Why VIVUS Shares Surged
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of biopharmaceutical company VIVUS (NAS: VVUS) surged 15% on Wednesday after receiving approval from the Food and Drug Administration for its new weight-loss pill Qsymia.
So what: The decision marks the second diet drug approval by the FDA within just the past month, giving overweight consumers the choice between VIVUS' Qsymia and Arena Pharmaceuticals' (NAS: ARNA) Belviq. Of course, FDA studies suggest that Qsymia is the more effective of the two, so it's no surprise that Arena shares are down significantly on the news.
Now what: Analysts estimate that the weight-loss-drug market can reach roughly $6 billion annually, with Qsymia expected to generate sales of about $1.2 billion in 2016. "We are pleased with FDA's decision today because patients and physicians now have another treatment option available to them," said VIVUS President Peter Tam. "It is expected that Qsymia will be available in the fourth quarter of 2012." The stock's huge run-up makes me nervous given the safety concerns that still surround Qsymia, but when you consider just how large the market is -- according to the U.S. Centers for Disease Control and Prevention, more than 78 million U.S. adults are obese -- more aggressive growth investors might want to take a closer look.
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The article Why VIVUS Shares Surged originally appeared on Fool.com.Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.