VIVUS REPORTS NET LOSSES FOR 4TH QTR AND YEAR END 2001.

VIVUS, Inc. (Nasdaq:VVUS), Mountain View, Calif., a pharmaceutical company developing innovative products to improve quality of life, has reported financial results for the three and twelve months ended December 31, 2001.

For the fourth quarter of 2001, VIVUS reported a net loss of ($150) thousand, or ($0.00) net loss per share, compared with net income of $5.0 million, or $0.15 per diluted share, during the same quarter in 2000. For the twelve months ended December 31, 2001, the company reported a net loss of ($7.1) million, or ($0.22) net loss per share, as compared to net income of $7.7 million, or $0.23 per diluted share, for the same period in 2000. Significantly higher research & development expenditures and lower gross margin in 2001 contributed to the change in profitability from the previous year.

U.S. gross product revenue was $5.3 million in the fourth quarter of 2001, an increase of 4% over the third quarter of 2001 and compares to $5.8 million for the fourth quarter of the previous year. For the twelve months ended December 31, 2001, U.S. gross product revenue was $20.8 million, a decline of 8% from $22.5 million for the same period in 2000. Based on information reported by NDC Health, prescriptions for MUSE(R) in the U.S. increased by 2% in the last six months of 2001, as compared to the first six months of 2001. The company believes this modest increase is the result of targeted marketing programs that were implemented during the first six months of 2001.

International product revenue was $282 thousand for the fourth quarter of 2001, a decrease of $1.5 million over the same period in 2000, which included initial shipments of product to Abbott Laboratories (NYSE:ABT) to support their launch of MUSE in Europe. For the twelve months ended December 31, 2001, international product revenue was $4.0 million, compared with $5.1 million for the same period the previous year. Based on current forecasts, the company anticipates that international product revenue will be between $2.0 million and $2.5 million for the year 2002.

R&D expenses for the fourth quarter of 2001 increased 140% to $2.4 million, compared to $1.0 million in the fourth quarter of 2000. For the twelve months ended December 31, 2001, R&D expenses were $12.3 million, $7.7 million higher than the same period in 2000. The increase in 2001 is primarily due to licensing and development expenses for TA-1790 as an oral treatment for male erectile dysfunction, clinical expenses for ALISTA(TM) our product for the treatment of female sexual dysfunction, and development and clinical expenses for VI-0134 to treat premature ejaculation. The company expects that R&D expenses will continue to increase as its products progress in development.

Cost of goods sold was $2.9 million and $12.9 million for the fourth quarter and twelve months ended December 30, 2001, respectively. This compares to a credit of ($667) thousand and $8.1 million for the same periods in the previous year, which included a one-time reduction of $5.1 million related to the release of reserves that were no longer required. Gross profit margin was 46% in the fourth quarter of 2001 and 45% for the year ended December 31, 2001. The company expects that the gross profit margin percentage in future periods will approximate the gross profit margin percentage recorded in 2001.

Selling, general and administrative expenses in the fourth quarter of 2001 of $1.9 million were slightly lower than $2.1 million for the same period in 2000. For the twelve months ended December 31, 2001, selling, general and administrative expenses of $9.3 million increased 8% from $8.7 million in the same period in 2000. The company expanded its targeted U.S. marketing efforts during 2001, which contributed to this increase.

The company recorded a tax benefit of $1.2 million and $1.7 million for the fourth quarter and twelve months ended December 31, 2001, respectively. The tax benefit recorded in 2001 was based on the company's estimate of its net tax liabilities.

Unrestricted cash, cash equivalents and available-for-sale securities at December 31, 2001 totaled $36.7 million, down $5.2 million from $41.9 million at December 31, 2000. This decrease is due primarily to the $5.0 million payment made to Tanabe during the first quarter of 2001 for licensing TA-1790.

Product Pipeline Update

Data from our first trial with ALISTA(TM), our proprietary topical formulation of alprostadil (prostaglandin E1) for Female Sexual Arousal Disorder (FSAD), was presented at the Female Sexual Function Forum in Boston in October of 2001. The study was presented by one of our clinical investigators and was well accepted by the attendees.

Our first efficacy trial with ALISTA was completed and demonstrated a significant increase versus placebo in sexual response in association with visual sexual stimulation in women with FSAD. ALISTA was associated with a rapid and sustained improvement in sexual response.

We are on schedule to begin the Phase II/III at-home study to evaluate the efficacy and safety of ALISTA in the first quarter 2002.

VIVUS successfully filed an Investigational New Drug Application (IND) with the U.S. Food and Drug Administration (FDA) in December to initiate a clinical study to evaluate the erectile response to oral TA-1790, its inhibitor of phosphodiesterase 5 (PDE5), in men with erectile dysfunction (ED). The company will initiate this trial in the first quarter 2002. Work on a transurethral formulation of TA-1790 is in progress.

The company initiated a clinical trial to evaluate the pharmacokinetics of VI-0134, its oral, on-demand treatment for premature ejaculation.

VIVUS withdrew its European application for ALIBRA(R), its second-generation product for the treatment of erectile dysfunction. The company continues to work with the FDA toward gaining approval for ALIBRA in the United States.

About VIVUS

VIVUS, Inc. is a pharmaceutical company developing innovative products to improve quality of life disorders in men and women, with a focus on sexual dysfunction. The company developed and markets in the U.S. MUSE(R) (alprostadil) and ACTIS(R), two innovations in the treatment of erectile dysfunction, and has partnered with Abbott Laboratories (NYSE: ABT) for the international marketing and distribution of its male transurethral ED products. In Canada, VIVUS is partnered exclusively with Paladin Labs, Inc. (TSE:PLB) to market and distribute MUSE.

For more information, call 650/934-5200 or visit http://www.vivus.com.