February 25th is the day that Vivus (VVUS) will offer its Q4 quarterly conference call. There will be a lot of ears listening to the call, but many of them will not even have an investment in Vivus. Others that will be paying close attention are investors in Arena (ARNA) and Orexigen (OREX). Vivus, Arena and Orexigen all are vying for a position in the prescription anti-obesity market, and while the three companies are at different stages, the results offered by Vivus could be telling in what to expect moving forward.
Vivus was the first to market with Qsymia launching very late in Q3 of 2012. The initial results were well below street expectations and the company took a substantial hit on the news. Vivus then adopted a two-week trial program that delivered much better results, but the jury is still out on whether or not Vivus can continue to gain traction. In fact, the jury is out on whether any of these anti-obesity drugs will become the next blockbuster.
Arena investors will be paying close attention because Arena's Belviq, the only other FDA approved anti-obesity drug, is only a couple of weeks away from its own launch with varied levels of expectations as to what would actually define success. Certainly, savvy investors will be using Vivus's sales data to extrapolate sales results for Belviq.
Orexigen is not yet FDA approved and is still in what one may call a speculation phase. Retail investors with a belief in the anti-obesity market have connected with Orexigen in hopes that the substantial potential of the anti-obesity market will have a positive impact on this company as well.
Lastly, Vivus investors will have a keen eye on the Vivus sales numbers as well as a gauge on what type of success Vivus is seeing with its promotional program and what the pathway for success is. One quarter will not make or break a company, but it does give investors a decent indication on what to expect going forward.
The biggest question for investors in all three of these companies is whether or not any of them can obtain "blockbuster" status. It is easier said than done, but a blockbuster drug is not necessary for success. The pharma sector is full of companies that do quite well without a blockbuster.
There are some things to note no matter which one of these three equities you are invested in.
- Good results for Vivus can be a lift to all three companies.
- Bad results for Vivus can deflate the prospects of all three companies.
- Okay results for Vivus will leave questions in the minds of everyone.
If you are invested in any one of these three equities, you will want to pay close attention on February 25th because your equity will more likely than not be impacted by the news on the Vivus call. The hotly debated difference in sales force, pharmacy availability, and safety profiles are not the driver here. The driver is how many patients are racing to a doctor to get on a prescription program.
Set aside speculation, skyrockets, and market dominance and look at what the sector is actually delivering thus far. Set aside the potential market and look at what the actual market is delivering. Think about it, the potential market to buy a Big Mac from McDonald's in the U.S. tomorrow is about 300 million. McDonald's understands that it will not sell 300 million Big Macs tomorrow. Use what is offered by Vivus on February 25th as a real world measuring stick.
Disclosure: I am long ARNA.
Additional disclosure: I have no position in Vivus or Orexigen.