UPDATED: Vivus sinks after delivering oral cleft data on obesity drug ingredient

Vivus' ($VVUS) data released Wednesday show how any perceived chink in an experimental drug's armor seems to give investors the jitters. The drug developer's stock sank in after-hours trading on retrospective study data linking one of the key ingredients in its experimental diet drug Qnexa with oral cleft defects in the offspring of mothers who took the pill early in their pregnancies.

It appears that analysts are all over the board as to how the data might factor into the FDA's review of Vivus' application to market the weight-loss drug, which goes in front of an expert panel of FDA advisers early next year, and that was enough for traders to wipe out all of the Mountain View, CA-based developer's stock gains this year and then some. The stock, which had been up about 11% on the year, is down about 15.5% as of 12:06 pm ET today.

In Vivus' retrospective study dubbed "Fortress," 5 out of 1,740 babies of mothers who took topiramate during their pregnancy to prevent migraines were born with oral cleft. The prevalence rate of 0.29% in this group was higher than the 0.16% rate among the 13,512 women whose babies were born with oral cleft and who took the drug before becoming pregnant. Qnexa is a combination of topiramate and the hunger blocker phentermine.

"We view the data disclosed as mostly in-line with investors' expectations and as ranging from neutral to incrementally positive for [Vivus]," Cowen analysts wrote in a note to investors. Cowen's analysts, however, noted that reviewers of Vivus' drug application could recommend cardio safety studies, which the FDA could require before deciding whether to approve Qnexa.

MLV & Co. analyst Christopher James told Bloomberg that he believed that the data from the Fortress study was unlikely to factor into the FDA's decision on whether to approve Qnexa.

An advisory committee weighs in on whether the FDA should give a green light to Qnexa in the first quarter of 2012, and Vivus' message about the Fortess data was that there weren't really any surprises. "The prevalence ratio for oral clefts in FORTRESS is within the recently reported range for topiramate from several large studies," Vivus President Peter Tam stated.

- here's the release
- see Bloomberg's article

Related Articles:
FDA gives new shot to Vivus obesity drug
Vivus gets back in the race for weight-loss drug OK, resubmits Qnexa
Vivus shares buoyed as FDA allows early resubmission on Qnexa

Editor's Note: This story was corrected to say that Vivus' data was released on Wednesday, not Thursday, as it was incorrectly reported in the original version of this article. Also, the stock price has been updated.

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