Brean Capital Downgrades Vivus (VVUS) to Sell, Low Qsymia Coverage Means Low Sales

January 17, 2013 7:41 AM EST Send to a Friend
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Price: $3.32 -4.32%

Rating Summary:
    4 Buy, 7 Hold, 5 Sell

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Brean Capital downgraded Vivus (NASDAQ: VVUS) from Hold to Sell with a $7 price target, suggesting more than 50% downside.

The firm notes still just 1 in 5 patients are covered by insurance for Qsymia, creating "sticker shock" among patients even with free low dose drug offered by the company.

On the Get Started! program for free low dose Qsymia, management indicated that it is likely to alter it sometime after January. The firm quips "it cannot get cheaper than free, and all that has been learned since launch indicates that paying more certainly will not reduce prescription abandonment."

On the REMS modifications proposed by the company, the firm notes "we have yet to find a drug that had its REMS altered so soon after launch, and clearly Vivus has not sold enough drug for long enough to possibly have generated data arguing against the current REMS."

The firm lowered 4Q12 Qsymia revenue estimate to $2 million and have cut future estimates as well.

The firm notes Arena (Nasdaq: ARNA) and Orexigen (Nasdaq: OREX) will have larger salesforces, with Orexigen having the best mix of efficacy, safety, CVOT data, and salesforce strength, and with far more minor competition from Arena, in their view.

For an analyst ratings summary and ratings history on Vivus click here. For more ratings news on Vivus click here.

Shares of Vivus closed at $14.32 yesterday.


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