Vivus Tumbles 70% on FDA Disapproval; Piper Jaffray Urges You to Buy Arena (ARNA, VVUS)

The FDA Advisory Committee voted 9 to 7 yesterday against approval of Vivus' (NASDAQ: VVUS) Qnexa, a fat-fighting pill.

Vivus tumbled 60% today on the news to just over $5.

Concerns arose over Qnexa's safety, especially suicide and cardiovascular risk at high doses. Piper Jaffray believes that even if Qnexa is ultimately approved, it would receive a restrictive label that would limit its use.

Piper Jaffray analysts Edward Tenthoff and Chad Messer think Arena Pharmaceuticals (NASDAQ: ARNA) is a good play now that Qnexa has been down-voted.

Arena's Lorcaserin is also a weight-management pill and a direct competitor to Qnexa. Lorcaserin has a clean safety profile, and Piper believes that Lorcaserin is approvable.

Piper Jaffray said, "We reiterate our Overweight rating and $10 price target based on a projected enterprise value of $1.16 billion."