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May 15

VIVUS Is A Viable Long Term Investment

By Jordo Bivona - May 14, 2012 | Tickers: ARNA, OREX, PFE, VVUS | 0 Comments

Jordo is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

Within the next year, VIVUS (NASDAQ: VVUS) may make the transition from a development stage start-up with no product revenue to a full-fledged pharmaceutical company with two approved drugs in large markets.

Vivus is on the verge of marketing drugs for some of the most common chronic conditions affecting world populations, including obesity, diabetes, sleep apnea and male erectile dysfunction (ED). The company is developing Qnexa for the first three indications. It has tested avanafil for ED.

The companys lead drug Qnexa is actually a combination of two drugs, phentermine and topiramate, each of which has been approved for treatment separately. Phentermine is an amphetamine that suppresses appetite, and is already used to treat obesity. Topiramate is an anti-convulsive agent used to treat epilepsy. As an obesity drug, topiramate probably promotes a feeling of satiety.

Weight loss is such a difficult problem because of the way that physiology works. The body runs basically on carbohydrates taken in by the diet or in short term storage as glycogen in the muscles or liver. Excess calories consumed in the diet are converted to triglycerides and stored as fat. But the fat is not used as fuel until the available glycogen has been depleted, which means that if people want to lose fat, they must be willing to function while hungry. Most people arent prepared to endure this discomfort.

Phentermine has a long history; it was part of the infamous fenfluramine/phentermine (fen-phen) combination used to treat obesity back in the 1990s. As the combo was quite successful in promoting weight loss, it became spectacularly popular, spawning weight-loss clinics that prescribed little else. Unfortunately, fenfluramine was shown to cause heart valve problems and pulmonary hypertension and so was withdrawn from the market by the FDA in 1997. At one point, Wyeth (now merged into Pfizer (NYSE: PFE) had set aside $21 billion to cover potential liability.

In December, 2011, Vivus reported the results of its SEQUEL trial of Qnexa, which showed that patients had an average 10% sustained weight loss compared to 1.8% for the placebo group. Earlier EQUIP and CONQUER studies had shown an average 14.7% weight loss.

In February of this year, an FDA panel voted 20-2 to recommend approval of Qnexa for the treatment of obesity in adults. On April 9, the FDA notified Vivus of an extended Prescription Drug User Fee Act (PDUFA) date of July 17, 2012 for its review of the Qnexa New Drug Application. This extension gives time for a full evaluation of the risks of Qnexa. It seems likely that the FDA will approve Qnexa sometime later this year.

The FDA has only approved one drugXenical, marketed by Roche Holding AG (RHHBY.PK) -- for long term weight loss. The agency has not approved a new drug for short term weight loss since 1999. Qnexa has potential competition in Arena Pharmaceuticals (NASDAQ: ARNA) lorcaserin and Contrave, from Orexigen Therapeutics (NASDAQ: OREX).

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VIVUS Is A Viable Long Term Investment

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