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VIVUS Reports Second Quarter and First Six Months 2013 Financial Results



VIVUS Reports Second Quarter and First Six Months 2013 Financial Results

MOUNTAIN VIEW, Calif., Aug. 6, 2013 (GLOBE NEWSWIRE) -- VIVUS,Inc.
(Nasdaq:VVUS) ("VIVUS"), which sells the obesity drug Qsymia^® (phentermine
and topiramate extended-release) capsules CIV in the United States, today
provided a business update and reported its financial results for the second
quarter and six months ended June 30, 2013.

Recent Highlights

  * On July 22, 2013, we announced that our Board of Directors had appointed
    Michael Astrue to serve as its non-executive chairman of the Board of
    Directors and Anthony (Tony) Zook to serve as our chief executive officer.
    Mr. Zook was also appointed to our Board of Directors on July 25, 2013.
    Mr. Astrue formerly served as chief executive officer of Transkaryotic
    Therapies, chairman of the Massachusetts Biotechnology Council, and
    Commissioner of Social Security. Mr. Zook formerly served as executive
    vice president for Global Commercial Operations for AstraZeneca and
    president of MedImmune.

    "It is a pleasure to join VIVUS as CEO and I look forward to working with
    the VIVUS team, including the Board of Directors," stated Tony Zook, chief
    executive officer of VIVUS. "We intend to move quickly on four main goals:
    1) expand use of Qsymia through targeted patient and physician education;
    2) find the right partner for Qsymia to expand PCP reach; 3) create a
    pathway for centralized approval in Europe; and 4) eliminate expenses that
    are not essential to expanding use of Qsymia. We are already making
    progress on these four goals."
     
  * On July 18, 2013, we entered into a settlement agreement with First
    Manhattan Co., or the Settlement Agreement, terminating the pending proxy
    contest with respect to the election of our Board of Directors at our 2013
    annual meeting of stockholders, or the Annual Meeting. The Settlement
    Agreement provides that the Annual Meeting be adjourned to August 14,
    2013.
     
  * On July 1, 2013, we announced initial availability of Qsymia through
    approximately 8,000 Walgreens, Costco and Duane Reade retail pharmacies
    nationwide. As of today, the number of retail pharmacies through which
    Qsymia is available is approaching 10,000 nationwide. We intend to
    continue certifying and adding to the Qsymia retail pharmacy network,
    including well-known national and regional chains as well as independent
    pharmacies, in the coming weeks and months.
     
  * On June 26, 2013, the European Commission, or EC, adopted the implementing
    decision granting marketing authorization for SPEDRA™ (the approved trade
    name for avanafil in the European Union, or EU) for the treatment of
    erectile dysfunction (ED) in the EU.
     
  * On July 5, 2013, we entered into a License and Commercialization
    Agreement, or the SPEDRA Agreement, and a Commercial Supply Agreement with
    Menarini to commercialize and promote SPEDRA for the treatment of ED in
    over 40 European countries, plus Australia and New Zealand. Under the
    SPEDRA Agreement, we will receive an upfront payment and various approval
    and sales milestones plus royalties on SPEDRA sales. Within the first
    year, we expect to receive approximately €39 million, including upfront
    payments totaling €16 million. Menarini will also reimburse us for
    payments made to cover various obligations to MTPC during the term of the
    SPEDRA Agreement. We are eligible to receive up to €79 million in
    milestones and other payments over the life of the SPEDRA Agreement in
    addition to royalties.
     
  * On June 19, 2013, we announced study results showing avanafil is effective
    for sexual activity within 15 minutes in men with ED. In the study,
    avanafil patients achieved statistically significant improvement over
    placebo, in the mean proportion of attempts that resulted in erections
    sufficient for successful intercourse, as early as 10 minutes for the 200
    mg dose and 12 minutes for the 100 mg dose after being taken. We intend to
    file an amendment to the current STENDRA and SPEDRA labels to include
    these results.
     
