Seeking Alpha
Growth, value, special situations, momentum
Profile| Send Message| ()  

Vivus (VVUS) reported earnings just before the market opened today, Oct. 6. While earnings are important, it was some initial official results from sales of the recently launched Qsymia that the Street was really interested in. The company did not disappoint: Vivus put out the sales data early on and the results show a positive trend.

While Qsymia sales are not at the "blockbuster" level that some overexuberant investors were seeking, they are very good and should lead to a promising future for Vivus and, by extension, competitor Arena Pharmaceuticals (ARNA). Arena has has an anti-obesity drug of its own that will hit the market as soon as DEA scheduling occurs.

There were several positive attributes to the Qsymia results. Vivus is seeing insurance cover more patients than expected and the mail order delivery method is not quite the hurdle that some had imagined. The company is working with the FDA to allow sales in regular pharmacies and is expecting a positive outcome to that request. That should boost sales even more going forward.

The company reported Q3 sales of $41,000 mostly on the launch of Qsymia, which happened with just two weeks left in the quarter. The loss per share for the quarter was $0.40. While a loss is never anything to celebrate, it is the potential of the anti-obesity drug Qsymia that has investors in Vivus excited.

In pre-market trading prior to the call, only the press release showing the financial data was available. The equity traded down $0.15 to $14.80 until just before the point when Vivus management took the stage. Going into the call, the equity was trading up at $15.60. Once management started the call, the equity seemed to be off to the races only to retrace back to $14.60.

There have been 5,560 prescriptions written for Qsymia in the six weeks since the launch, some of them being refills. Through Oct. 26, 2012, there were 3,504 unique patients. The $41,000 in revenue represented 656 prescriptions on a two-week program. This would imply that 5,560 could deliver an impressive $695,000 per month at an average of $125 per month per patient. The company outlines that actual revenues will be closer to $160 per month. Using that number, the potential monthly revenues on 5,560 means an even more impressive $890 million. This shows substantial potential going forward as the company reaches out to more physicians and establishes the market further.

The company stressed that insurance coverage is at about 20%. Because prescription obesity treatment is a new dynamic, it expects to make progress with insurers as time passes. Also, Vivus did review the decision by Europe to recommend against the EU Qsymia equivalent. The company is obtaining more data and appealing the decision. It expects to know more about the situation in Europe in mid-2013.

All things considered, the company has a pipeline in place now that can bring it much closer to a profitable status. The initial sales data on Qysmia is very positive. Both Vivus and Arena should benefit from this news as the market begins to digest the real potential at play.

Source: Vivus Reports Earnings And Initial Results Of Qsymia Sales