Vivus (NASDAQ:VVUS) was up more than 17 percent in early trading on Wednesday after winning regulatory approval Tuesday evening for its drug Qsymia, widely considered to be the most effective in a new generation of anti-obesity pills. Vivus plans to begin selling the drug in the fourth quarter of this year with a relatively small sales force of 150 representatives. Analysts are estimating sales of $1.2 billion for the drug in 2016.
Qsymia is the second such drug to be approved by the U.S. Food and Drug Administration within three weeks, but only the third ever since Roche’s Xenical in 1999. Belviq, a diet drug from Arena Pharmaceuticals (NASDAQ:ARNA) and Eisai, received approval on June 27 and is scheduled to start selling in early 2013.
The Vivus (NASDAQ:VVUS) drug, a combination of the appetite suppressant phentermine and the antiseizure drug topiramate, will carry a warning about potential heart and birth-defect risks. The warnings may benefit Belviq, Atsushi Seki, a health care analyst with Barclays, told Bloomberg. “Vivus will have some restrictions to sell Qsymia as the drug is very effective, which also means the side effects will be stronger,” Seki said.
However, Vivus (NASDAQ:VVUS) hopes Qsymia will be a safer successor to the banned “fen-phen” diet cocktail, which combined fenfluramine and phentermine and damaged the heart in some cases. Reviewers say the amount of the drug phentermine in Qsymia is safer, though a few consumer groups have been campaigning against the drug.
Vivus (NASDAQ:VVUS) had earlier planned to market the drug under the brand name Qnexa. However, FDA regulators ordered the name change to avoid potential confusion with other similar sounding drugs.
More than 78 million U.S. adults are obese, according to the U.S. Centers for Disease Control and Prevention, and the condition costs the economy an estimated $147 billion a year in medical expenses and lost productivity. The market for obesity treatment is expected to reach $6 billion annually.
In 2010, the FDA had rejected both Qsymia and Belviq on safety concerns. The companies re-applied for their respective drug approval after further testing. Orexigen Therapeutics (NASDAQ:OREX) is also developing a weight-loss pill called Contrave along with Japan-based Takeda Pharmaceutical, and agreed in September to hold a two-year study of the drug’s heart risks.
After the buzz wore off, shares of Vivus (NASDAQ:VVUS) finished the week lower over 6% on Friday at $24.15 per share, while Arena Pharma (NASDAQ:ARNA) shares closed the week below $10 at $9.52 per share
Don’t Miss: HTC Tag Teams HP in Apple Fight.