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VIVUS Reports 2010 Fourth Quarter and Full-Year Financial Results

MOUNTAIN VIEW, Calif., Feb. 28, 2011 /PRNewswire/ -- VIVUS, Inc. (Nasdaq: VVUS), a biopharmaceutical company dedicated to the development and commercialization of novel therapeutic products, today reported its highlights and financial results for the fourth quarter and year ended December 31, 2010.

2010 Highlights

  • In the QNEXA investigational drug development program, we successfully completed the two-year SEQUEL study, an extension study in 675 patients from the CONQUER study.  Results were announced in September and showed sustained weight loss of greater than 10% for both doses of QNEXA over two years.

  • In December, we filed the Marketing Authorization Application, or MAA, to the European Medicines Agency, or EMA, in the European Union for QNEXA as a treatment for obesity. Obesity is a global epidemic, with approximately 150 million European adults affected and the prevalence is rising rapidly.

  • In the avanafil investigational drug development program, we completed the two remaining phase 3 studies: in diabetics with erectile dysfunction and the long-term open label safety study.  Both studies met all primary efficacy endpoints. The NDA filing for avanafil is scheduled for Q2 2011.

  • We divested MUSE and the related assets to Meda AB for $22 million and are eligible to receive a $1.5 million milestone based upon future sales of MUSE.  The transaction closed on November 5, 2010. In connection with the sale, all of our loans and long-term notes payable were repaid and our MUSE-related royalty obligations were terminated.

  • Lastly, we ended the year with $139.2 million in cash, cash equivalents and available for sale securities.

  • QNEXA Regulatory Update  On October 28, 2010, we received a Complete Response Letter, or CRL, from the FDA regarding the QNEXA NDA.  The FDA issued the CRL to communicate its decision that the NDA could not be approved in its present form.  The CRL included the following areas: clinical, labeling, REMS, safety update, and drug scheduling.  We held a meeting with the FDA on January 19, 2011, to discuss the items contained in the CRL.  At this meeting the FDA requested that we assess the feasibility of performing a retrospective observational study utilizing existing healthcare databases to review fetal outcomes in the offspring of women who received 100mg of topiramate for migraine prophylaxis during pregnancy. In the QNEXA studies, which included 15 births from women exposed to topiramate, there were no reports of any adverse fetal outcomes.

    We expect to reach agreement with the FDA, and if deemed feasible, initiate the retrospective observational study on fetal outcomes within the next two months.  We will provide more details as soon as an agreement is reached.  It is our goal to resubmit the NDA for QNEXA by the end of 2011.

    Although no other requests for additional information or studies were made by the FDA at the meeting, there can be no assurances that the FDA will not request or require us to provide additional information or undertake additional studies in connection with the QNEXA NDA.  

    "In 2010, we also made significant progress with the development of QNEXA as a treatment for obesity by filing for approval in the European Union, and for avanafil we completed the pivotal phase 3 studies," stated Leland Wilson, chief executive officer of VIVUS. "We are working diligently on responding to the FDA's request to assess the feasibility of conducting a retrospective observational study. Our goals for 2011 include the continued advancement towards approval of QNEXA in the US and the EU and filing the NDA for avanafil."

    Fourth Quarter ResultsIn November 2010, we sold MUSE and the related assets.  Accordingly, all historical financial results related to the MUSE business have been classified as discontinued operations.  In the fourth quarter of 2010, we reported a net loss from continuing operations of $19.1 million, or $0.23 per share, net income from discontinued operations of $12.6 million, or $0.15 per share, and total net loss of $6.5 million, or $0.08 per share.  The loss from continuing operations included a $6.0 million loss on the early extinguishment of long term debt repaid in conjunction with the MUSE sale. The net income from discontinued operations in the fourth quarter included a $13.7 million gain from the sale of MUSE.

    In the fourth quarter of 2009, we had a net loss from continuing operations of $15.5 million, or $0.19 per share, net income from discontinued operations of $2.3 million, or $0.03 per share, and total net loss of $13.2 million, or $0.16 per share.  In the fourth quarter of 2009, research and development expenses included the expenses related to the preparation of the QNEXA NDA, which was filed in December 2009.

    Year End ResultsFor the year ended December 31, 2010, we reported a net loss from continuing operations of $75.4 million, or $0.93 per share, net income from discontinued operations was $9.4 million, or $0.11 per share, and total net loss of $66.1 million, or $0.82 per share.  As mentioned above, in the fourth quarter of 2010 we closed the sale of MUSE.  We included in the net loss from continuing operations a $6.0 million loss on the early extinguishment of long term debt repaid in conjunction with the MUSE sale and recorded a $13.7 million gain from the sale of MUSE, which is included in the net income from discontinued operations.  Also included in the results from continuing operations in 2009 is $31.4 million in revenue, previously deferred, from the sale of Evamist.  

    Cash, Cash Equivalents and Available-for-Sale SecuritiesVIVUS had cash, cash equivalents and available-for-sale securities (U.S. Treasuries) of $139.2 million at December 31, 2010, as compared to $206.8 million at December 31, 2009.  The change in cash, cash equivalents and available-for-sale securities of $67.6 million for the year is the net result of cash used for operating and financing activities, including the proceeds from the MUSE sale and the payoff of long term debt.

