Piper Cuts VIVUS, Inc. (VVUS) to Underweight; Proxy Battles Weigh on Outlook

Piper Jaffray downgrades VIVUS, Inc. (Nasdaq: VVUS) from Neutral to Underweight on Thursday, while slashing its price target from $8 down to $3.

Analyst Charles Duncan noted that, while the firm is still positive on the improving U.S. anti-obesity drug market outlook and positive evidence for long-term pharmacoeconomic benefit from treating obesity, these macro-dynamics have not yet appreciably translated to significant gains into Qsymia’s prescription and sales trends, in our view ... Given that now nearly three full quarters have transpired post proxy battle and management changes, we have grown increasingly wary on the outlook for Qsymia due to:

• current prescription trends
• delays in signing a U.S. marketing partner; and
• an expected Contrave launch in 2H14, Duncan noted.

Bottom line: Based on our updated view of increased execution risk, we are reducing our out-year Qsymia revenue projections and also increasing our discount rate to 20% (from 15%).

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