(By Balaseshan) Vivus Inc. (NASDAQ: VVUS) shares were downgraded to "Sell" from "Hold" by Brean Capital due to unwarranted recent optimism.
Analyst Jonathan Aschoff said that as of his meeting with the biopharmaceutical company's management last week, still only 1 in 5 patients are covered by insurance for Qsymia, leading to continued prescription sticker shock even with free low dose drug as offered by Vivus ($150 versus almost twice that amount) for most patients.
Regarding the company's Get Started! program for free low dose Qsymia, management indicated that it is likely to alter it sometime after January, but it cannot get cheaper than free, and all that has been learned since launch indicates that paying more certainly will not reduce prescription abandonment, the analyst noted.
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In relation to the reimbursement, Aschoff does not know how many patients can actually benefit from the recent deal with Express Scripts due to the numerous payor exclusions for obesity medications.
Regarding the REMS modifications proposed by Vivus to the FDA, the analyst has 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.
Aschoff has lowered 4Q-2012 Qsymia revenue estimate to $2 million and have cut future estimates as well. The competitive environment is only going to increase, in his view, and both Arena and Orexigen 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 his view.
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The brokerage, with $7 price target on the stock, widened its 2012 loss per share estimate to $1.27 from $1.23 and its 2013 loss estimate to $1.49 from $0.62.
VVUS is trading down 4.89% at $13.62 on Thursday.