Shares of Vivus Inc. tumbled Thursday after an analyst said Wall Street may be over-estimating gains from initial sales of the drug developer's obesity treatment Qsymia.
THE SPARK: Credit Suisse analyst Lee Kalowski said in a research note that sales of the drug may be slow in the initial quarters, since Qsymia is launching with a relatively small amount of sales representatives, isn't marketing directly to consumers and will make be available only through mail order.
Kalowski also said the Mountain View, Calif., company will recognize revenue as prescriptions are dispensed, so it won't see a sales bump that bigger drugmakers record from distributing drugs to wholesalers and pharmacies.
THE BIG PICTURE: Qsymia, Vivus' only approved drug, launched in the U.S. in September. It's the the first long-term prescription weight loss drug to reach the market since 1999.
The drug's market could grow. A panel of advisers to the European Union's health agency is currently evaluating it, although Vivus said last month that it expects an EU advisory panel to recommend against approval. Vivus has also asked U.S. regulators to let Qsymia be sold through a broader range of pharmacies.
There may also be more competition in the weight-loss drug market soon. The FDA has approved Arena Pharmaceuticals Inc.'s drug Belviq, and it's expected to go on sale in early 2013. Still, Qsymia is generally seen as the more effective of the two drugs.
ANALYSIS: Kalowski predicted about $12 million in fourth-quarter revenue from Qsymia, about half of what he said analysts, on average, expect. He has an "Outperform" rating on the stock.
SHARE ACTION: Down $1.39, or 6.2 percent, to $20.91 Thursday afternoon. Shares have more than doubled this year.