Vivus, Analyst in Obesity Drug Side-Effect Spat

PHILADELPHIA, Pa. (TheStreet) -- Did a winner emerge from this week's Obesity Society meeting?

It's kind of hard to tell. The meeting, which wraps today, was a bit anti-climatic. Data presentations from the three small drug makers racing to develop new weight-loss drugs were largely in-line, offering little new information from what investors had already seen.

Perhaps Arena Pharmaceuticals(ARNA Quote) can lay claim to the top prize, but only because its stock dropped less -- 3% from Friday through Tuesday -- than its competitors. Orexigen Therapeutics(OREX Quote) shares fell 8% in the same time frame while shares of Vivus(VVUS Quote) lost 9%.

Vivus played a central role in what may be the only excitement to emerge from the Obesity Society meeting. The stock fell 15% Tuesday after Cowen issued a note to clients that accused Vivus of hiding the extent to which central nervous side effects of its weight-loss drug Qnexa had forced patients to withdraw from two phase III studies.

According to a Cowen analysis of data from two phase III trials presented Saturday, 2.6% and 2.1% of patients treated with full-dose Qnexa, respectively, dropped out of the studies due to cognitive side effects like "disturbance in attention" or "forgetfulness." This is compared to a placebo dropout rate of 0.8% and 0.3% in the two studies.

Cowen says Vivus didn't disclose these dropouts when the company reported top-line data from the Qnexa trials in September.

"We believe adverse events such as "disturbance in attention," "memory impairment," "amnesia," "aphasia" and "cognitive disorder" -- even if relatively rare -- will prove to be serious regulatory hurdles for a weight-loss drug. Therefore, we now have reduced conviction in the approvability of Qnexa, and partnering prospects also may be reduced," wrote Cowen analyst Ian Sanderson.