Producers of Obesity Drugs Rally on Aetna Update
Weight-loss drug makers popped Wednesday morning after mega-insurer Aetna (NYSE:AET) issued a bulletin on weight reduction medications and procedures. Qysmia, from Vivus (NASDAQ:VVUS), and Arena’s (NASDAQ:ARNA) Belviq are both listed as medically necessary weight reduction medicines in the update. Insurance reimbursement was a major concern among investors leading up to the announcement, adding to pressure on VVUS following a disappointing third quarter of Qsymia sales; the stock was down 33% since mid-October. But as the large short position scrambled to cover Wednesday morning, VVUS climbed as high as $12.59, more than a 20% gain over yesterday’s close. Analysts expect more insurers to follow suit in the near-term, although Aetna’s addition may be the greatest boon for these drug makers. Last week, Vivus’ second largest shareholder, QVT Financial, advocated for the sale of the company following Qsymia’s poor third quarter, and favorable reimbursement from a tough insurance company makes that more of a possibility. ARNA and OREX, the developer of Contrave, are both rising on the news as shorts move to cover.