There has been some question as to the safety of Vivus's Qsymia for its potential to cause dangerous heart problems, birth defects, and cognitive effects such as mental fogginess or lack of concentration in patients taking the drug. Regardless, the FDA approved Qsymia with a Risk
Evaluation and Mitigation Strategy (REMS), which consists of a Medication Guide advising patients about important safety information and elements to assure safe use that include prescriber training and pharmacy certification.
Qsymia uses a combination of phentermine and topiramate. Phentermine was an ingredient used in half of fen-phen, originally approved by the FDA, and then withdrawn from the market in 1997 over concerns about heart risks and other dangerous side effects.
Arena's Belviq is believed to decrease food consumption and promote satiety by selectively activating 5-HT2C receptors located in the hypothalamus, as Atherys's ATH-9I385. However, Athersys believes it has shown so far that ATH-91385 has better compound selectivity than other 5HT2c agonists like Arena's Belviq. Additionally, ATH-91385 avoids the 5HT2b receptor and other receptors, such as 5HT2a.
Athersys's specific goal is to develop a once-per-day orally administered pill that reduces appetite by stimulating the 5HT2c receptor, but that does not stimulate the 5HT2b receptor, the 5HT2a receptor, or other receptors that could cause adverse side effects.
If ATH-91385 ultimately proves to work as effectively as the company believes, Belviq and Qsyimia could be facing some stiff competition from ATH-91385 in the future.
Technical analysis of the chart shows that the stock appears to be forming a rounding bottom here from the $1.00 level with an indication it wants to go higher. The first point of minor resistance will be the 200ma at $1.33, but from there it should be clear until the $1.50 and $1.80 level. The MACD and RSI both are indicating good room to run with bullish momentum indicators.
With its near term catalyst, strong chart, and adequate management, we think the company is very undervalued with a market cap of only $66M. If the collaboration program with Pfizer and other catalysts solidify previous results, the stock price by the end of the year could easily be approaching $4 to $5.
Price target opinions: Short term (1 day - 3 months) $1.55 - $1.75, long term (over 1 year) $5.
Disclosure: Long ATHX
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