  * On May 21, 2013, we closed an offering of $220.0 million in 4.5%
    Convertible Senior Notes due May 1, 2020, or the Convertible Notes. In
    addition, on May 29, 2013, the Initial Purchasers exercised in full their
    option to purchase an additional $30.0 million aggregate principal amount
    of the Convertible Notes. Total net proceeds from the Convertible Notes
    were approximately $241.8 million. The Convertible Notes are senior
    unsecured obligations of the Company and bear interest at a fixed rate of
    4.50% per annum, payable semiannually in arrears on May 1 and November 1
    of each year, beginning on November 1, 2013, unless earlier purchased or
    converted.

Second Quarter Financial Results

In the second quarter of 2013, net product revenue from sales of Qsymia was
$5.5 million. For the quarter ended June 30, 2013, we reported a net loss of
$55.5 million, or $0.55 net loss per share, as compared to a net loss of $24.0
million, or $0.24 net loss per share during the second quarter of 2012. The
increased net loss in the second quarter of 2013, as compared to the second
quarter of 2012, is primarily attributable to increased selling, general and
administrative expenses related to commercialization activities for Qsymia.
Included in the net loss for the quarter ended June 30, 2013 were $2.8 million
related to the proxy contest and a total charge of $4.4 million for Qsymia
inventories on hand in excess of demand, plus a purchase commitment fee due to
the manufacturer of Qsymia.

For the second quarter of 2013, there were approximately 81,000 Qsymia
prescriptions dispensed, of which approximately 24,000 were dispensed under
the Free Trial Offer. All of these prescriptions were dispensed through the
certified mail order home delivery system. As patients switch to retail, we
anticipate that the future number of prescriptions dispensed through the mail
order system will decline and prescriptions dispensed through certified retail
pharmacies will grow and eventually surpass the number of prescriptions
currently dispensed through mail order.

First Half Financial Results

Net product revenue from sales of Qsymia in the first half of 2013 was $9.6
million. For the six months ended June 30, 2013, we reported a net loss of
$109.1 million, or $1.08 net loss per share, as compared to a net loss of
$42.8 million, or $0.45 net loss per share during the first half of 2012. The
increased net loss in the first half of 2013 is again primarily attributable
to increased selling, general and administrative expenses related to
commercialization activities for Qsymia. Included in the net loss for the six
months ended June 30, 2013 were $3.5 million related to the proxy contest and
a total charge of $10.2 million for Qsymia inventories, including a purchase
commitment fee, as explained above.

Cash, Cash Equivalents and Available-for-Sale Securities

Cash, cash equivalents and available-for-sale securities (cash) totaled $358.3
million at June 30, 2013, as compared to $214.6 million at December 31, 2012.
The increase of $143.7 million is primarily due to net cash provided by
financing activities, including the net proceeds of $48.4 million from the
Senior Secured Notes with BioPharma and $241.8 million from the Convertible
Notes, less cash used to purchase capped calls of $34.7 million and cash used
in operating activities of $110.3 million.

Note to Investors

As previously announced, VIVUS will hold a conference call and an audio
webcast to discuss the second quarter and first six months of 2013 financial
results today, August 6, 2013, beginning at 1:30PM Pacific Time. Investors can
listen to this call by dialing 1-877-359-2916 and outside the U.S.
224-357-2386. A webcast replay will be available for 30 days and can be
accessed at http://ir.vivus.com/.

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 (MAOIs); 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

SPEDRA™, the trade name for avanafil in the EU, has been approved by the EMA
for the treatment of erectile dysfunction in the EU.

STENDRA is approved by the FDA for the treatment of erectile dysfunction in
the U.S. VIVUS, through collaboration arrangements with third parties, intends
to market and sell STENDRA in the U.S. and under the trade name SPEDRA in the
EU and other territories outside the U.S. 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 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. VIVUS is currently in discussions with potential partners to
commercialize STENDRA in the U.S. and its other territories throughout the
world.

