Thursday, July 15, 2010

Advisory committee votes 10 - 6 No on Qnexa

As I expected, the independent advisory committee voted 10 - 6 (one panel member later changed his vote) against Qnexa being recommended for FDA approval. Shares in VVUS were halted this morning, but when trading resumes, the shares will plummet.

Shares of ARNA, a competitor to VVUS in the anti-obesity sector, gapped up 34% to a high of $5.72 in anticipation of the vote. After the Qnexa outcome, ARNA shares dropped in sympathy below $4, down approximately 10% for the day. However, upon further inspection, lack of sufficient safety data doomed Qnexa, but ARNA's Lorcaserin has a strong safety profile. Hence, I believe shares of ARNA will rebound leading up to its September 16 advisory committee review.

Edit: as I posted this, ARNA shares are recovering close to their previous close above $4 in after-hours trading. All that volatility, and ARNA ended up its round trip near yesterday's close. What a wild day of trading!

Wall Street was bullish on Qnexa's efficacy, but once again, safety ruled.

See disclaimers on the side bar.

Disclosure: no position in VVUS (and glad). Long ARNA shares.
Posted by Gaucho Greg at July 15, 2010
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4 comments:

  1. AnonymousJuly 15, 2010 at 1:54 PM

    G-Unit,

    Refresh my memory what's the timeline on OREX?

    IYO is OREX less safe(likely worse than 9 vs. 7) than VVUS that it's a possible short situation?

    I've never been a short player.....I thought that OREX might allow me the chance to break my cherry!

    Any thoughts?

    ReplyDelete
  2. Gaucho Greg July 15, 2010 at 2:08 PM

    Orexigen's Contrave has an advisory panel review on December 7, 2010, and a PDUFA date of January 31, 2011.
    http://ir.orexigen.com/phoenix.zhtml?c=207034&p=irol-newsArticle&ID=1441163&highlight=
    By comparison, ARNA's Lorcaserin has an advisory committee review on September 16, 2010, and PDUFA event of October 22, 2010.
    Qnexa did have a PDUFA date of October 28, 2010, but it's becoming a moot point.

    Regarding Contrave, the safety profile is similar because of high discontinuation due to adverse side effects. The efficacy is also lower, although that won't be a deal-breaker. Safety and tolerability are in the forefront for the FDA, especially for non-life-threatening conditions as weight management, although some could argue obesity is a life-threatening disease.

    ReplyDelete
  3. AnonymousJuly 15, 2010 at 2:24 PM

    G-Unit,

    Did they halt trading on DNDN the day of their PDUFA?

    I want to rethink my strategy on ARNA.....IF ARNA follows the VVUS, and others, run-up I might consider doubling my position in ARNA. Then dump half of my position a couple of days before, allowing me to play with house money.

    Seeing ARNA after hours, leads me to believe that other might immediately raise the price....I just don't know if there is volume to maintain the price.

    I'll be curious to see how the stock does here over the next couple of days/weeks.

    ReplyDelete
  4. Gaucho Greg July 15, 2010 at 3:00 PM

    Yes, I believe trading was halted on DNDN's PDUFA. It was also halted on announcement of top-line results last year, and also during the urological conference, when the bear raid was slapped on.

    I'm not a trader, but I believe shares of ARNA will creep up prior to their AC panel on September 16 just like it did prior to Qnexa's AC panel review today. I would normally think OREX shares will climb too, but I think the market is waking up to the importance of safety first, so perhaps OREX won't perform as well pre-Lorcaserin AC panel. Markets and stocks can be manipulated and gamed by big players, but eventually, the science and technology ultimately determine revenue and profitability. This is my opinion, and any direction or price targets mentioned are not predictions. See disclaimers in the side bar and perform your own due diligence. Disclosure: long ARNA shares. No position in OREX or VVUS.

    ReplyDelete

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