What Slims Down Fastest After Diet Drugs Are Approved by he FDA? Two Stocks on the Move

You have to admire the optimism at some pharmaceutical companies, where people seem to believe that all human problems, or at least some really big ones, can be solved with the right prescription. Take diet drugs, for example. Our guts are growing, and scientists are on the case, looking for a magic bullet that will make you thin.

But as we said in this earlier story about ways to play the obesity epidemic, diet pills can be disappointing if not dangerous. That’s true for patients and for investors.

The latest example of this is Vivus Inc. (VVUS), which has a new obesity-fighting drug called Osymia. Along with Arena Pharmaceuticals’ (ARNA) Belviq, it got FDA approval this summer. According to the Associated Press, Jefferies analyst Thomas Wei predicted it would be a blockbuster that could pull in $3.6 billion a year.

But the AP says that last week he cut his estimate by two-thirds, saying doctors can prescribe two other generic drugs, the ingredients, for far less. After he said this, Vivus shares slid.

VVUS Chart

VVUS data by YCharts

They’re down 37% from the day after Osymia’s approval. Arena’s been doing just as badly.

VVUS Chart

VVUS data by YCharts

To be sure, some people made good money on the run-up anticipating FDA approval. But when it comes to long-term dieting, hope and hype have triumphed. If you’re looking for a pharma-focused way to capitalize on our collective girth, take a look at diabetes drugs instead.

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.



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