Company to host conference call today at 4:30pm ET
CAMPBELL, CA., November 5, 2019 – VIVUS, Inc. (NASDAQ: VVUS) (the “Company”), a specialty pharmaceutical 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 ended September 30, 2019 and provided a business update.
“The strategies that we have implemented over the past several quarters continue to gain traction, as evidenced by growing patient adoption rates from our Qsymia Advantage Program, which increased 170% in prescriptions in the third quarter compared with the second quarter,” said John Amos, VIVUS’ Chief Executive Officer. “As we implement our plan to expand the U.S. market for Qsymia, we are also making significant strides toward unlocking its full global potential, having recently obtained marketing approval in the Republic of Korea and having our Marketing Authorization Application for Qsymia accepted on a decentralized basis in Europe. The initiation of our strategy for reducing our corporate debt is helping to improve our capital structure, while providing us with financial flexibility to advance the growth opportunities for both Qsymia and PANCREAZE.”
Recent Business Highlights
Qsymia® Marketing Authorization Application (MAA) Accepted on a Decentralized Basis
In September 2019, the European regulatory agencies in Sweden, Denmark, Finland, Iceland, Norway, and Poland (the “Concerned Member States”) accepted the MAA for Qsymia (phentermine and topiramate extended-release) on a decentralized basis, with Sweden acting as the lead Concerned Member State, also known as the Reference Member State, for purposes of assessing the MAA.
- Qsymia Approved in the Republic of Korea
In August 2019, VIVUS announced that its Korean marketing partner, Alvogen Malta Operations (ROW) Ltd, obtained marketing approval for Qsymia from the South Korea Ministry of Food and Drug Safety (MFDS).
- Released Results of a Pilot Study with Qsymia and Laparoscopic Sleeve Surgery
In August 2019, VIVUS announced the results of a pilot clinical study demonstrating that patients receiving Qsymia before and after laparoscopic sleeve gastrectomy surgery lost more weight and had a greater probability of achieving a body mass index of less than 40 compared with patients undergoing surgery alone without anti-obesity medication. The study was conducted at the Wake Forest School of Medicine and the results appear in the current issue of Surgery for Obesity and Related Diseases.
Reduced Debt and Interest Expense
In September 2019, VIVUS paid down $48.6 million of its Senior Secured Notes due 2024 resulting in savings of $10.5 million due to a reduction in interest payments over the remaining term of the loan.
2019 Third Quarter vs 2019 Second Quarter Financial Results
Revenue consisted of the following:
Three Months Ended
|Qsymia net product revenue||$||9,583||$||9,994|
|PANCREAZE/PANCREASE MT, net product revenue||5,266||5,110|
Qsymia net product revenue was $9.6 million and $10.0 million in the third and second quarters of 2019, respectively. In both the third and second quarters of 2019, approximately 86,000 prescriptions were dispensed. The Company continues to migrate Qsymia patients from a traditional retail pharmacy model to the Qsymia Advantage Program that is expected to improve access to Qsymia through, among other things, direct-to-patient distribution and improved pricing. During the third quarter, 22% of Qsymia scripts were dispensed through the Qsymia Advantage Program’s Direct-to-Patient model, up from 8% and less than 2% in the second and first quarters of 2019, respectively.
Milestone revenue represents the payment received related to Alvogen, VIVUS’ Korean marketing partner, obtaining marketing approval for Qsymia from the South Korea MFDS.
PANCREAZE® net product revenue was $5.3 million and $5.1 million in the third and second quarters of 2019, respectively. In the third quarter, this amount includes $0.1 million related to Canadian sales of PANCREASE® MT. Prior to the third quarter, the Company received a royalty on Canadian sales. The Company currently has a dedicated 10-person sales force, sampling program, full patient support program, a plan for investigator-sponsored trials in oncology, a digital marketing campaign strategy, along with a number of other enhancements.
Supply revenue consists of sales of STENDRA®/SPEDRATM to our licensees for sales in the EU and U.S. Supply revenue varies based on the timing of orders from our licensees and consists of minimum order requirements and such purchases do not correspond to end user demand.
Royalty revenue was $0.6 million and $1.5 million in the third and second quarters of 2019, respectively. Third quarter 2019 royalty revenue consisted of royalties earned on SPEDRA European revenues. Second quarter 2019 royalty revenue consisted of $1.0 million of royalties on PANCREASE MT Canadian revenue and $0.5 million of royalties on SPEDRA European revenues. In the third quarter, the Company assumed commercial responsibility for PANCREASE MT and began recording sales of PANCREASE MT as net product revenue.
Total cost of goods sold excluding amortization was $3.0 million and $4.4 million in the third and second quarters of 2019, respectively. The decrease was primarily due to no STENDRA supply revenue in the third quarter. Supply revenue varies based on the timing of orders by our commercial partners.
Amortization of intangible assets was $3.6 million in both the third and second quarters of 2019. The amount primarily consisted of amortization expense of costs capitalized related to the acquisition of PANCREAZE.
Selling, general and administrative expense was $9.2 million and $10.1 million for the third and second quarters of 2019, respectively, and included selling and marketing expense of $4.5 million and $4.6 million, respectively. VIVUS expects selling, general and administrative expenses to fluctuate with business development activities.
