Is Vivus’s Stock a Buy After This News From Aetna?

With shares of Vivus (NASDAQ:VVUS) now trading just below $12, is VVUS a BUY, a WAIT and SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement:

Wall Street expected Vivus’ newly launched weight-loss treatment Qsymia to be a success; in fact Bloomberg health-care analyst Andrew Berens predicted that the drug could generate as much as $1 billion per year by 2016. After all, the drug was the second obesity medicine to receive regulatory approval by the Food and Drug Administration and the first to reach the market in more than ten years.

But Qsymia sales have been weak in the drug’s first months on the market.

Vivus reported third quarter results on November 6 that revealed how deeply the company’s profitability depends on sales of Qsymia. For the three-month period ended on September 30, the pharmaceutical manufacturer posted a net loss of $40.4 million, or $0.40 per share, as compared to a loss of $8.6 million, or $0.10 per share, in the year-ago quarter. According to the company’s earnings statement, the net loss was attributed to “increased selling, general and administrative expenses related to pre-commercialization and commercialization activities for Qsymia.”…