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 commercializing and developing
innovative, next-generation therapies to address unmet needs in obesity, sleep
apnea, diabetes and sexual health. 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 our ability to continue to certify and add to the
Qsymia retail pharmacy network and sell Qsymia through this network; risks and
uncertainties related to the milestones, payments and royalties under the
SPEDRA Agreement; risks and uncertainties related to filing an amendment to
the current STENDRA and SPEDRA labels to include recent study results; risks
and uncertainties related to the number of prescriptions dispensed through the
mail order system and through certified retail pharmacies; risks and
uncertainties related to the completion of our STENDRA partnering discussions
on acceptable terms and on a timely basis; and risks and uncertainties related
to the launch and commercialization of SPEDRA in the EU. 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's Form 10-K for the year ending December 31, 2012,
as amended by the Form 10-K/A filed on April 30, 2013 and by the Form 10-K/A
filed on June 12, 2013, 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 amounts)
(Unaudited)
                                                                    
                              Three Months Ended      Six Months Ended
                              June 30     June 30     June 30      June 30
                              2013        2012        2013         2012
                                                                    
Revenue:                                                            
Net product revenue            $ 5,534     $ --        $ 9,646      $ --
                                                                    
Operating expenses:                                                 
Cost of goods sold            572          --         962           --
Inventory impairment and      4,448        --         10,225        --
commitment fee
Research and development       9,232       8,873       16,278       15,007
Selling, general and           42,727      15,444      87,423       28,082
administrative
                                                                    
Total operating expenses       56,979      24,317      114,888      43,089
                                                                    
Loss from operations           (51,445)    (24,317)    (105,242)    (43,089)
                                                                    
Interest and other income      (4,183)     54          (4,148)      71
(expense), net
                                                                    
Loss from continuing
operations before income       (55,628)    (24,263)    (109,390)    (43,018)
taxes
                                                                    
Provision for income taxes     (7)         (3)         (13)         (10)
                                                                    
Loss from continuing           (55,635)    (24,266)    (109,403)    (43,028)
operations
                                                                    
Income from discontinued       123         218         315          202
operations
                                                                    
Net loss                       $ (55,512)  $ (24,048)  $ (109,088)  $ (42,826)
                                                                    
Basic and diluted net income                                        
(loss) per share:
Continuing operations          $ (0.55)    $ (0.24)    $ (1.08)     $ (0.45)
Discontinued operations        --          --          --           --
Net loss per share             $ (0.55)    $ (0.24)    $ (1.08)     $ (0.45)
                                                                    
Shares used in per share                                            
computation:
Basic and diluted             100,739     99,777      100,700      96,022

 
VIVUS, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                                
                                              June 30          December 31
                                              2013             2012*
                                              (unaudited)       
Current assets:                                                 
Cash and cash equivalents                      $ 124,713        $ 58,605
Available-for-sale securities                  233,542          155,981
Accounts receivable, net                       5,085            2,778
Inventories                                    34,217           25,353
Prepaid expenses and other assets              18,338           19,159
Total current assets                           415,895          261,876
Property and equipment, net                    3,329            1,951
Non-current assets                             7,788            287
Total assets                                   $ 427,012        $ 264,114
                                                                
Current liabilities:                                            
Accounts payable                               $ 16,777         $ 25,375
Accrued and other liabilities                  16,047           14,680
Deferred revenue                               2,846            1,150
Total current liabilities                      35,670           41,205
Long term debt                                 206,220          --
Total liabilities                              241,890          41,205
                                                                
Commitments and contingencies                                   
                                                                
Stockholders' equity:                                           
Common stock and additional paid-in capital    780,382          709,022
Accumulated other comprehensive income         (26)             33
Accumulated deficit                            (595,234)        (486,146)
Total stockholders' equity                     185,122          222,909
Total liabilities and stockholders' equity     $ 427,012        $ 264,114
                                                                
*The Condensed Consolidated Balance Sheet at December 31, 2012 has been
derived from the Company's audited financial statements at that date.

CONTACT: VIVUS, Inc.
         Timothy E. Morris
         Chief Financial Officer
         morris@vivus.com
         650-934-5200
        
         Investor Relations:  The Trout Group
         Brian Korb
         bkorb@troutgroup.com
         646-378-2923
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