For quite some time I have been a proponent of Arena (ARNA) investors using Vivus (VVUS) as a proverbial measuring stick when it comes to gauging the possibilities in the prescription anti-obesity drug market. After all, Vivus launched its antiobesity drug Qsymia in late September of 2012, and being the only prescription drug on the market, sales figures would give an idea as to what type of traction is possible. This was not to say that Arena would be limited to the numbers Vivus puts up, but rather that a gauge has been established.
Well, we are now perhaps a few short days away from Arena launching its drug, Belviq, in North America. It is now time that Vivus investors pay attention to the sales figures and prescription numbers of Arena.
When Vivus launched Qsymia it had 5,394 scripts written in the first 4 weeks. This figure was well below street expectations and the market punished the Vivus stock price accordingly. Through mid February of 2013 a total of 57,000 Qsymia scripts have been written. Vivus investors will finally have a gauge to compare to.
Why Watch Arena?
The answer to this question is simple. It will help determine whether Vivus and Qsymia are garnering a fair share of the market, under-performing, or over-performing. Qsymia has some REMS restrictions associated with it and one component of those restrictions is that the drug is only available through mail order pharmacies. While I do not consider it a massive hurdle, it is a hoop that needs to be navigated through by patients as well as doctors. In contrast Arena's Belviq will be available at all pharmacies.
The bigger question relates to the anti-obesity market as a whole. Will patients line up at doctors offices to get Belviq? It did not happen with Vivus and Qsymia, so if it does happen with Belviq a glaring and underlying problem will show itself to Vivus investors.
The fact of the matter is that there is plenty of room in the market for more than one anti-obesity player. In fact, there are hundreds, if not thousands, of anti-obesity players when you consider non-prescription solutions. It just so happens that only two will involve a prescription.
For the first time investors in Vivus and Arena will get a taste for what the overall market for prescription anti-obesity pills actually is. Arena investors have touted that availability, side effects, and the partnership with Eisai will make it a bigger success than Vivus and Qsymia. The proving grounds are now upon us and savvy investors are paying close attention.
At stake is the health of the overall prescription anti-obesity drug market. Is it as big as many hope for, or is it a more modest market?There is little doubt that there are many obese people out there. The question is whether or not they have an appetite for a prescription solution over a non=prescription one. The three major players here have a lot at stake. Orexigen (OREX) has a drug of its own but does not yet have FDA approval. This is more that just a Vivus vs. Arena vs. Orexigen debate, it is a question of market acceptance. Stay tuned, and if you are invested in Vivus, watch the channel check on Arena sales carefully.
Disclosure: I am long ARNA.
Additional disclosure: I have no position in Vivus or Orexigen