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Vivus (VVUS) is an equity under pressure. The company has pinned a great deal of responsibility of success directly in the performance of its anti-obesity drug Qsymia. The company has been giving investors data regarding prescriptions about once a month, and it is fast approaching the time period where the next set of data should be revealed. Will Vivus publish the data? What should investors look for? This is particularly interesting in light of the fact that the company has initiated a second price drop since the launch of Qsymia just six months ago.

There are many angles from which investors can look at Vivus, sales of Qsymia, and the overall size and scope of the prescription anti-obesity market. It is important to consider all angles in this.

Price Drop Number 2

This was an interesting move by Vivus. On one hand it could be a move to help bolster sales that are not at levels the company desires. On another hand it could be viewed as a move to try to garner more patients prior to competitor Arena (ARNA) entering the market and providing the first competitive threat for a prescription solution to anti-obesity. It could also be a combination of both.

What this situation develops is essentially market confusion. It is now inherently difficult to assign a value to the market for Qsymia because there are varying price points for the drug. We did see a marked improvement in sales with the first price reduction. At just the point that we would have gotten to a meaningful point of program success the price point changes again.

One thing that may help with clarity for Vivus investors, and in fact all investors in the sector, is that Arena has not been able to launch Belviq yet. This means that we will have at least the March data to look at where Vivus and Qsymia have the prescription anti-obesity market cornered. The longer it takes Belviq to get to the market the more pure (at least in theory) the Vivus sales data are.

The Arena Threat

There will be a point in time (likely very soon) that Arena will enter the marketplace. Arena has a partner, Eisai, that will market and distribute its product. Arena has a wide pharmacy net where patients can fill scripts in the more traditional manner, as well as the ability to market the product in ways that Vivus can not match.

It is my belief that a part of the reason for the second price reduction was directly related to the fact that Arena would be hitting the market within a short time frame. Patients tend to try a treatment, and if they are seeing success, stay with it. The more patients Vivus can get while it is exclusive, the better off the company is.

Had Arena been able to launch Belviq in early March as was anticipated, we would have had a new factor to consider in the Vivus monthly numbers as they are reported. One benefit for investors is that fact, which would have blurred the data, is actually not in the mix. This means that the only blurring factor with the March numbers is the second price reduction. Think about that and how it relates to what you are expecting from Vivis.

The Numbers

These are the numbers for the prescriptions of Qsymia thus far.

  • 4 weeks ended October 24, 2012 - 5,394
  • 4 weeks ended November 23, 2012 - 7,749
  • 4 weeks ended December 22, 2012 - 12,978
  • 4 weeks ended January 18, 2013 - 13,037
  • 4 weeks ended February 15, 2013 - 17,383

What we want to see for the month from February 15th through mid March is the numbers showing an increase. I would be very concerned if the number is less than 22,000. What I would want to see, particularly with no competition and a second price reduction is at least 27,000. Even that number (27,000) is not showing the type of growth that Vivus actually needs to demonstrate a path to success with Qsymia. In my opinion, six months in, this company needs to be at 50,000 or better. A turnaround is needed. Can it happen quickly enough?

What Investors Need To Know

Vivus is a company that has a viable and approved treatment for anti-obesity. It also has another product called Stendra on the market. The success of Vivus, and thus the basis for many to invest in it is and was the anti-obesity drug Qsymia. To date the sales data of Qsymia have been less than stellar. In fact there is an active move by Central Manhattan Bank to insert a new Board of Directors at the next company meeting, and CMB has nominated a slate for that purpose.

Major investors have shown concern, sales numbers are less than expected, and the flagship drug has had two price reductions in six months while there has been no competition.

This does not mean that the company will fail, or is a failure, but it could be indicative that the path to success is more challenged than many may have thought. What is key to investors is whether or not Qsymia has better than a traction that is good enough to sustain the company absent competition. In other words, when Arena's Belviq hits the market we need to assume that it will impact Vivus.

This is not a call to buy, sell or act in a rash manner. It is simply a call to pay attention (as you should with any equity) and plan your investments carefully. Look for the details that can present you with the best chances to arrive at a good decision.

Source: Will Vivus Publish Qsymia Prescription Data?

Additional disclosure: I have no position in Vivus.