Who said this panel vote would be close? Non-agency experts gave strong support to Vivus' ($VVUS) quest to gain FDA approval for its diet pill Qnexa, voting 20-2 Wednesday evening to support the drug getting a green light to hit the U.S. market.
Vivus' stock was up a whopping 110.5% in early morning trading Thursday.
The Endocrinologic and Metabolic Drugs Advisory Committee vote comes ahead of the FDA's decision, which is expected by April 17, on whether to stamp an approval on the Mountain View, CA-based developer's drug. If approved, Qnexa would be the first new diet pill to garner FDA approval in more than a decade. The agency, as many know, is not required to follow such panel's recommendations, but it often does.
Industry watchers have been largely split on Vivus' chances of gaining a nod for its latest approval bid, as U.S. regulators have taken a tough stance on the safety of diet drugs because of their side effects. The FDA, which shot down Vivus' first bid for Qnexa's approval in 2010, released its staff review of the company's latest application, noting previous concerns about the cardiovascular side effects of the drug, as well as the risk of birth defects in the offspring of mothers on the treatment.
During Wednesday's committee session, non-agency experts and company officials discussed having a risk evaluation and mitigation strategy for Qnexa to limit any ill effects of the drug on patients. Prior to today's panel vote, analysts had speculated from the tenor of the FDA's briefing documents that the agency might delay approval of Qnexa to seek additional safety information.
Cowen's Simos Simeonidis quickly conceded that he had guessed wrong on the outcome of the vote. The analyst now counts himself as a believer in a looming approval. "We see FDA approval by April 17 as pretty much a done deal, attention shifts to hiring the right salesforce, and executing on launch, pricing and reimbursement efforts," he said in a note to investors today.
It's important to note, though, that while a panel vote as lopsided as this one typically precedes a formal approval, regulators in the FDA have made it clear that any new obesity drug will have to clear a very high safety bar.
Vivus has been among three drug developers including Arena Pharmaceuticals ($ARNA) and Orexigen ($OREX) that have been racing to gain approval for new weight-loss drugs. The panel's favorable vote on Qnexa appears to have spurred a jump in the stock prices of Arena (6%) and Orexigen (14%) in after-hours trading.
There's no question that a stout market awaits new weight-loss drugs. Two out of three Americans are either overweight or obese, and drug developers have been vying to fill a gap in the market that isn't addressed with existing interventions such as dieting, exercise and bariatric surgery. The CDC has put the annual cost of obesity--which can lead to diabetes, heart attacks and other health problems--at $147 billion in the U.S. alone.