Vivus counts $25M in Q3 sales, $300M in debt. How can it possibly cover a $200M-plus Qsymia trial?

It's been more than 3 years since the FDA approved Vivus' ($VVUS) obesity med Qsymia, but the company has yet to start up a required cardiovascular safety trial. And with sales disappointing and debt piling up, that's a problem.

Vivus is still working to convince the FDA that it can fulfill its requirements with a smaller and shorter (read--cheaper) trial, CEO Seth Fischer said in a statement Wednesday. "We are working with leading cardiovascular outcome trial experts in planning substantial revisions to the original design … and we are committed to involving the FDA in reviewing alternative proposals that will satisfy the requirements," he said.

But RBC Capital Markets analyst Simos Simeonidis, for one, isn't convinced that'll work. "We think the chances of them being successful in this argument are fairly low," he wrote in a Thursday note to clients.

And if it doesn't? The company may need to fund the trial on its own, and that could run between $200 million and $250 million.

For Vivus--which Wednesday reported a Q3 net loss of 15 cents per share and just $24.9 million in revenue--that's a tall order. The company is also facing generic challenges and is saddled with $300 million in debt. On top of all that, the deadline for the study is coming up quickly: It must be completed by the end of 2017, with a trial report due by the end of 2018, Simeonidis notes.

How did Vivus get here? It started with a decision to hawk Qsymia alone--one that angered investors and sparked a proxy war that ultimately ousted former CEO Leland Wilson and a hefty chunk of the company's board. A partner with a larger commercial footprint could have shouldered the financial burden for the trial--or helped, at least--and put its marketing muscle behind a launch.

But Vivus isn't the only company to drag its feet on follow-up trials since the FDA began mandating post-marketing safety studies in 2007. In July 2013, Johns Hopkins University researchers took a look at the FDA's follow-up on those studies, determining that in 2011, 85% hadn't been completed and more than half hadn't even begun.

Nor is Vivus the only weight-loss drugmaker picking up its whole outcomes study tab. Earlier this year, Orexigen ($OREX) blabbed some early results from its own trial, leading investigators to nix the study and leaving partner Takeda threatening to walk. Now, Orexigen is planning to fund the re-do itself, meaning it's on the hook for $210 million.

- read Vivus' release

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