Needham & Company Cuts Target on Vivus (VVUS), Adjusts Qsymia Estimates

Needham & Company cut its price target on Vivus (NASDAQ: VVUS) from $38 to $32 following a disclosure last Friday that a negative CHMP decision for Qsymia is likely when announced next month. The firm is also updated sales estimates with the commercial launch of Qsymia.

"Based on our discussions with management, the European regulatory environment appears less accommodating to new weight loss drugs than we had appreciated," analyst Alan Carr states. "We do not expect Qsymia approval in that region in the near future and have removed E.U. sales and collaboration revenue from our models."

Needham is lowering 2012 and 2013 U.S. Qsymia sales estimates to $10.6M (was $25M) and $258.9M (was $290M), to reflect accounting guidance (20% G-N; No stocking at launch). They are revising 2014 and 2015 sales estimates upwards to $469M (was $410M) and $618M (was $490M) based on a historical analysis of other obesity and metabolic drugs.

"Last, we remind investors that we believe litigation with J&J is a meaningful possibility subsequent to first sale of Qsymia," Carr states. "We conservatively assume a royalty payment to J&J of up to 10%, which is embedded in our COGS estimate."

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 $21.00 yesterday.

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