Does Qsymia Have a Future After All?

Poor sales of Vivus (NASDAQ:VVUS) Pharmaceuticals’ obesity drug Qsymia, which was released in mid-September, have depressed the company’s stock price by 23 percent and contributed to a third-quarter net loss of $40.4 million. However, shares in Vivus rose 12 percent on Monday after new data revealed that weekly prescriptions were growing steadily, according to Reuters.

What is Helping Qsymia Sales?

For the week ended November 12, the healthcare research firm Symphony Health Solutions reported that Qsymia prescriptions had increased by 44 percent, while IMS Health stated that prescriptions rose only 15 percent for the same period.

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While investors saw the rising prescriptions numbers as a positive sign for future sales, analysts were not as confident. “Given the discrepancy between vendors’s numbers and actual scripts in 3Q12, we don’t trust these script numbers 100 percent,” Cowen & Co analyst Simos Simeonidis wrote in a note seen by Reuters. “We’ll probably have quite a few more up-and-down weeks in the first few months, not only in terms of scripts reported, but especially in terms of investor sentiment, possibly due to unrealistic expectations on either side of the aisle.”

Simeonidis holds “neutral” rating on Vivus stock, with a price target of $11.48. After the sales numbers were announced, shares rose as high as $13.04, although the stock lost some of its gains by mid-morning.

But despite the discrepancy, Qsymia sales numbers had a reason to improve. The health insurer Aetna (NYSE:AET), which previously did not cover Qsymia, revised the criteria it uses to determine whether weight reduction medications are “medically necessary” for the treatment of obesity in late November. Now, Vivus’ pill is covered by the United States’ third largest health insurance company. One reason Qsymia sales were so low in the last quarter was because of the drug’s prohibitive cost. Many insurers had declined to cover prescriptions, and without insurance, the drug cost $160 for a 30 day supply.

CHEAT SHEET Analysis: Are These Sales Figures a Positive Catalyst for Vivus’ Stock?

One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. Wall Street expected Vivus’ newly launched weight-loss treatment Qsymia to be a success; in fact Bloomberg health-care analyst Andrew Berens predicted that the drug could generate as much as $1 billion per year by 2016. After all, the drug was the second obesity medicine to receive regulatory approval by the Food and Drug Administration and the first to reach the market in more than ten years. When the drug failed to live up to its expectations, the company’s stock price plummeted. As Qysmia’s sales figures improve, its stock price should benefit.

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