VIVUS Reports Fourth Quarter 2017 Financial Results

CAMPBELL, CA—(Marketwired – March 13, 2018) – VIVUS,Inc. (NASDAQ: VVUS) (the “Company”), a biopharmaceutical company committed to the development and commercialization of innovative therapies focusing on treatments for patients with serious unmet medical needs, today reported financial results for the quarter and year ended December 31, 2017 and provided a business update.

“Throughout 2017, we executed on strategies intended to expand our pipeline and maximize our legacy assets. Achievements in these areas include advancing tacrolimus toward the clinic, with a phase 2 trial start scheduled for the second half of 2018, and our marketing agreement for Qsymia® in the Republic of Korea,” said Thomas B. King, VIVUS' interim Chief Executive Officer. “We move into 2018 with continued efforts to monetize our current assets, identify additional assets to enhance our pipeline and financial resources, and ultimately create value for patients and stockholders.”

Recent Business Highlights

  • VIVUS Management Transition

    On December 31, 2017, VIVUS board member Thomas B. King was appointed to the role of CEO on an interim basis. VIVUS' Board is working with an executive search firm to identify a permanent CEO with the passion and vision to help VIVUS succeed in the execution of its strategies.

  • Tacrolimus Hits Key Milestones

    In October 2017, the Company announced that it held a pre–IND meeting with the U.S. Food and Drug Administration (FDA) for its proprietary formulation of tacrolimus for the treatment of pulmonary arterial hypertension (PAH). The FDA addressed VIVUS' questions related to preclinical, nonclinical and clinical data, planned design of clinical trials of tacrolimus in class III and IV PAH patients, and clarified the requirements needed to file an IND to initiate a clinical trial in this indication. VIVUS is on track to file this IND in the first half of 2018. As discussed with the FDA, VIVUS currently intends to design and conduct clinical trials that could qualify for Fast Track and/or Breakthrough Therapy designation.

2018 Strategic Objectives

  • Continue to expand the Company's clinical and commercial portfolios, with a particular emphasis on cash flow–generating assets
  • Continue monetization of VIVUS' legacy assets
  • Recruit and hire a permanent CEO
  • Initiate the tacrolimus Phase 2 clinical trial in the second half of 2018

Financial Results

Net loss for the fourth quarter of 2017 was $10.1 million, as compared to net income of $56.6 million in the fourth quarter of 2016. Cash, cash equivalents and available–for–sale securities were $226.3 million at December 31, 2017.

Total revenue, net for the fourth quarters of 2017 and 2016, was $11.9 million and $81.8 million, respectively. The decrease was primarily a result of lower license and milestone revenue recognized in the fourth quarter of 2017 as compared to 2016. Revenue consisted of the following:

    Three Months Ended
    December 31,
    2017   2016
Qsymia, net product revenue   $ 8,934   $ 11,046
License and milestone revenue         69,400
STENDRA/SPEDRA supply revenue     2,343     765
STENDRA/SPEDRA royalty revenue     664     594
  Total revenue   $ 11,941   $ 81,805
               

Beginning in the first quarter of 2017, with 48 months of returns experience, VIVUS believed that it had sufficient data and experience from selling Qsymia to reliably estimate expected returns. As a result, VIVUS changed its revenue recognition methodology for Qsymia sales from a “sell–through” methodology to a “sell–in” methodology.

Approximately 91,000 and 100,000 Qsymia prescriptions were dispensed in the fourth quarters of 2017 and 2016, respectively. In the fourth quarter of 2017, VIVUS shipped approximately 88,000 units of Qsymia to the wholesalers as wholesalers continued to reduce their Qsymia inventory levels. VIVUS recognized approximately $0.3 million less Qsymia revenue under the “sell–in” methodology than would have been recognized under the “sell–through” methodology. The “sell–in” methodology could continue to result in higher volatility of Qsymia sales, as wholesalers adjust inventory levels compared to those historically reported.

Total cost of goods sold was $3.9 million and $2.2 million in the fourth quarters of 2017 and 2016, respectively. The increase was primarily a result of higher STENDRA/SPEDRA supply revenue during the fourth quarter of 2017.

Research and development expense was $1.2 million and $1.8 million in the fourth quarters of 2017 and 2016, respectively. Research and development expenses were impacted by a decrease in efforts surrounding our Qsymia regulatory requirements partially offset by development efforts of tacrolimus for the treatment of PAH.

General and administrative expense was $5.7 million and $9.3 million for the fourth quarters of 2017 and 2016, respectively, while selling and marketing expense for the commercialization of Qsymia totaled $3.0 million and $3.8 million in the fourth quarters of 2017 and 2016, respectively. The decreases were due to the continued cost control initiative and the result of the realignment of our sales force and refinement of our marketing and promotional programs.