    About VIVUS VIVUS is a biopharmaceutical company developing therapies to address obesity, sleep apnea, diabetes and male sexual health. The company's lead investigational product in clinical development, QNEXA, has completed phase 3 clinical trials for the treatment of obesity and is currently being considered for approval by US regulators. QNEXA is also in phase 2 clinical development for the treatment of type 2 diabetes and obstructive sleep apnea. In the area of sexual health, VIVUS is in phase 3 development with avanafil, a PDE5 inhibitor being studied for the treatment of erectile dysfunction. For more information about the company, please visit For more information about the company, please visit

    Note to Investors As previously announced, VIVUS will hold a conference call and an audio webcast to discuss the fourth quarter and year-end financial results today, February 28, 2011, beginning at 1:30 p.m. Pacific Time. You can listen to this call by dialing 1-877-359-2916 and outside the U.S. 1-224-357-2386. A webcast replay will be available for 30 days and can be accessed at

    Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words such as "anticipate," "believe," "forecast," "estimated" and "intend," among others. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements.  These factors include, but are not limited to, the timing and substance of our response to the FDA's requests from the End of Review meeting, our response to the FDA's complete response letter, or CRL; the feasibility assessment of performing a retrospective observational study of infants born to mothers exposed to 100 mg of topiramate for migraine prophylaxis during pregnancy and the results, if any, from the retrospective observational study, the FDA's interpretation of and agreement with the information VIVUS submitted relating to teratogenicity and cardiovascular safety; the FDA's meeting minutes; the FDA's interpretation of the data from our SEQUEL study, or OB-305; the FDA's requests, if any, to conduct additional clinical trials, provide further analysis of clinical trial data or to conduct retrospective observational studies; substantial competition; the impact on future sales under a limited label and restrictions on distribution; uncertainties of litigation and intellectual property and patent protection; reliance on sole-source suppliers; limited sales and marketing resources and dependence upon third parties; risks related to the development of innovative products; risks related to the failure to obtain FDA or foreign authority clearances or approval; noncompliance with FDA or foreign  regulations; and our dependence on the performance of our collaborative partners.  As with any pharmaceutical in development, there are significant risks in the development, the regulatory approval, and commercialization of new products.  There are no guarantees that our response to the FDA's CRL or their request stemming from the End of Review meeting will be sufficient to satisfy the FDA's safety concerns, and that the FDA will not require us to conduct any additional clinical or non-clinical observational studies, or that any product will receive regulatory approval for any indication or prove to be commercially successful.  VIVUS does not undertake an obligation to update or revise any forward-looking statements.  Investors should read the risk factors set forth in VIVUS' Form 10-K for the year ending December 31, 2009, and periodic reports filed with the Securities and Exchange Commission.CONTACT:   VIVUS, Inc.Investor Relations:The Trout GroupTimothy E. MorrisBrian Korb Chief Financial Officer646-378-2923650-934-5200VIVUS, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)Three Months EndedYears EndedDecember 31December 31December 31December 312010200920102009*(unaudited)(unaudited)(unaudited)Revenue:License and other revenue$
    31,395Operating expenses:Research and development6,09313,52139,97170,940General and administrative7,0183,68525,65613,870Total operating expenses13,11117,20665,62784,810Loss from operations(13,111)(17,206)(65,627)(53,415)Interest and other income (expense), net of loss on early extinguishment of debt and other-than-temporary loss on impaired securities

    (6,000)(725)(9,798)(2,349)Loss from continuing operations before income taxes(19,111)(17,931)(75,425)(55,764)Benefit (provision) for income taxes

    (8)2,388(9)2,379Net loss from continuing operations

    (19,119)(15,543)(75,434)(53,385)Net income (loss) from discontinued operations12,6082,3319,369(906)Net loss$
    (54,291)Basic and diluted net income (loss)per share:Continuing operations$
    (0.74)Discontinued operations0.150.030.11(0.01)Net loss per share$
    (0.75)Shares used in per share computation:Basic81,28880,58181,01772,779Diluted83,54183,67283,82172,779*The Condensed Consolidated Statement of Operations at December 31,

    2009 has been derived from the Company's audited financial statements

    at that date. VIVUS, Inc.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except par value amount)December 31December 3120102009*(unaudited)Current assets: Cash and cash equivalents

    40,533Available-for-sale securities  


    3,225-Prepaid expenses and other assets

    1,6484,106Current assets of discontinued operations

    612,482Total current assets

    144,065223,362Property and equipment, net

    221259Non-current assets of discontinued operations

    -6,411Total assets

    230,032Current liabilities: Accounts payable

    8,082Accrued and other liabilities

    6,3776,769Current liabilities of discontinued operations

    3,5127,659Total current liabilities

    12,28422,510Notes payable-net of current portion

    -15,255Non-current liabilities of discontinued operations

    -5,541Total liabilities

    12,28443,306Commitments and contingenciesStockholders' equity: Common stock; $.001 par value; shares  authorized 200,000; shares outstanding - 81,568 at December 31, 2010; 80,607 at December 31, 2009, respectively

    8281Additional paid-in capital  

    432,041420,708Accumulated other comprehensive income (loss)

    4(3)Accumulated deficit

    (300,125)(234,060)Total stockholders' equity

    132,002186,726Total liabilities and stockholders' equity

    230,032*The Condensed Consolidated Balance Sheet at December 31, 2009 has
    been derived from the Company's audited financial statements at that date.

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