Sector Snap: Diet drug makers gain on FDA advisory
NEW YORK (AP) — Shares of a trio of companies that are developing new weight-loss drugs climbed Thursday after a Food and Drug Administration panel recommended one of the drugs be approved.
Shares of Vivus Inc. nearly doubled after the FDA panel said the Mountain View, Calif., company's drug Qnexa should be approved, citing the significant weight loss measured in patients who took the drug. For most of the panelists, that counteracted concerns about the effects the drug has on patients' heart rates and the risk of heart palpitations, as well as a possible link to birth defects.
The FDA is scheduled to make a new ruling on Qnexa by April 17. Based on the strong support for the drug in the panel vote, Cowen and Co. analyst Simos Simeonidis said approval of the drug is "pretty much a done deal."
The FDA refused to approve Qnexa in 2010, and around the same time, it declined to approve Orexigen Therapeutics Inc.'s drug Contrave and lorcaserin from Arena Pharmaceuticals Inc. All three companies have continued to try to win approval for the drugs after conducting additional safety studies.
It has been more than a decade since the FDA approved a new prescription weight loss drug.
Vivus shares rose $9.109, or 86 percent, to $19.64 in midday trading. Earlier, shares touched $21.44, their highest point in 14 years.
Shares of Orexigen gained 59 cents, or 18.4 percent, to $3.80, after earlier hitting a 52-week high of $3.98.
Arena Pharmaceuticals stock experienced a smaller gain of 4 cents, or 2.2 percent, to $1.85. BMO Capital Markets analyst Jim Birchenough said he is less confident that lorcaserin could be approved, because clinical trial data says it is less effective than Qnexa. He added that the FDA may feel that approving one new obesity drug is sufficient.
"Approval of Qnexa may reduce the argument of unmet need and may have satisfied the need of some panel members to approve something new for obesity," he wrote. However he maintained an "Outperform" rating on Arena shares.
Orexigen and Arena have their headquarters in San Diego.
