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Vivus (NASDAQ:VVUS) announced Tuesday that the FDA has approved its amendment and modification to the Risk Evaluation and Mitigation Strategy (REMS) for the anti-obesity drug Qsymia. The company had applied for the amendment last Fall and had been working with the FDA on a modification to the REMS that would allow a wider distribution network of pharmacies. Prior to the modification Qsymia was only available through mail order. The loosened restrictions now allow for non-mail filling of prescriptions that meet certification requirements.

Vivus has had challenges in sales since the launch of Qsymia last October. The mail order only restriction has been a focal point of management as to why sales of Qsymia have not been as robust as the street was expecting. In comments Tuesday, Vivus management seems to indicate that Vivus may well gain new traction in the next three months. Meanwhile, competitor Arena (NASDAQ:ARNA) is seeking to launch its anti-obesity drug Belviq once the DEA offers final scheduling. That could happen at any time, and if the Belviq launch does occur soon, it could muddy the waters on whether the mail order restriction is a main source of slow sales for Qsymia.

With FDA approval of the REMS modification, today we begin the process of increasing the availability of Qsymia, simplifying prescribing and dispensing and resolving the challenges associated with the mail-order-only system," said Peter Tam, president of VIVUS. "Our goal over the next three months is to ensure availability of Qsymia in thousands of certified retail pharmacies nationwide. The REMS modification is a key accomplishment in removing a major barrier that has hindered the initial acceptance of Qsymia into everyday medical practice. We believe that retail access, along with ongoing improvements in reimbursement, will help to accelerate Qsymia awareness, trial and usage.

As indicated by management, it could take 90 days or so to get the retail pharmacy distribution system up and running. From an investor standpoint there are now decision points to consider.

  1. Is the mail order restriction the main source of slow sales or is it an overall lack of consumer acceptance of a prescription anti-obesity drug, or is it that consumers simply do not want to take Qsymia specifically? This point is important for investors in the sector, including Arena and Orexigen (NASDAQ:OREX).
  2. Will a new Board of Directors be elected for the company? First Manhattan has been critical of current management and is nominating a new slate of Directors for the upcoming annual meeting. Should investors stick with current management or go a new route? This puts a level of uncertainty on the equity.
  3. If Arena is able to launch Belviq, will there be more or less clarity on the sector as a whole? If Belviq does not launch, can Vivus gain market share to levels needed for success as the sole player on the market?

In my opinion there is still uncertainty surrounding Vivus and the anti-obesity sector as a whole. The catalysts that will give some clarity are sales figures of Qsymia and the launch of Belviq. It is important that investors keep tabs on issues sector wide. Vivus spiked on this news, it should settle back down again with the next reaction being sales figures.

Disclosure: I am long ARNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have no position in Vivus or Orexigen.