About Qsymia

Qsymia is approved in the U.S. and is indicated as an adjunct to a reduced–calorie diet and increased physical activity for chronic weight management in adults with an initial body mass index (BMI) of 30 kg/m2 or greater (obese) or 27 kg/m2 or greater (overweight) in the presence of at least one weight–related medical condition such as high blood pressure, type 2 diabetes, or high cholesterol.

The effect of Qsymia on cardiovascular morbidity and mortality has not been established. The safety and effectiveness of Qsymia in combination with other products intended for weight loss, including prescription and over–the–counter drugs, and herbal preparations, have not been established.

Important Safety Information

Qsymia® (phentermine and topiramate extended–release) capsules CIV is contraindicated in pregnancy; in patients with glaucoma; in hyperthyroidism; in patients receiving treatment or within 14 days following treatment with monoamine oxidase inhibitors; or in patients with hypersensitivity to sympathomimetic amines, topiramate, or any of the inactive ingredients in Qsymia.

Qsymia can cause fetal harm. Females of reproductive potential should have a negative pregnancy test before treatment and monthly thereafter and use effective contraception consistently during Qsymia therapy. If a patient becomes pregnant while taking Qsymia, treatment should be discontinued immediately, and the patient should be informed of the potential hazard to the fetus.

The most commonly observed side effects in controlled clinical studies, 5% or greater and at least 1.5 times placebo, include paraesthesia, dizziness, dysgeusia, insomnia, constipation, and dry mouth.

About Avanafil

STENDRA® (avanafil) is approved in the U.S. by the FDA for the treatment of erectile dysfunction. Metuchen Pharmaceuticals LLC has exclusive marketing rights to STENDRA in the U.S., Canada, South America and India.

STENDRA is available through retail and mail order pharmacies.

SPEDRA™, the trade name for avanafil in the EU, is approved by the EMA for the treatment of erectile dysfunction in the EU. VIVUS has granted an exclusive license to the Menarini Group through its subsidiary Berlin–Chemie AG to commercialize and promote SPEDRA for the treatment of erectile dysfunction in over 40 European countries plus Australia and New Zealand.

Avanafil is licensed from Mitsubishi Tanabe Pharma Corporation (MTPC). VIVUS owns worldwide development and commercial rights to avanafil for the treatment of sexual dysfunction, with the exception of certain Asian–Pacific Rim countries. VIVUS is in discussions with other parties for the commercialization rights to its remaining territories.

For more information about STENDRA, please visit www.STENDRA.com.

Important Safety Information

STENDRA® (avanafil) is prescribed to treat erectile dysfunction (ED).

Do not take STENDRA if you take nitrates, often prescribed for chest pain, as this may cause a sudden, unsafe drop in blood pressure.

Discuss your general health status with your healthcare provider to ensure that you are healthy enough to engage in sexual activity. If you experience chest pain, nausea, or any other discomforts during sex, seek immediate medical help.

STENDRA may affect the way other medicines work. Tell your healthcare provider if you take any of the following; medicines called HIV protease inhibitors, such as ritonavir (Norvir®), indinavir (Crixivan®), saquinavir (Fortavase® or Invirase®) or atazanavir (Reyataz®); some types of oral antifungal medicines, such as ketoconazole (Nizoral®), and itraconazole (Sporanox®); or some types of antibiotics, such as clarithromycin (Biaxin®), telithromycin (Ketek®), or erythromycin.

In the rare event of an erection lasting more than 4 hours, seek immediate medical help to avoid long–term injury.

In rare instances, men taking PDE5 inhibitors (oral erectile dysfunction medicines, including STENDRA) reported a sudden decrease or loss of vision. It is not possible to determine whether these events are related directly to these medicines or to other factors. If you experience sudden decrease or loss of vision, stop taking PDE5 inhibitors, including STENDRA, and call a doctor right away.

Sudden decrease or loss of hearing has been rarely reported in people taking PDE5 inhibitors, including STENDRA. It is not possible to determine whether these events are related directly to the PDE5 inhibitors or to other factors. If you experience sudden decrease or loss of hearing, stop taking STENDRA and contact a doctor right away. If you have prostate problems or high blood pressure for which you take medicines called alpha blockers or other anti–hypertensives, your doctor may start you on a lower dose of STENDRA.

Drinking too much alcohol when taking STENDRA may lead to headache, dizziness, and lower blood pressure.

STENDRA in combination with other treatments for ED is not recommended.

STENDRA does not protect against sexually transmitted diseases, including HIV.

The most common side effects of STENDRA are headache, flushing, runny nose and congestion.

Please see full patient prescribing information for STENDRA (50 mg, 100 mg, 200 mg) tablets.

