Vivus's Obesity Drug Awaiting FDA Review: Expecting Positive Ruling

by: Kaushik Paul

On July 15, 2010, the U.S. Food and Drug Administration's (FDA) Endocrinologic and Metabolic Drugs Advisory Committee is expected to review the marketing application of VIVUS Inc. (NASDAQ:VVUS)’s Qnexa (formerly known as VI-0521), designed for the treatment of obesity.

The Endocrinologic and Metabolic Drugs Advisory Committee is a panel of experts that reviews and evaluates data regarding the safety and effectiveness of marketed and investigational human drugs for use in the treatment of hormonal and metabolic disorders. The committee also provides the FDA with scientific and medical guidance to facilitate the marketing approval decisions of the drugs under review.

Although the FDA is not obligated to follow the recommendation of the expert panel, it generally does pass a decision congruent with the decision of the panel. Hence, the upcoming panel review is a key event for VVUS and Qnexa.

Based on the extensive safety and efficacy data from all the clinical trial results of Qnexa, the committee should rule in favor of Qnexa's approval. This will result in a short-term spike in the stock price and eventually once the drug is approved by the FDA, it should add substantially to the company's bottom line.


Obesity affects approximately 300 million people globally and 60 million people in the U.S. The condition is responsible for approximately 112,000 deaths in the U.S. annually. The worldwide obesity therapeutic market currently stands at approximately $5 billion. Certain central nervous system (CNS) disorders such as anxiety, depression and insomnia are also associated with obesity. If left untreated, obesity increases the risk of cardiovascular diseases and diabetes.

Existing Drugs and Side-Effects

Currently, there are two major drugs in the market for the treatment of obesity: sibutramine and orlistat. Sibutramine is marketed as the prescription drug Meridia (approved in 1997) by Abbott Laboratories (NYSE:ABT). Orlistat is marketed as a prescription drug under the name of Xenical (approved in 1999) by Roche Holding Ltd (OTCQX:RHHBY) and Glaxosmithkline Plc (NYSE:GSK). GSK also sells an over the counter (OTC) drug called Alli (approved in 2007), which is a low-dose version of Xenical (it contains 60mg orlistat, as compared to 120mg orlistat in Xenical). Despite the attractive opportunity in the obesity market, the commercial performance of these drugs has been lackluster due to the side effects associated with them. (The 2009 sales of Meridia and Xenical were $40 million and $35 million respectively while the 2009 sales of Alli was approximately $150 million).

Sibutramine causes hypertension (high blood pressure) and tachycardia (rapid beating of the heart) in subjects. Sibutramine was pulled out from the European market in January 2010 (where it was marketed as Reductil, Zelium and Reduxade by ABT) after a trial indicated that people with history of cardiovascular problems suffered from more heart attacks and strokes after having sibutramine. In the U.S., the FDA warned users that the drug should not be taken by patients with history of heart disease, a significant limitation for an obesity drug, given that many obese patients suffer from heart diseases.

Orlistat is associated with GI side effects such as oily stools and fecal urgency (a diarrhea like condition). Apart from these side effects, orlistat also impairs the body’s absorption of some essential vitamins like A, E, D and K from food, due to which a multivitamin has to be taken within two hours of taking orlistat (to ensure adequate nutrition), increasing pill burden.

Another disadvantage of all the existing weight loss drugs is that they have limited efficacy and need to be taken for an indefinite period of time, with much of or the entire weight being regained once the treatment is stopped. As a result, there exists a need for improved alternative treatment options for obesity.


Qnexa is a combination product of two drugs, phentermine and topiramate. Phentermine is a generic drug, which is used as a short-term treatment for the reduction of weight. Topiramate (marketed as Topamax by Johnson and Johnson/JNJ) is a drug approved for the treatment of epilepsy (seizure/convulsions) and for the prevention of migraine (a severe headache).

One of the causes of obesity is an increased appetite, as a result of which, people start eating more food, thereby gaining weight. A decrease in appetite is one of the approaches to treat obesity. A certain chemical in the brain, called dopamine, plays a key role in suppressing the appetite. Obese subjects have low activity of dopamine in their brains, which results in an increased appetite and craving for food.

Phentermine works to decrease the appetite by enhancing the effect of dopamine. An enhanced activity of dopamine following the administration of phentermine suppresses the appetite so that people start feeling less hungry.

A chemical in the brain called gamma-aminobutyric acid (GABA) controls the feeling of fullness (satiety). Topiramate enhances the activity of GABA in the brain. The enhanced action of GABA following the administration of topiramate increases the feeling of satiety in obese subjects.

Being a combination of phentermine and topiramate, Qnexa suppresses the appetite and also induces a feeling of satiety, thereby reducing the craving for food, which ultimately results in the reduction of body weight.

For obesity alone, Qnexa can attain peak revenues of approximately $500 million, or 60% of the company’s current market capitalization.

History of Obesity Drugs

A drug called phentermine was the first medication to receive approval for obesity in 1959. However, phentermine is associated with unwanted side effects such as headache, increased blood pressure, nausea, constipation and insomnia. The drug also suffers from high abuse potential and has been classified as a Schedule IV substance by the Drug Enforcement Agency (DEA) and is indicated only for short-term usage (a few weeks).

Another short-term treatment for obesity, called fenfluramine, received approval in 1973. In the 1990s, physicians started prescribing phentermine in combination with fenfluramine (commonly referred to as Fen-phen), based on the data from a clinical trial, which cited Fen-phen as a highly effective treatment for reducing weight in obese subjects. Unfortunately, 24 cases of heart valve disease reported by Fen-phen users in 1997, suggested a correlation between Fen-phen usage and heart valve disease. Upon additional investigation, it was found that nearly 30% of fenfluramine users had abnormal heart valve findings, which indicated that fenfluramine was responsible for causing heart valve disease. Based on these alarming reports, the FDA requested for the withdrawal of fenfluramine in 1997.

Qnexa has been tested in multiple clinical trials for safety as well as efficacy. The FDA usually looks for patients achieving at least 5% more weight loss in the drug group as compared to the placebo group. Qnexa has met this benchmark requirement by the FDA in all its pivotal trials. VVUS has also successfully completed a cardiac safety trial (The FDA requires a cardiac safety trial data for all new drugs seeking marketing approval). In the pivotal trials of Qnexa, the most commonly reported adverse events were tingling of the extremities, dry mouth, altered taste, headache and constipation.

Taking all the data into consideration, the panel should rule positively in VVUS' favor, which should boost the company's stock price in the near-term. The final marketing approval of Qnexa by the FDA is expected by the end of this year.

Disclosure: Author is long VVUS

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