Vivus attracts dubious bid interest as Orexigen awaits verdict
With the FDA due to deliver its verdict on Orexigen’s Contrave by June 10 the emergence of apparent bid interest in rival Vivus has introduced another focus point to the obesity space. But while Orexigen is expected to be celebrating good news, it seems that all Vivus has managed to attract is more investor wrangling, rather than the big partner that it really needs.
Consensus forecasts from EvaluatePharma reveal that the three obesity pills that attracted considerable attention a couple of years ago are each seen generating over $500m a year in 2020; Vivus in particular would be very pleased if this optimistic-looking forecast comes to pass. Much greater things are predicted for Novo Nordisk’s Victoza in this use, reflecting a faith based as much in marketing muscle as efficacy and once again underscoring the need for size in the weight loss market (see table below).
|Predicted progress for prescription obesity products|
|Annual sales ($m)|
|Victoza||Novo Nordisk (WW)||76||880||Filed|
|Contrave||Orexigen (Ex-US by assumed partner)||1||184||Filed|
|Belviq||Eisai (WW ex South Korea etc)||144||527||Marketed|
|Meridia||AbbVie (where still available)||38||34||Marketed|
|Oblean (cetilistat)||Takeda (Japan)||9||26||Approved|
|WW royalty revenues ($m)|
Earlier this month Vivus revealed sales of $9.1m for its entrant in the obesity space, Qsymia, up from $4.1m in the same period last year but still a disappointing performance for a drug that has been available since September 2012. Struggles with reimbursement have been compounded by lack of marketing power – and were arguably not helped by the drug’s relatively minimal impact on weight loss and the poor safety reputation of diet pills – and the company’s various management teams have failed to address the situation with any speed.
Last year’s proxy battle that saw disgruntled shareholders led by First Manhatten oust the original board will not have helped the company’s focus. This week’s announcement by another, previously unknown, shareholder, Aspen Investment Fund, of its plans to offer to buy Vivus for $640m can only further distract management from the job at hand, regardless of how serious the claims turn out to be.
Vivus shares have climbed only 9% since Aspen showed its hand – valuing the company, which has $217m in debt, at $529m – suggesting that few believe a takeover will actually materialise. It is certainly hard to imagine why an unknown investment firm would want to take it private.
The situation shows that once again Vivus has failed to attract the attention that it really wants: that of an industry partner. It is perhaps telling that its two rivals both managed to snare deals for their respective products – or at least were realistic enough to accept the terms that were on offer. That said, the benefit of their partners' presence has yet to be really proven.
Arena signed up Eisai to help sell Belviq in the US; it reported first quarter sales of $8.4m in the first quarter, after launching the drug in June 2013. It has essentially achieved a similar level of demand to Qsymia in half the time.
Orexigen will hear by June 10 whether the FDA will grant approval second time round for Contrave. It will be hoping its partner Takeda has been watching and learning and will streak from the blocks with a finely honed launch plan.
Some believe that having another big player investing in direct-to-consumer in this space could ultimately benefit Vivus – a factor that Aspen could have in mind with its move. But the real marketing push would happen when Novo arrives with Victoza in obesity. The FDA is due to decide on the GLP-1 antagonist’s expanded approval in October.
Assuming it gets a green light the scope of that marketing license is far from determined, however; although the sales forecasts in the table suggest there is real potential for Victoza in this indication, the injection might not be directly competing for the same patients as the oral drugs (Novo’s obesity strategy will turn on safety, May 24, 2013).
Meanwhile Vivus, with its first-to-market pill that arguably boasts the best efficacy of the bunch, remains effectively sidelined. While shareholder activism drives interest in the stock and occupies management time, Qsymia will never receive the boost needed to resurrect its chances.