Vivus Vs. Citron, Buy Vivus

| About: Vivus, Inc. (VVUS)

On Thursday, July 19, 2012, word spread of concerns raised by Citron Inc that there are patent issues with Qsymia and that generics may compete with Qsymia. Vivus, Inc. (NASDAQ:VVUS) traded down about $3 per share and some attribute the drop to the concerns raised by Citron.

First, hypothetical issues were raised. There are no suits, pending litigation, etc. Read the issues for yourself raised by Citron.

Second, Qsymia is controlled release formulation of topiramate, it's not just generic Topamax. The time course of serum levels, especially peak serum levels, will be quite different between a controlled release formulation and generic Topiramate. I won't venture a guess on whether higher peak serum levels would increase the adverse effects of topiramate, but that would be a concern. Substituting equivalent doses of Phentermine and immediate release Topiramate is not the same as Qsymia, albeit more than likely cheaper. Pricing is not available for Qsymia yet.

This is reminiscent of negative publicity surrounding Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) leading up to the FDA Advisory Panel Meeting, which ultimately had a favorable vote for Lorcaserin (Belviq). This publicity was correlated, not necessarily causative, with a drop in Arena's share price. In hindsight, it was a tremendous buying opportunity for Arena.

On the horizon and more of a concern is a possible controlled release formulation of Topiramate for pediatric patients that could be marketed as soon as 2013. The formulation of Topiramate is being developed by Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) and is covered in another Seeking Alpha article.

The biggest risk in Vivus is behind Vivus; Qsymia is approved. The potential revenue from Qsymia may be overestimated, and that issue is covered here; this suggests that the fair value for Vivus is about $30 per share. Arena, Vivus, and Orexigen Therapeutics, Inc. (NASDAQ:OREX) have further risk pending on the outcome of cardiovascular safety trials. The FDA has mandated post-marketing trials for Belviq and Qysymia. Phase III cardiovascular safety trials are underway for Contrave, which is being developed by Orexigen.

Unless concrete issues are raised, the odds are these bumps in the road create buying opportunities for Vivus.

Disclosure: I am long ARNA.

Additional disclosure: I may buy VVUS shares in the next 72 hours.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Tagged: , , , Biotechnology
Problem with this article? Please tell us. Disagree with this article? .