Memorandum

Vivus 1Q16 – Qsymia revenues see first YOY decline and largest sequential decline at $12.4 million; Vivus to upgrade Qsymia Patient Savings offer and laying out protocol of retrospective CV study in place of ACQLAIM CVOT - May 3, 2016

Executive Highlights

  • This afternoon, Vivus provided its 1Q16 update in a call led by CEO Mr. Seth Fischer, in which we learned that Qsymia (phentermine/topiramate extended-release) sales declined 1.5% year-over-year (YOY) and 11% sequentially to $12.4 million, marking the product’s first YOY decline and largest sequential decline since its launch.
  • Management shared that Vivus will be upgrading its Qsymia Patient Savings offer to help drive brand trial and patient retention; in addition, the company is working on the protocol of a retrospective CV study to propose to the FDA as an alternative to its required CVOT, ACQLAIM.

This afternoon, Vivus provided its 1Q16 update in a call led by CEO Mr. Seth Fischer. Qsymia (phentermine/topiramate extended-release) sales decreased 1.5% year-over-year (YOY) and 11% sequentially to $12.4 million, marking the product’s first YOY decline and largest sequential decline since its launch. This was quite a surprising result. The company’s cash and cash equivalents totaled $228 million. Regarding prescriptions, the total volume reached 116,000 in 1Q16, representing a 15% YOY and 12% sequential decline. As in previous quarters, management continued to note that the obesity market faces many challenges including lack of reimbursement, lack of consumer demand, and physician reluctance to prescribe obesity therapy, and highlighted that the market as a whole failed to return to growth following the holiday season, which was a surprise to them. According to Vivus, the branded obesity drug market declined 4% sequentially in 1Q16, suggesting that this lack of a bounce-back was not company-specific. However, Novo Nordisk’s Saxenda (liraglutide 3.0 mg) achieved sales of $36 million in 1Q16. This is the first quarter in which they have broken out sales for Saxenda. Presumably, some of the decreased revenue for Qsymia may be due to increased sales of Saxenda. It’s pretty notable that although Saxenda is more expensive than Qsymia, Saxenda sales were three times higher than Qsymia, which has been available much longer.

Moving forward, the company shared that it will be upgrading its Qsymia Patient Savings offer to help drive brand trial and patient retention. This new benefit will launch on June 3 and will continue to offer the two-week free trial and also an alternative option of $95 savings for a first 30-day prescription, with a subsequent monthly saving of $65 for an extended 36 months. With the high costs of obesity drugs, we are hopeful that this degree of savings will encourage more patients to try and subsequently stay on the drug – a clear need, as Qsymia must be taken in a long-term manner in order to maintain weight loss.

Management aimed to emphasize the company’s bright spots, pointing to the recent launch of its Smart Changes Program (combining a 14-day free-trial of Qsymia with free, three-moths subscription to the Mayo Clinic Diet) and the impact of the digital campaign (number of visits to www.Qsymia.com has been increasing over the past year). Regarding the progress on the CVOT ACQLAIM, management noted that it is laying out the protocol for a retrospective CV study of Qsymia, phentermine, and topiramate, which Vivus will then confirm with the FDA. During Q&A, the company shared that there are no specific plans to meet with the FDA but that Vivus is in “regular correspondence” with the Agency. We assume a retrospective CVOT is being considering due to cost considerations but we would be surprised if the FDA agreed to this approach.

Overall, we feel that Vivus’ update does not bode well for the branded obesity drug market for 2016 – at least for small companies - with an atypical sequential decline from 4Q15’s poor performance. That said, we were impressed by Novo Nordisk’s revenue for Saxenda in 1Q16. The other three branded obesity products Qsymia, Arena/Eisai’s Belviq (lorcaserin), and Orexigen/ Contrave (naltrexone/bupropion extended-release) together totaled $35 million in 4Q15, suggesting that Novo Nordisk will give the obesity drug class a glimmer of hope in moving the market forward. We will be able to provide a clearer picture of the market after Orexigen and Arena report on May 4 and May 9, respectively. Overall, the “real world” experience for Qysmia is much different from what was seen in clinical trials – we’d like to look at this in more depth and get some KOL opinions.

 

-- by Melissa An, Sarah Odeh, and Kelly Close