Vivus Proxy Battle & Arena Launch Inducing Volatility Print E-mail
By Brian Wilson - Lead Contributor   
Monday, 15 July 2013 11:15
The two competing prescription obesity drug developers Vivus (NASDAQ: VVUS) and Arena (NASDAQ: ARNA) have recently begun direct competition in the market with their respective drugs Qsymia (phentermine + topiramate ER) and Belviq (lorcaserin). While Qsymia has been on the market since September 2012, Belviq has already made huge progress in catching up, and has begun to generate roughly 40% of Qsymia’s prescription sales just weeks after launch. Volatility for the two names has increased drastically in light of the prescription data and the importance of the next few months.

It’s worth noting that Qsymia sales have finally been picking up steam in recent weeks, after restrictions on the drug’s distribution via retail pharmacies was lifted due to an amendment made to the REMS agreement that the drug was initially approved under in 2012. This helped the stock recover lost ground in April, as short sellers and longs saw an opportunity for a drastic change in Qsymia’s prescription sales going into the second half of 2013. Interestingly enough, this did occur. It also seems that Belviq’s sales have yet to interfere with Qsymia’s trajectory, suggesting that the two drugs may grow independently until the prescription obesity drug market becomes saturated.

This all comes at a very interesting time for Vivus investors and the company’s managers, who are in the middle of a proxy battle with 10% shareholder First Manhattan Corp (FMC) and possibly other major funds. In particular, eyeballs are drifting onto Passport Capital and QVT Financial, who hold 9.5% (9.6 M shares) and 8.3% (8.3 M shares) of shares outstanding and have yet to officially declare support to either side. Note that  FMC, who believes that Vivus has botched the launch of Qsymia, recently

Today’s annual meeting was delayed until July 18th, when the vote between the Gold (Vivus) and White (FMC) proxy cards should be finalized. Recently, a compromise was offered by Vivus to FMC for three seats on the company’s board, although it seems that FMC wants the vote to occur. This event creates “catalyst” potential for VVUS after the annual meeting, although it’s uncertain how the market will react to the outcome.

Going forward, we can expect a return to normalcy as the dramatic Vivus proxy battle eventually ends and as investors once again focus on Qsymia’s prescription data. The same should be true for Arena, which has seen very weak trading as a likely consequence of the extreme uncertainty in Belviq’s commercial viability. 

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