in sales from the drug.

Vivus conducted two late-stage, 56-week trials of Qnexa comprising of 3,750 people. Of the patients taking Qnexa, 67 percent in one trial and 70 percent in the other achieved at least a five percent body weight loss, compared to 17 percent and 21 percent for the placebo groups. With the full dose, patients on average lost 14.7 percent of their weight, or 37 pounds, and 13.2 percent of body weight, or 30 pounds in the two trials, compared to the placebo groups' weight loss of 2.5 percent and 2.4 percent, respectively. Vivus thus met both of the FDA's requirements, unlike competitors.

The drug is a combo therapy that mixes the generic drug phentermine with the generic topiramate, sold as Topamax by Johnson & Johnson (JNJ). The two drugs work together in a controlled-release formulation of low dose to reduce appetite and make the user feel more satisfied.

Since previous diet pills had some disastrous side effects, including psychiatric ones, these were particularly tested especially since phentermine was part of the infamous fen-phen diet drug cocktail. While some minor side effects were present such as dry mouth and insomnia, there were other welcome effects of improvements in blood pressure, lipid levels and type 2 diabetes.

Other companies in the race include Orexigen Therapeutics (OREX) and Arena Pharmaceuticals (ARNA), both of which saw their shares gain Wednesday.

But not everybody is certain the "miracle diet pill" will get FDA approval as the regulatory authority is bound to be extra careful following past fiascos. No doubt, though, these strong results are bound to help it with the FDA and market confidence alike.

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