) share price fell almost 12.5% after the company reported
disappointing third quarter financial results.
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The company reported third quarter 2013 loss (excluding one-time
items and including share-based compensation) of 40 cents per
share, in line with the Zacks Consensus Estimate and the year-ago
The company's total revenue for the third quarter of 2013 came in
at $27.4 million as compared to $41,000 recorded in the year-ago
period. The third quarter 2013 revenues included $21.0 million of
license fee received from the privately-held Italian
pharmaceutical company, Menarini, for the erectile dysfunction
(ED) drug, Spedra. The Zacks Consensus Estimate stood at $19
million for the third quarter of 2013.
We remind investors that Qsymia was launched in the U.S. in Sep
2012. The U.S. Food and Drug Administration (FDA) cleared Qsymia
in Jul 2012 as an adjunct to a healthy diet (low on calories) and
increased physical activity for chronic weight management in
obese (Body Mass Index, or BMI - 30 or more) or overweight (BMI -
27 or more) adults suffering from at least one weight-related
Net product sales of Qsymia in the reported quarter were $6.4
million, up 15% sequentially. In contrast, Qsymia prescriptions
(approximately 109,000) witnessed a 35% sequential jump in the
reported quarter. Qsymia, gross sales (excluding free goods) were
also up 40% sequentially to $11.1 million.
The sharp difference between net product sales and prescription
growth was because 56% of total prescriptions were a free good or
on a discount offer in the reported quarter.
At the third quarter conference call, the company stated that
Qsymia was available at over 31,000 certified retail pharmacies
in the U.S., reflecting a three fold increase sequentially. The
company further stated that reimbursement trends for the drug are
Meanwhile, Qsymia availability is expected to improve as VIVUS
has several contracts in process expected to be completed this
year. VIVUS is looking for a partner for Qsymia and is in
discussion with several companies.
We remind investors that apart from Qsymia, another weight-loss
Arena Pharmaceuticals, Inc.
) Belviq, received approval in the U.S. last year. Belviq was
launched in the U.S. in Jun 2013. Other companies are also
developing candidates targeting the lucrative obesity market.
Apart from Qsymia, the company's portfolio consists of another
approved product, Spedra, which received approval in the U.S. in
Apr 2012 and in the EU in Jun 2013.
VIVUS has entered into a license and commercialization agreement
with Menarini. As per the terms of the agreement, Menarini will
get the rights to Spedra in more than 40 European countries and
Australia and New Zealand.
VIVUS has entered into an agreement for Spedra with
Auxilium Pharmaceuticals, Inc.
). As per the terms of the agreement, Auxilium will get the
rights to Spedra in the U.S. and Canada. Auxilium is expected to
launch Spedra by the year end. In Oct 2013, VIVUS received $30
million as upfront payment from Auxilium.
In the third quarter of 2013 research and development expenses
were $8.4 million, down 9.6% year over year. Selling, general and
administrative expenses were up 22.1% to $38.2 million due to
increased expenditure related to the commercialization of Qsymia.
The company is also working on reducing its expenses and has
initiated a cost reduction plan for the same. As a part of the
plan the company intends to reduce approximately 17% (20
employees) of its workforce. VIVUS intends to complete the plan
by end of this year. The company expects to incur pre-tax
non-recurring charges of $6 - $8 million in the fourth quarter of
2013 and realize $6 - $8 million in annual savings from 2014.
We are concerned about the slower-than-expected ramp up in Qsymia
sales. The promotional programs and upcoming holidays in November
and December are expected to negatively impact revenues in the
fourth quarter of 2013. Additionally, the competitive nature of
the obesity market given the presence of Arena's Belviq among
others also keeps us concerned.
The successful commercialization of Qsymia is crucial for the
financial performance of VIVUS as it can drive the company to
VIVUS, a biopharmaceutical company, currently carries a Zacks
Rank #3 (Hold).
) appears to be well placed in the biopharma space with a Zacks
Rank #1 (Strong Buy).