Vivus plummets 62% as FDA advisory meeting rejects approval of its obesity drug Qnexa

In a fairly unexpected decision, a US Food and Drug Administration advisory panel yesterday voted 10 to six against recommending approval of a new diet pill from USA-based Vivus, sending the firm's shares into free-fall, dropping 62% to $4.60, having plunged as much as 67% in extended trading last night. Trading in the stock was halted Thursday pending the decision.

The FDA's Endocrinologic and Metabolic Drugs Advisory Committee voted against the following question: "Based on the current available data, do you believe the overall benefit-risk assessment of Qnexa (phentermine/topiramate) is favorable to support its approval for the treatment of obesity in individuals with a BMI [body mass index]

The decision was surprising in view of the fact that FDA briefing documents ahead of the meeting were positive as far as the efficacy of the agent was concerned, noting that data from two Phase III trials showed that patients treated with low, medium and high doses of Qnexa lost 3%, 7% and 9% of their body weight, respectively. In these treatment arms, 45%, 62% and 69% lost more than 5% of their body weight, compared to 20% of those on placebo. The release of the documents saw Vivus' shares leap 16.8% at $12.44 on Monday.