Insider Activity at Vivus Inc

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Vivus Inc (NASDAQ: VVUS) is a biopharmaceutical company that develops therapies to address obesity, sleep apnea, diabetes, and male sexual health. The company has 38 full time employees, was founded in 1991, and is headquartered in Mountain View, California. The biggest competitor of Vivus will be Arena Pharmaceuticals (NASDAQ: ARNA). In the next year, the two companies will fight it out in the market for treatments for obesity. Another potential competitor in the long term can be Orexigen Therapeutics (NASDAQ: OREX). This company is developing Empatic for the treatment of obesity. This drug is a fixed dose combination of zonisamide sustained release SR and bupropion SR. This clinical candidate is currently in phase II study.

Let's take a look at Vivus' current developments and its fundamentals.

A Glimpse Into Its Clinical Developments

Source: Vivus.com

Currently, Vivus has two candidates to treat sleep apnea and diabetes. Qsymia is a combination of two FDA-approved drugs, phentermine and topiramate, in an extended-release formulation. Qsymia is an addition to a reduced-calorie diet and exercise for chronic weight management approved by FDA on July 17, 2012. Vivus is developing Qsymia to treat patients with obstructive sleep apnea. On Nov. 12, 2012 Vivus said about Qsymia Sleep Apnea study:

The proof-of-concept study suggests that Qsymia, combined with lifestyle modification, may be useful in the treatment of patients with obstructive sleep apnea who are unable to use PAP therapy.

At the same time, the company is developing Qsymia to treat patients with type 2 diabetes.

Qsymia: The second new prescription diet drug in 2012

On July 17, 2012 the FDA approved Qsymia (phentermine and topiramate extended-release), as an addition to a reduced-calorie diet and exercise, for chronic weight management. Janet Woodcock, M.D., director of the FDA's Center for Drug Evaluation and Research, said:

Obesity threatens the overall well being of patients and is a major public health concern. Qsymia, used responsibly in combination with a healthy lifestyle that includes a reduced-calorie diet and exercise, provides another treatment option for chronic weight management in Americans who are obese or are overweight and have at least one weight-related comorbid condition.

This news has increased the price of Vivus shares. The company's stock hit its 52-week on July18 at $31.21. Currently, Vivus is trading at $10.54 per share (as of Dec. 7, 2012). Investors are waiting for the Qsymia sales.

First Catalyst

Vivus will have the first important catalyst in 2013 with the launch of its diet drug Qsymia. The expectation created for this launch is very high. In addition, Vivus has two candidates in phase II to treat sleep apnea and diabetes. The results will be presented during 2013.

Fundamental Basic Review

Vivus has a market cap of $1.15 billion and an enterprise value of $871.22 million. This stock trades at a expensive valuation. Its trailing P/E is zero, and its forward P/E is incalculable. Vivus' estimated growth rate for this year is 40.15%. It has a total cash position on its balance sheet of just $274.48 million, and its total debt is zero. The basic share count is 100.59 million (as of Sep. 30, 2012).

Insider Activity

In 2012, insiders have started to sell shares in Vivus. Currently, Vivus' insiders sold 2,084,572 shares in 2012.

  • Charles J. Casamento, Director of Vivus, has just sold 8,000 shares, or $165,000 worth of stock, at $20.63 per share.
  • Linda M. Dairiki Shortliffe, Director of Vivus, has just sold 5,000 shares, or $409,000 worth of stock, at $22.72 per share.

Vivus: Increased short interest

Settlement DateShort InterestAvg Daily Share VolumeDays To Cover
11/15/2012 20,134,789 7,514,980 2.679287
10/31/2012 17,633,308 2,906,419 6.067022
10/15/2012 16,925,121 3,258,401 5.194

Conclusion

Vivus has a significant difference with its maximum competitor Arena Pharmaceuticals. The company has two promising studies in phase II. These two studies could be catalysts during 2013. However, the company has the same percentage of short interest as its competitor Arena Pharmaceutical--close to 20%. For this reason, I believe that Vivus is as good a candidate to open short positions with as its competitor Arena Pharmaceuticals.


JorgeAura has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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