Vivus Weight-Loss Drug's Failing Math

MOUNTAIN VIEW, Calif. ( TheStreet) -- It's only been six weeks, but the commercial launch of Vivus' ( VVUS) weight-loss pill Qsymia is already falling well below Wall Street expectations.

Admittedly, it's too early to call the Qsymia launch a total bust and Vivus has cautioned investors to expect a slow rollout. But based on prescription data collected so far, Vivus is highly unlikely to meet the $25 million in Qsymia sales that analysts have forecast for the fourth quarter -- the first significant barometer of the weight-loss drug's launch.

Vivus shares are down 12% to $15.38 in Wednesday trading.

The Qsymia launch math doesn't look pretty:

Doctors have written 5,802 new prescriptions for Qsymia in the five weeks since the drug launched (Sept. 21 through Oct. 19), according to healthcare research firm IMS Health.

Vivus has recommended that doctors write two Qsymia prescriptions for each new patient -- one at the low, titration dose and the second at the middle, recommended dose. Not all doctors are following this advice but roughly speaking, dividing total new Qsymia prescriptions in half gives you an estimate for the actual number of patients.

Through Oct. 19 -- or roughly one-third of the way through the fourth quarter -- there are approximately 2,901 patients on Qsymia, according to IMS data.

That's bad because the fourth-quarter Qsymia consensus sales estimate of $24.5 million (from Bloomberg with 12 analysts contributing forecasts) implies an average of 59,600 patients on the drug.

Qsymia is priced at approximately $4.50 per day, or $137 per month, or $411 per quarter per patient.

To be fair to Vivus, these are back-of-the-envelope calculations and data providers like IMS are not capturing all Qsymia prescriptions. But even if you upsize assumptions -- let's say there are 5,000 patients on Qsymia in October and that numbers doubles in November and doubles again in December -- Vivus still won't come close to $25 million in Qsymia sales.

Credit Suisse analyst Lee Kalowski is forecasting $12 million in fourth-quarter Qsymia sales, which I believe is the low estimate on the Street. Based on the current trajectory of new patient starts, Vivus will be hard-pressed to meet Kalowski's conservative forecast.

And let's not even begin to discuss 2013, when analysts are forecasting $240 million in Qsymia sales. Again, using current prices, that implies an average of 584,000 patients on drug. Next year, Vivus will face competition from Arena Pharmaceuticals' ( ARNA) weight-loss drug Belviq. A third obesity drug from Orexigen Therapeutics ( OREX) is still in clinical trials.

Vivus reports third-quarter results on Nov. 6, which will include negligible Qsymia sales since the drug was launched at the end of the quarter. The stock has lost 38% of its value since Qsymia's lauch, reflecting investor uncertainty. Still, don't be surprised to see analysts use Vivus' third-quarter report as a trigger to sharply reduce Qsymia sales forecasts for the rest of this year and next.

At least that's what the analysts should do, if they were looking at the Qsymia prescription data objectively.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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