Vivus shares rally after FDA staffers detail Qnexa concerns

With an expert panel review looming in two days, FDA staffers outlined a series of potential risks associated with the weight-loss drug Qnexa. But the agency also recognized the drug's ability to trigger significant weight loss, and analysts who have been following the therapy didn't immediately trigger any alarms about the risk analysis as VVUS shares soared in premarket trading.

At extremely high doses, Qnexa--a combination of phentermine and the anti-convulsant topiramate--has been linked to fetal malformations. Some people taking a regular, full dose of the therapy have demonstrated signs of depression, anxiety and sleep disorders. Experts were advised to probe the drug's link to sleep, attention and memory disorders as well as an increased heart rate.

But the agency's primary concern appears to be the risk that women who take the drug will be more likely to become pregnant, despite taking some stringent precautions. And staffers raised a red flag over the lack of sufficient data to evaluate the risk involved. "If approved, the person-years of exposure to PHEN/TPM among women of child-bearing potential will be enormous," the agency staff noted.

On the upside, though, people taking Qnexa in a clinical trial registered an average weight loss of 14.7 percent, well ahead of the average 2.5 percent weight loss among the placebo group. And that outcome easily fits within the agency's standards for efficacy. In a country where a third of the population is obese, an effective new weight-loss therapy could easily grow into a blockbuster.

Jefferies analyst Thomas Wei remarked this morning that while there was nothing alarming in the agency's remarks, the "totality of the debated issues will leave the panel uncomfortable with the prospect of such widespread patient exposure in the obesity indication."

The FDA documents were void of the hectoring tone the agency can take when it signals that it's lining up against approval. And Vivus' shares shot up as soon as the briefing documents hit the Internet, rising 31 percent in a matter of minutes. By midday, though, the big jump in share price was cut to 14 percent. Now we'll see if today's market rally will help nudge a potential Big Pharma partner off the sidelines.

- here are the briefing documents from the FDA
- here's the Dow Jones report
- here's the story from Bloomberg