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VIVUS REPORTS NET LOSS OF $1.6 MILLION FOR 4TH QTR '02.

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 12 months ended December 31, 2002.

For the fourth quarter of 2002, VIVUS reported a net loss of ($1.6) million, or ($0.05) net loss per share, compared with a net loss of ($150) thousand, or ($0.00) net loss per share, during the same quarter in 2001. For the 12 months ended December 31, 2002, the company reported a net loss of ($10.6) million, or ($0.32) net loss per share, compared with a net loss of ($7.1) million, or ($0.22) net loss per share, for the same period in 2001. Higher operating expenditures and lower interest income in 2002 contributed to the change from the previous year.

U.S. net product revenue was $7.5 million in the fourth quarter of 2002, an increase of 123% over the third quarter of 2002 and a 49% increase over the fourth quarter of 2001. The fourth quarter 2002 sales volume is primarily due to wholesalers having not kept pace with the MUSE cumulative 2002 market demand for the first three quarters. Some wholesaler distribution centers also slightly increased inventory level positions at the end of 2002. For the 12 months ended December 31, 2002, U.S. net product revenue increased 7.2% to $21.0 million, compared with $19.6 million for the same period in 2001 due to an increase in the number of MUSE units sold in 2002 versus 2001.

International product revenue was $363 thousand for the fourth quarter of 2002, an increase of $81 thousand compared with the same period in the previous year. For the 12 months ended December 31, 2002, international product revenue was $1.4 million, compared with $4.0 million for the same period in 2001. Lower international product revenue in 2002 was due to a decrease in product demand by our previous international distributor in anticipation of the transition to our new distribution partner, Meda. Based on current forecasts from Meda, we anticipate that 2003 international product revenue will increase significantly over 2002 levels.

R&D expenses for the fourth quarter of 2002 were $3.8 million, compared with $2.4 million for the fourth quarter of 2001. The increase is primarily due to pre-clinical and clinical expenses for our three current R&D projects: ALISTA for female sexual arousal disorder (FSAD), TA-1790 for erectile dysfunction (ED) and VI-0162 for premature ejaculation (PE). For the 12 months ended December 31, 2002, R&D expenses were $13.3 million, $1.0 million higher than the same period in the previous year, which included a $5.0 million payment made during the first quarter of 2001 to Tanabe for licensing the proprietary compound TA-1790. If not for this $5.0 million expense, R&D costs in 2002 would have been $6.0 million higher than the same period in 2001 due to increased expenditures for clinical development of our current pipeline.

Cost of goods sold in the fourth quarter of 2002 was $4.0 million, compared with $2.9 million for the same period in the previous year. The primary reason for the increase is higher sales volumes. For the 12 months ended December 31, 2002, cost of goods sold decreased $1.7 million to $11.2 million, compared with the same period in the previous year. The year-to-date 2002 figure includes a reduction in cost of goods sold of $802 thousand as a result of settlements of previously recognized purchase commitment liabilities for our major raw material, alprostadil. Adjusting for this item, comparative gross margins for the 12 months ended December 31, 2002 versus 2001 were 46.3% and 45.2%, respectively.

Selling, general and administrative expenses in the fourth quarter of 2002 of $2.5 million were $613 thousand higher than the same period in 2001. For the 12 months ended December 31, 2002, selling, general and administrative expenses of $10.6 million were $1.3 million higher than the same period in the previous year due to increased investment in U.S. sales and marketing efforts.

The company recorded a tax benefit of $650 thousand and $918 thousand for the fourth quarter and 12 months ended December 31, 2002, respectively. This was based on an updated estimate of our tax liabilities as well as our filing for a refund of previously paid alternative minimum taxes.

Unrestricted cash, cash equivalents and available-for-sale securities at December 31, 2002 totaled $29.8 million, down $6.9 million from $36.7 million at December 31, 2001. This decrease is primarily due to R&D expenditures for development of our current pipeline.

2002 Research and Development Highlights

During the year, the company focused on the advancement of its development programs targeting female sexual arousal disorder (FSAD), erectile dysfunction (ED) and premature ejaculation (PE). Not only did we initiate clinical trials in each program, the company presented data on ALISTA(TM), for the treatment of FSAD, at the 2002 Annual Meeting of the American Urological Association (AUA) and continued to strengthen our intellectual property portfolio in the areas of FSAD and PE with the issuance of new patents.

Female Sexual Arousal Disorder

The company presented data from a single dose in-clinic safety and efficacy trial with ALISTA, its topical alprostadil formulation to treat FSAD, at the 2002 AUA. The study demonstrated that ALISTA, in association with visual sexual stimulation, significantly increased the patients' sexual arousal, satisfaction with their level of sexual arousal, and their overall level of sexual satisfaction. ALISTA was well tolerated both locally and systemically. The results from this in-clinic study formed the basis for an at-home clinical trial in which treatment began during March of 2002.

Interim results from the ALISTA at-home study were anticipated at this time. However, we do not yet have data from a sufficient number of patients to make an interim analysis meaningful. Treatment is scheduled to be completed in mid February 2003 with completed study results anticipated by the end of the first quarter of 2003.

Erectile Dysfunction

During the fourth quarter of 2002, the company announced positive results from its clinical study evaluating the safety and efficacy of TA-1790, its proprietary oral phosphodiesterase type 5 (PDE5) inhibitor, in men with ED. This in-clinic trial was a double-blind, placebo-controlled evaluation of TA-1790 using RigiScan(R) to assess erectile response in association with visual sexual stimulation. Peak penile response with TA-1790 occurred within 20-40 minutes after drug administration and was comparable to or greater than that observed with Viagra(R). TA-1790 was well tolerated with no indication of hypotension or visual disturbances.

The company has conducted a single and multiple dose pharmacokinetics study with TA-1790, results of which are being analyzed.

Premature Ejaculation

In November of 2002, VIVUS initiated an at-home proof-of-principle clinical trial with VI-0162, its oral, on-demand treatment for PE. The objective of this study is to assess the ability of VI-0162 to increase the time to ejaculation in men with rapid ejaculation. The company also has another compound, VI-0134, which is administered orally. VI-0134 has demonstrated positive activity in men with PE.

Patents

In 2002, the company was awarded Patent No. 6,403,597, entitled "Administration of Phosphodiesterase Inhibitors for the Treatment of Premature Ejaculation," and Patent No. 6,469,016, entitled "Treatment of Female Sexual Dysfunction Using Phosphodiesterase Inhibitors." We believe these patents afford the necessary intellectual property to develop phosphodiesterase inhibitors to treat patients diagnosed with premature ejaculation and female sexual dysfunction.

About VIVUS

VIVUS, Inc. is a pharmaceutical company engaged in the development of innovative therapies for the treatment of quality-of-life disorders in men and women, with a focus on sexual dysfunction. Current development programs target Female Sexual Dysfunction (FSD), Erectile Dysfunction (ED) and Premature Ejaculation (PE). 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 Meda AB (Stockholm: MEDAa.ST) for the international marketing and distribution of its male transurethral ED products. In Canada, VIVUS has partnered exclusively with Paladin Labs (TSE: PLB) to market and distribute MUSE.

For more information, call 650/934-5200 or visit http://www.vivus.com.
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Publication:Biotech Financial Reports
Geographic Code:1USA
Date:Mar 1, 2003
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