Shares of Vivus Inc. more than doubled in price Thursday in premarket trading, a day after a panel of Food and Drug Administration advisers gave a strong endorsement to the drugmaker's potential weight loss drug Qnexa.
On Wednesday, a physician panel voted 20-2 in favor of the drug, which the FDA rejected in 2010, citing concerns that included an elevated heart rate in patients, psychiatric problems and birth defects.
Vivus, based in Mountain View, Calif., had resubmitted the drug with additional follow-up information, and an FDA approval could prove lucrative for the company. Experts agree that new weight loss drugs are needed to treat an estimated 75 million obese adults in the United States.
But the FDA has rejected Qnexa and two other weight loss pills in the last two years due to safety concerns, and these rejections raised questions of whether any pharmaceutical treatment is safe enough to win approval.
Even though the FDA panel endorsed Qnexa, it stressed that the drugmaker must be required to conduct a large, follow-up study of the pill's effects on the heart. A final decision from the FDA on the drug is expected by mid-April. It is not required to follow the advice of its panels, though it often does.
However, Jefferies analyst Thomas Wei still sees Qnexa's approval as high risk. He said in a Thursday morning research note regulators may require a cardiovascular safety study to be done before approving Qnexa or other obesity drugs. Such a study would cost the company millions of dollars and take a few more years.
Wei lifted his price target on the stock to $11 from $3 but rates Vivus "Underperform."
Company shares climbed $12 to $22.55 Thursday morning. Over the past year, shares have traded between $6 and $13.18.