About VIVUS

VIVUS is a biopharmaceutical company committed to the development and commercialization of innovative therapies that focus on advancing treatments for patients with serious unmet medical needs. For more information about the Company, please visit www.vivus.com.

Certain statements in this press release are forward–looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks, uncertainties and other factors, including risks and uncertainties related to potential change in our business strategy to enhance long–term stockholder value, including the evaluation of development opportunities; risks and uncertainties related to our, or our partner's, ability to successfully commercialize Qsymia; risks and uncertainties related to our ability to successfully develop or acquire a proprietary formulation of tacrolimus as a precursor to the clinical development process; risks and uncertainties related to our ability to identify, acquire and develop new product pipeline candidates; risks and uncertainties related to our ability to develop a proprietary formulation and to demonstrate through clinical testing the quality, safety, and efficacy of our current or future investigational drug candidates; risks and uncertainties related to the timing, strategy, tactics and success of the commercialization of STENDRA (avanafil) by our sublicensees; risks and uncertainties related to our ability to successfully complete on acceptable terms, and on a timely basis, avanafil partnering discussions for territories under our license with MTPC in which we do not have a commercial collaboration; risks and uncertainties related to the failure to obtain FDA or foreign authority clearances or approvals and noncompliance with FDA or foreign authority regulations; and risks and uncertainties related to the impact, if any, of changes to our senior management team. These risks and uncertainties could cause actual results to differ materially from those referred to in these forward–looking statements. The reader is cautioned not to rely on these forward–looking statements. Investors should read the risk factors set forth in VIVUS' Form 10–K for the year ended December 31, 2017 as filed on March 13, 2018, and periodic reports filed with the Securities and Exchange Commission. VIVUS does not undertake an obligation to update or revise any forward–looking statements.

 
VIVUS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2017     2016   2017     2016
Revenue:                    
  Net product revenue   $ 8,934     $ 11,046   $ 44,983     $ 48,501
  License and milestone revenue           69,400     7,500       69,400
  Supply revenue     2,343       765     10,407       2,291
  Royalty revenue     664       594     2,483       4,066
    Total revenue     11,941       81,805     65,373       124,258
                             
Operating expenses:                            
  Cost of goods sold     3,936       2,186     17,187       10,602
  Research and development     1,204       1,771     5,263       5,592
  Selling, general and administrative     8,681       13,125     40,130       52,379
    Total operating expenses     13,821       17,082     62,580       68,573
                             
(Loss) income from operations     (1,880 )     64,723     2,793       55,685
                             
    Interest expense and other expense, net     8,190       8,104     33,302       32,313
(Loss) income before income taxes     (10,070 )     56,619     (30,509 )     23,372
Provision (benefit) for income taxes     5       56     2       70
  Net (loss) income   $ (10,075 )   $ 56,563   $ (30,511 )   $ 23,302
                             
Basic net (loss) income per share   $ (0.10 )   $ 0.54   $ (0.29 )   $ 0.22
Diluted net (loss) income per share   $ (0.10 )   $ 0.54   $ (0.29 )   $ 0.22
Shares used in per share computation:                            
  Basic     105,941       104,852     105,741       104,385
  Diluted     105,941       105,338     105,741       104,969
 
VIVUS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
   
    December 31,     December 31,  
    2017     2016*  
ASSETS   (Unaudited)        
Current assets:            
  Cash and cash equivalents   $ 66,392     $ 84,783  
  Available–for–sale securities     159,943       184,736  
  Accounts receivable, net     12,187       9,478  
  Inventories     17,712       16,186  
  Prepaid expenses and other assets     7,178       8,251  
    Total current assets     263,412       303,434  
Property and equipment, net     542       788  
Non–current assets     1,014       1,554  
    Total assets   $ 264,968     $ 305,776  
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY                
Current liabilities:                
  Accounts payable   $ 10,072     $ 4,707  
  Accrued and other liabilities     21,475       15,686  
  Deferred revenue     2,075       19,174  
  Current portion of long–term debt     5,147       8,708  
    Total current liabilities     38,769       48,275  
  Long–term debt, net of current portion     230,536       232,610  
  Deferred revenue, net of current portion     4,674       6,449  
  Non–current accrued and other liabilities     327       257  
    Total liabilities     274,306       287,591  
Commitments and contingencies                
Stockholders' (deficit) equity:                
  Common stock and additional paid–in capital     834,835       831,855  
  Accumulated other comprehensive loss     (608 )     (616 )
  Accumulated deficit     (843,565 )     (813,054 )
    Total stockholders' (deficit) equity     (9,338 )     18,185  
    Total liabilities and stockholders' (deficit) equity   $ 264,968     $ 305,776  
   
* The Condensed Consolidated Balance Sheets have been derived from the Company's audited financial statements at that date, as adjusted.