California-based pharmaceutical company Vivus revealed that its obesity drug Qsiva was not likely to be approved by European health regulators next month, triggering a drop of 14 percent of its share prices.
Vivus said that while it is still awaiting a formal report from the European regulators in order to determine the exact reasons why the drug was not approved, its president Peter Tam said that tough regulations in Europe could be one of the reasons for the rejection.
Analysts believe that the use of phentermine in developing the drug could be the reason why the regulatory body decided not to approve the drug. Phentermine was used in another obesity drug 'fen-phen' which was found to increase the risk of death due to hypertension and heart valve problems.
"An eventual approval in EU seems problematic, given that the issues raised by (the EU committee) seem more related to the lack of comfort with phentermine in Europe, rather than the data itself. A situation that we view as difficult to ameliorate", said Simos Simeonidis, who works as an analyst at Cowen and Co.