Investors on high alert as D-Day arrives for Vivus's Qnexa

Yesterday afternoon restive investors gradually shoved up the price of Vivus's shares ($VVUS) by about 6%, underscoring some broad sentiment that its weight drug Qnexa is likely to win an approval, with an announcement coming sometime today. Then this morning, as anticipation grew, the stock lost that gain, dragged down at least in part by fear that regulators could apply some tough marketing restrictions on the drug to address the FDA's safety concerns.

Vivus, of course, was one of three biotechs angling to gain the first approval for a new weight drug in swell over a decade. Arena ($ARNA) won that race with the recent groundbreaking approval for lorcaserin. But Arena and its partner Eisai are only slowly rolling out the marketing campaign, keeping the weight-drug watchers out there on the edge of their seat as they wait for the commercialization process to get underway. Orexigen ($OREX) will be the last in line as it completes a major safety study to satisfy regulators' concerns.

The FDA delayed its decision on Qnexa last April so it could get a clear understanding of Vivus's plans for a risk mitigation effort in the event it won an approval. That, combined with a lopsided panel vote in its favor, persuaded the smart money to bet on an approval. Most expect regulators to require a lengthy post-approval CV study to evaluate the heart risks associated with the phentermine/topiramate combo. And there will be some restrictions likely to reduce any chances of birth defects, which helped create a cloud over the drug.

Dr. Barbara Troupin, Vivus' vice president of scientific communications and risk management, told CNN that Vivus plans to initially sell the drug by mail order alone. "There will not be dispensing from doctors' offices," she said. "Seeing that issue and what has happened in fad and diet drugs in the past, that is not a path that we're going to be taking."

Overall, though, Vivus's drug has won a heartier level of support for its efficacy. And there's no doubt that a huge market awaits any well-accepted weight drug. A small company like Vivus, however, isn't the kind of company most likely to capitalize on a blockbuster drug. And in a heated M&A environment that's bred plenty of speculation that a Big Pharma company could step in post-approval to snap up this product.

We'll be posting the news once it hits.

- here's the CNN story
- here's Investors Business Daily's report on the stock