Biotech company Vivus (Nasdaq: VVUS) will be looking forward to a favorable decision from Food and Drug Administration (FDA) for its weight loss drug Qnexa. The FDA will take another look at the drug candidate in its meeting on February 22, after they had rejected the approval in 2010. The stock has witnessed more than 12 percent downside on February 21. This is obviously due to negative sentiments expressed by analysts.
Though the drug was considered effective in cutting down weight, the possible side effects weighed down in favor of denying approval for the drug in the earlier sitting. The FDA has not given its nod for any new drug meant for weight reduction in the U.S. during the last 13 years.
The Mountain View, California-based Vivus is looking to take advantage of growing obesity epidemic in Canada and the U.S. Statistics indicate that about 33 percent of the U.S. population is affected by obese, while 67 percent of the population was regarded overweight.
Importantly, the Obesity Research Journal sees 86.3 percent of adults to be affected by overweight and 51.1 percent will be affected by obese by the turn of 2030. Clearly, biotech companies are vying to take a major slice in the obesity market.
There is already a report indicating that 12 panel members will vote against, whereas 10 members will vote in favor the drug candidate making the vote a close call. It is not easy to judge how the panel's outcome will be.
Interestingly, eight panel members are new in the obesity panels. They have not participated in the earlier sitting on Qnexa. Their decision will apparently hold the key to the final outcome.
Twelve specialists will sit again in the panel, while two additional specialists were invited for the review of Qnexa. Seven of them voted against the drug candidate in the previous sitting. The two experts have participated in the earlier meetings of FDA.
Any favorable decision from the FDA will lift the stock price, reversing the trend witnessed during the last two trading session. But if the pessimists are proved right, then the stock could see further downside.