Vivus hits bump in obesity road

Vivus persevered long and hard to convince the US to approve its anti-obesity combination of phentermine and topiramate, but now its bull run has hit a bump in the road, with the EU regulator set to prove a harder nut to crack.

The company says that, based on preliminary feedback from the European Medicines Agency’s CHMP, it expects its filing for the drug to be turned down. It has not outlined any reasons for the expected negative opinion, but it would be logical to assume the regulator to have expressed concerns over the risk/benefit profile. Vivus’s stock fell 12% to under $21 a share in early trading this morning.

The CHMP has just concluded its September meeting, and Vivus recently presented to the body as part of the EU approval process; presumably the negative feedback arose during or after this presentation. There was little noticeable effect on the share prices of Vivus’s two key competitors, Arena Pharmaceuticals and Orexigen Therapeutics.

The Vivus drug, which in the EU carries the trade name Qsiva, is to be discussed formally at the CHMP’s next session between October 15 and 18; the next steps will depend on the precise nature of the regulator’s response.

Tougher stance

While Vivus, Arena and Orexigen all had to carry out additional studies after initial thumbs downs from US advisory panels and the FDA, the approval of Arena’s Belviq as the first new obesity drug for 13 years drove hopes that the regulator’s stance had softened (Arena fends off the big question as lorcaserin delivers, June 28, 2012). The Vivus drug got the US green light a month later as Qsymia.

Clearly Europe is taking a tougher stance. Credit Suisse analysts recently said they expected the CHMP to pay particularly close attention to CNS side-effects, perhaps in light of Sanofi’s rimonabant, which was pulled from the market. Qsiva’s phentermine component – which has been withdrawn in the EU as a standalone obesity drug – might also be a concern.

While consensus estimates are not available on a country-by-country basis, the EU likely represents a significant minority of the Vivus drug’s sales – perhaps 20% or so. According to EvaluatePharma the drug has an NPV of $4.8bn, with global sales expected to reach $2.0bn by 2018.

Vivus will likely seek a partner to sell Qsiva in the EU, but a deal seems unlikely until the regulatory issues are resolved. Analysts at Jefferies last month cut their price target for Vivus, citing generic competition concerns in the US, as well as reducing their peak European revenue forecasts on concerns over Vivus’s ability to charge a high enough price.

Pricing a separate headache

Nevertheless, any pricing issue will be a separate one, as the CHMP only considers safety and efficacy – pricing is down to individual member states.

While the Vivus hiccup can be seen as a positive for its nearest rival, Arena, the situation might be more complicated if the CHMP proves tough against obesity drugs in general. Arena’s Belviq is also under review in the EU and Switzerland, and Europe – where it will also seek a partner – is a major part of its strategy; it has, for instance, set up a plant in Switzerland to manufacture Belviq.

Vivus says depending on the CHMP’s formal response its course of action might comprise appealing against the decision or resubmitting the filing later. The latter course would presumably include additional studies or analyses to allay whatever specific concerns the regulator might raise.

Although the EU regulator might eventually be persuaded to change its stance, if Vivus’s experience in the US is anything to go by the road to European approval might also prove long and tortuous.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com

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