Vivus basks in limelight of rampant M&A speculation

In yet another sign of just how quickly biotech investors can change their minds, Bloomberg is running a piece today speculating on which Big Pharma company is most likely to swoop in and pay a big premium for Vivus ($VVUS)--which has been flying high on its recent lopsided panel vote favoring approval of the weight drug Qnexa. And the suddenly popular obesity field--which had been relegated to the dust heap of biotech history by a number of observers--has even inspired takeover interest in the fledgling Zafgen, a 2009 Fierce 15 company.

A year ago Vivus was a cautionary tale. Stiff-armed by regulators concerned by safety concerns, it appeared indefinitely stymied alongside rivals Orexigen ($OREX) and Arena ($ARNA). But after managing to resolve most of the panelists' concerns by its willingness to restrict the pill to a carefully defined patient population, Vivus is now the odds-on winner in the race to an approval. And analysts have dollar signs in their eyes as they share gossip on a multibillion-dollar takeover bid by the likes of J&J ($JNJ) or Merck ($MRK).

Rodman & Renshaw has helpfully outlined potential peak sales at a mammoth $5 billion, according to Bloomberg, making Vivus a valuable prize for a Big Pharma company looking to beef up its income. It should be noted that other analysts have been far more cautious in their projections, but few doubt that the drug could be a blockbuster once on the market.

"The FDA has clearly crossed the Rubicon of balancing risk and benefit, understanding that the obesity problem is a pandemic," Rodman's Michael King tells the business news wire, which always enjoys a good M&A rumor story. "There are not a lot of products around in the pharmaceutical industry that address such large market opportunities. Vivus is not going to give this up cheap."

Vivus and its rivals have been criticized for offering up drugs with only marginal impact on body weight. But the same can't be said for Zafgen, which has racked up some inspiring early-stage results for its approach. And CEO Tom Hughes says that he's received overtures from pharma companies interested in buying him out.

Of course, despite the panel vote, some observers still have a nagging feeling that regulators will go ahead and require a cardio safety study ahead of an approval, rather than after. And that would crash the stock price. Vivus isn't waiting to find out, though. Vivus is offering 8.5 million shares while the stock price is high. And several insiders, including the CEO, have been cashing in on their options.

- here's the article from Bloomberg