Vivus Down On Worries That Europe Will Reject Its Obesity Drug

| About: Vivus, Inc. (VVUS)

Vivus (NASDAQ:VVUS) shares are down sharply (almost 3% to $20.81) in pre-market trading as the company has expressed worry that its anti obesity drug Qsiva (the EU version of Qsymia) will not gain approval in Europe via the European Medicines Agency. The company based this opinion on preliminary feedback from agencies in Europe.

While this certainly represents a setback for Vivus, it does not mean that the company can not make modifications to gain eventual approval. This is a process, and until Vivus has the official report in hand, it is difficult at best to determine the steps that need to be taken.

Vivus recently launched the U.S. version called Qsymia, and was the first to market ahead of Arena Pharmaceuticals (NASDAQ:ARNA) and its drug Belviq. Both Arena and Vivus gained FDA approvals for their respective drugs this year. The events were landmark in that these were the first anti obesity drugs approved in over a decade.

For its part, Arena is waiting on a write-up from the DEA prior to getting its product launched in the U.S. Arena will also be seeking approval in Europe.

The competition between Vivus and Arena has been robust. Vivus launched in the U.S first, but now has a hurdle in Europe, possibly opening up a door for Arena to tap that market first, or at least narrow the gap.

While this is certainly a setback, and will impact the Vivus stock price in the short term, the fact that the drug is available in the U.S. should make the company more attractive throughout 2013 and beyond. There are millions in the U.S. who are potential patients for both Vivus' Qsymia and Arena's Belviq. This setback may actually be a buying opportunity for investors looking to get into VVUS.

Disclosure: I am long ARNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have no position in VVUS

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