Is it really news if the event was already anticipated by everyone? The answer may not be as easy as it appears. Yes, it is still news, but the reaction of the European rejection of Vivus's (VVUS) anti-obesity drug is not as bad as it could have been if it were to have come as a surprise.
Last month Vivus was pre-emptive in letting Wall Street know that it was anticipating rejection by The European Medicine Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) for Qsiva, the European name given to the FDA approved drug Qsymia.
Yesterday Vivus announced that the European rejection was now official. In early action today, Vivus is trading at about $20.50, down some 60 cents from yesterday's close. This compared to being priced as low as $17.21, following the early warning the company issued in September.
It would appear that the market has accepted, digested, and dealt with the fact that Vivus's prospects in Europe are limited with this particular drug. Vivus did say that it will appeal the decision and work with the agency to try to gain approval.
While the news regarding Europe is a setback, the company does have Qsymia approved and on the market in the United States. With about one month of sales and marketing, it would appear that the street is eager to hear some results (both financial and clinical). Given that the equity has not taken a trip back down into the $17's, it would seem that anticipation is high.
Currently, Vivus has the only prescription anti-obesity drug on the market. Competitor Arena (ARNA) is awaiting DEA scheduling for its drug, Belviq, which is also FDA approved. Once the DEA issues a schedule for Belviq, it will enter the market as well. Arena does not appear to have the same hurdles in Europe as Vivus, but it is too early to think that Arena has guaranteed approvals there.
While it is possible that Vivus will test below $20, it seems that there is a floor of support there. This is likely due to the fact that at some point soon, the company could issue early results surrounding U.S. sales. Pay close attention, because with one month of sales just surpassed, we could hear something any day.
Disclosure: I am long ARNA.