The problem with Belviq is that it’s minimally effective. Some people think Belviq will be successful for off-label use, including the improvement of cardiovascular function. However, at this point it is a weight loss drug, and apparently, it is not a particularly reliable one. As a result, I’d be highly skeptical investing in this company right now as the Consumer Reports article could go a long way in swaying the consumer not to use the product.
What about the other drug?
With Belviq’s launch, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) is dominating the headlines – but there is another FDA approved weight loss drug available in the market, Qsymia.
VIVUS, Inc. (NASDAQ:VVUS)‘ Qsymia has been a complete disaster in every sense of the word. Not only does the company have to fight with insurance companies for coverage, but it has remarkably few to no marketing rights – so it shouldn’t serve as a surprise that sales have been dismal.
In the first quarter of 2013, sales of Qsymia were just $4.1 million! Back in September 2012, full-year estimates for Qsymia were $201 million, then in November the estimates were cut in half to $91 million. In May, estimates were once more slashed to just $45 million!
Simply put, no one is buying Qsymia, and with Belviq’s review, it’s tough to imagine Belviq being too successful. Some might say that Qsymia’s failure doesn’t indicate a disaster for Belviq. Yet, consider the fact that these are weight loss products, and Qsymia is three times more effective!
If 1+1=2 than a less effective drug will be less successful than its competitor. Since Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) only receives 30-35% of sales on Belviq, I do not see how one can logically defend its market capitalization, which is slightly higher than VIVUS, Inc. (NASDAQ:VVUS). Thus, I’d sell or avoid the stock — and would expect Vivus-like results in the year ahead – as Belviq’s first year estimates currently stand at $200 million (much like Qsymia last year).
The article Consumer Reports Says “Exercise” Rather Than Take This Drug originally appeared on Fool.com and is written by Sherrie Stone.
Sherrie Stone has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Sherrie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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