(EMAILWIRE.COM, July 19, 2012 ) New York, NY -- VFC's Stock House, an information and research outlet that brings ideas and opens discussions to a broad spectrum of investors, discusses popular developments in the healthcare sector this week that can effect both short and long term trading patterns.
It had been thirteen years since the FDA approved a new weight-loss drug before Arena Pharmaceuticals (ARNA) received the nod of approval a few weeks ago for Belviq, but it was barely thirteen minutes before the next such approval came. Vivus, Inc. (VVUS) just announced that it, too, had received approval for Qsymia, its own version of a once-daily weight-loss pill, making the weight-loss sector a very hot one right now.
Both Arena and Vivus have been huge and rapid gainers this year, as the general investor sentiment surrounding both new drug approval requests was that the FDA would approve. The positive sentiment before the formal decision was announced is most likely a primary factor as to why neither company experienced any significant share price increases in conjunction with their respective approvals.
Vivus, after having dropped to as low as under twenty one dollars on Tuesday, closed the day down by eight percent with an even further drop during after hours trading. It's likely that the approval decision was largely priced in before the announcement, leaving many of the catalyst traders with the opportunity to move on in search of another quick mover, but it's also likely that the drop can be attributed to what's become a sector trend over the past couple of years. This phenomena not only allows the traders to take profits - because more often than not the real run takes place after Phase III data is announced and/or during the weeks and months leading into the expected FDA decision, not after it - but it also allows new investors to buy into much more of a 'sure thing' for discounted prices, compared to where shares were trading.
The hype surrounding both Arena's and Vivus' product potential is huge, given the ever-increasing obesity problem in the United States. Should these products only rake in a small portion of the weight-loss market, that includes multiples of supplements and other 'fad' offerings, then success could be huge for these guys. That said, the problem with the weight-loss market is that many products eventually turn into 'just another fad' as consumers realize that there is no miracle cure for obesity. No pill is going to miraculously make it all ok, and no pill should replace healthy dieting and exercise. In today's society, however, where people want everything done for them while putting out the least amount of effort, the belief is that the pill alone will do the trick and when it doesn't, well then it gets tossed to the side in order to make room for the next fad.
That is the danger for both Belviq and Qsymia, in my opinion, is the potential for longevity. I believe that consumers will become disappointed when the pounds don't shed off at the rate they were expecting from a prescription medication and that can hurt future sales. On the other hand, I may be off base in my train of thought - because, after all, I had faith enough in people to believe that the overweight populations of America would eventually catch on to the fact that there is no replacement for healthy living and exercise, with the possible augmentation of a 'workout assist' product, such as the pre-workout Celsius beverage from Celsius Holdings (CELH) that provides a natural energy boost te enhance the effects of a workout.
Also worth watching in the healthcare sector:
Investors who may have missed the massive price run of Sunshine Heart (SSH) over the past couple of weeks may have another chance to jump in on this company that can potentially revolutionize the standard of care treatment for heart failure. Sunshine shares exploded from lows of $2.50 barely weeks ago to as high as seventeen dollars-plus on news of the development and potential for the imminent commercialization of the company's implantable medical device, the C-Pulse Heart Assist system that has proven to not only halt the progression of heart failure in early studies, but to reverse the effects as well. Sunshine is planning to commence US trials later this year for its potential blockbuster product, while trials in Canada are already ongoing and an application for CE Mark approval in Europe has already been filed. A share price pullback has materialized just as quickly as the run did previously, hence the 'second chance' to take a look at this company.
Another company with huge potential currently experiencing a pullback in MRI Interventions (MRIC). Like Sunshine Heart, MRI Interventions is taking advantage of the trend towards less-invasive medical procedures - hat translates into less expensive, also - and has developed a medical device that enables medical professionals to more-accurately and less-intrusively conduct procedures on the heart and brain that were previously known to be highly-intrusive, more time consuming - and therefore more expensive.
VFC's Stock House is an information and research outlet that brings new ideas to the table and opens discussions for a broad spectrum of investors, with a strong focus on - but not limited to - biotech stocks, biopharma stocks, growth stocks and the pharmaceutical and healthcare sectors. VFC's Stock House provides individual company profiles, write-ups and reports as well as giving general insights into broader-market news through various 'Stock Watch' lists. At the conclusion of most weeks, VFC's Stock House issues a "Weekly Stock Watch" that examines news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well. The information contained within the pages of VFCs Stock House are not intended to be taken as advice, but as a starting point where investors can follow up with their own DD and devise their own entry and exit strategies.