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Vivus Inc.'s FDA Review Of Weight Loss Drug Qnexa Could Hint At Future Approval For Arena And Orexigen Therapeutics

|Includes:ARNA, OREX, Vivus, Inc. (VVUS)

Tomorrow is a big day for Vivus, Inc. and stock VVUS. Vivus is preparing tomorrow for the FDA's Endocrinologic and Metabolic Drugs Advisory Committee review panel on the weight loss drug Qnexa. I wrote an article on this subject last year based on their Phase III clinical trial results titled Vivus's Qnexa Drug Approval Makes It a Nice Trade, and was impressed with the long-term growth potential in the $40B weight loss industry.

We are all aware of Americans obesity problems and how it effects almost every American in some way or another. With this in mind what do I expect the panel to find tomorrow? I expect some safety concerns with pregnant women but overall a recommendation for approval. I have seen incidents where the committee provided a recommendation but the drug was still not approved, however I do not see that happening with Qnexa. Just a note of caution before you heavily invest in Vivus, as with any investment based on Biopharma Clinical Trials and FDA review committees.

Adam Feuerstein on The Street writes Vivus: Prepping for Thursday's FDA Panel. Adam will be Live Blogging the event tomorrow starting at 7:45 AM. He is predicting a recommendation with some safety concerns. Additionally, The Street writes Vivus Weight-Loss Pill Works - FDA.

Reuters yesterday discussed Vivus's rising stock price. Shares of Vivus up on U.S. FDA review of diet drug.

Business Week expands on Vivus' competition with Arena Pharmaceuticals and Orexigen Therapeutics Inc. Arena’s Lorcaserin Helped Overweight Adults Lose More Weight. More analysis of the competition with Arena and Orexigen Therapeutics from the Wall Street Journal. Arena Pharma Deal Doesn't Portend Terms For Vivus, Orexigen

Here is a fellow Seeking Alpha contributor Joseph Krueger's take on the science behind the drugs. Vivus, Arena and Orexigen Investors All Worried About Qnexa FDA Panel Review.

On Thursday, an FDA panel of outside experts will discuss the safety issues and offer advice on whether to approve Qnexa. The agency will then make the final approval decision, which Vivus expects by Oct. 28. If approved I see the stock rising from it's current mark around 12 upward to the 18-20 range. If not approved I see a devastating turn from 12 to around 5-6 range, if not more.

Huge risk-reward analysis of Vivus, but I see a recommendation being made tomorrow and approval in the fall. Tomorrow's review of Qnexa could give subtle hints into the future possible approval of Arena’s lorcaserin and Orexigen’s Contrave.

Disclosure: Long VVUS, ARNA, OREX

Stocks: VVUS, ARNA, OREX