Vivus (VVUS) has surged as much as 10% on news that prescription numbers on its anti-obesity drug Qsymia are way up in the 4 weeks ended December 31st. In an 8K filed with the SEC Vivus released up to date prescription numbers that indicate a 68% rise in scripts in a four week period.
Vivus launched Qsymia in late September of 2012 and initial results did not meet very lofty street expectations. In late November the company instituted a free trial period that, in combination with broader insurance coverage, boosted sales to numbers that are now above street expectations.
For the 4 week period ended October the company had 5,394 scripts. The period ended November 23rd saw that number climb modestly to 7,749. Following the free trial offer and better insurance coverage the week ending December 22nd saw a huge spike to 12,978 scripts.
While some investors have expressed concerns that the REMS (Risk Evaluation and Mitigation Study) requirement would be a concern for Vivus, the latest data would seem to point to price point as the major driver. Vivus has addressed the price point on two fronts. First the company is active in working with insurance companies to get broader coverage. Second, the company has initiated a free trial program where the patient receives a couple of weeks of medicine free. Clearly a 68% jump in sales would indicate sensitivity to prices for consumers.
As I have always stated, watching Vivus and its actions is a good thing for investors in competitors Arena (ARNA) and Orexigen (OREX). As an investor we seek out any information that is helpful to gaining a better understanding of the sector. In many ways Vivus is providing a blueprint for competitors when they go to market themselves.
With insurance coverage and free trials Vivus reaches a price point that is much closer to $150, which seems to be a sweet spot for this type of treatment. While free trials do take away from potential revenue, the exercise appears to be worth while. Giving up 10% to 15% of revenue to see patient numbers increase 68% is a no brainer in any business.
Investors do need to bear in mind that we are still very early in the launch of Qsymia. There is a long way to go before the dust settles. Apparently Vivus is on a good path at the moment and is taking the actions that need to be taken. As for Arena and its anti-obesity drug Belviq, we are still about 8 weeks away from a likely launch, so we will have to stay tuned. Orexigen and its drug Contrave are still not approved by the FDA.
Disclosure: I am long ARNA.
Additional disclosure: I have no position in Vivus or Orexigen