Zacks_Analysts' Blog : Vivus Posts Narrower Loss - Analyst Blog

Vivus Inc. (VVUS) posted a loss of 10 cents per share during the third quarter 2011, narrower than the Zacks Consensus Estimate of a loss of 12 cents and the year-ago loss of 22 cents per share. Lower research and development (R&D) expenses led to the narrower loss.

The company did not record any revenues during the quarter, similar to the prior-year quarter.

Quarterly Details

During the quarter, R&D expenses decreased 63.0% to $3.7 million. Moreover, general and administrative expenses amounted to $5.2 million, reflecting a decline of 22.6% from the prior-year period.

Vivus experienced a lower R&D spend during the reported quarter, as both Qnexa and avanafil have completed their clinical studies and have been filed for regulatory approval.

The company expects to end 2011 with $140 million of cash, revised upward from the earlier guidance of $100 million.

Pipeline Update

Recently, the US Food and Drug Administration (FDA) accepted for review Vivus’ new drug application (NDA) for Qnexa. The regulatory body has set a target date of April 17, 2012 for the application. The FDA’s advisory committee is expected to meet in the first quarter of 2012 to discuss the NDA.

Vivus had resubmitted the NDA for Qnexa in June. The company is seeking approval for the use of Qnexa for the treatment of obesity, including weight loss and weight maintenance for obese patients (BMI > 30 kg/m2), or overweight patients (BMI > 27 kg/m2), with weight-related co-morbidities such as hypertension, type II diabetes, dyslipidemia, or central adiposity (abdominal obesity).

Vivus filed a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) for Qnexa (obesity) in December 2010. A response from the European regulatory body is expected in the first quarter of 2012.

On approval, Qnexa will face competition from currently available obesity treatment orlistat, sold by Roche Holdings Ltd. (RHHBY) as Xenical and by GlaxoSmithKline (GSK) as Alli.

We note that Vivus is also evaluating Qnexa as a potential treatment for type II diabetes and obstructive sleep apnea.

In August, the FDA accepted for review the company’s NDA of its investigational drug, avanafil. The company is seeking to get the drug approved for the treatment of erectile dysfunction (ED). The regulatory body has set a target date of April 29, 2012 for the application, which was submitted in late June 2011.

Additionally, Vivus plans to make a regulatory filing for avanafil with the EMA in the first quarter of 2012.

We note that once approved, avanafil will primarily compete with Pfizer Inc.’s (PFE) Viagra and GlaxoSmithKline’s Levitra.

Neutral on Vivus

We currently have a Neutral recommendation on Vivus. The stock carries a Zacks #3 Rank (Hold rating) in the short-run. We believe that 2012 will be a transforming year for Vivus, with potential approvals of both avanafil and Qnexa expected in April.