Research and development expense was $3.3 million and $2.4 million in the third and second quarters of 2019, respectively. In 2019, research and development efforts primarily consisted of activities related to the Qsymia adolescent and efficacy study (OB-0403), PANCREAZE post-marketing requirements assumed from Janssen and ongoing PANCREAZE product improvement initiatives.
Total interest and other expense was $9.9 million and $3.9 million in the third and second quarters of 2019, respectively. The increase in interest expense in the third quarter was due to prepayment premiums related to the reduction in debt balances.
Net loss for the third and second quarters of 2019 was $11.1 million and $5.9 million, respectively. Cash, cash equivalents and available-for-sale securities were $40.1 million at September 30, 2019.
Non-GAAP EBITDA for the third and second quarters of 2019 was $3.0 million and $2.1 million, respectively. Excluding the Qsymia milestone revenue and certain professional fees related to our debt buyback, recurring non-GAAP EBITDA was $1.2 million for the third quarter of 2019.
Conference Call Details
VIVUS will hold a conference call and an audio webcast to provide a business update and to discuss third quarter 2019 financial results today, November 5, 2019, beginning at 4:30 PM Eastern Time. Investors may listen to this call by dialing toll-free (877) 359-2916 in the U.S. and (224) 357-2386 from outside the U.S. The audience passcode is 2467905. A webcast replay will be available for 30 days and may be accessed at http://ir.vivus.com/events-and-presentations.
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.
For more information about Qsymia, please visit www.Qsymia.com.
Important Safety Information for Qsymia
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.
PANCREAZE is a prescription medicine used to treat people who cannot digest food normally because their pancreas does not make enough enzymes due to cystic fibrosis or other conditions. PANCREAZE may help your body use fats, proteins, and sugars from food. PANCREAZE contains a mixture of digestive enzymes including lipases, proteases, and amylases from pig pancreas. PANCREAZE is safe and effective in children when taken as prescribed by your doctor.
Important Safety Information for PANCREAZE
What is the most important information I should know about PANCREAZE?
- PANCREAZE may increase your chance of having a serious, rare bowel disorder called fibrosing colonopathy that may require surgery.
- The risk of having this condition may be reduced by following the dosing instructions that your healthcare provider gave you.
Call your doctor right away if you have any unusual or severe stomach area (abdominal) pain, bloating, trouble passing stool (having bowel movements), nausea, vomiting, or diarrhea.
Take PANCREAZE exactly as prescribed by your doctor. Do not take more or less PANCREAZE than directed by your doctor.
What are the possible side effects of PANCREAZE?
PANCREAZE may cause serious side effects, including:
- A rare bowel disorder called fibrosing colonopathy.
- Irritation of the inside of your mouth. This can happen if PANCREAZE is not swallowed completely.
- Increase in blood uric acid levels. This may cause worsening of swollen, painful joints (gout) caused by an increase in your blood uric acid levels.
- Allergic reactions including trouble with breathing, skin rashes, or swollen lips.
Call your doctor right away if you have any of these symptoms.
The most common side effects include pain in your stomach (abdominal pain) and gas.
Other possible side effects: PANCREAZE and other pancreatic enzyme products are made from the pancreas of pigs, the same pigs people eat as pork. These pigs may carry viruses. Although it has never been reported, it may be possible for a person to get a viral infection from taking pancreatic enzyme products that come from pigs.
These are not all the side effects of PANCREAZE. Talk to your doctor about any side effect that bothers you or does not go away.
You may report side effects to FDA at 1-800-FDA-1088 or www.fda.gov/medwatch.
What should I tell my doctor before taking PANCREAZE?
Tell your doctor if you:
- are allergic to pork (pig) products.
- have a history of blockage of your intestines, or scarring or thickening of your bowel wall (fibrosing colonopathy).
- have gout, kidney disease, or high blood uric acid (hyperuricemia).
- have trouble swallowing capsules.
- have any other medical condition.
- are pregnant or plan to become pregnant.
- are breast-feeding or plan to breast-feed.
Tell your doctor about all the medicines you take, including prescription and nonprescription medicines, vitamins, and herbal supplements.
The Product Information and Medication Guide for PANCREAZE is available at www.pancreaze.com.
About STENDRA/SPEDRA (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 subsidiaries 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 for STENDRA
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.
VIVUS is a specialty pharmaceutical 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 our ability to execute on our business strategy to enhance long-term stockholder value; risks and uncertainties related to our ability to address our outstanding balance of the convertible notes due in May 2020; risk and uncertainties related to the timing, strategy, structure and success of our capital raising efforts; risks and uncertainties related to our expected future revenues, operations and expenditures; risks and uncertainties related to our ability to identify and acquire cash flow generating assets and opportunities; risks and uncertainties related to the timing, strategy, tactics and success of the marketing and sales of PANCREAZE, including our ability to improve patient access to PANCREAZE; risks and uncertainties related to our commercialization of PANCREAZE as a new product and our management team initiating the commercialization of PANCREAZE; risks and uncertainties related to our, or our current or potential partner’s, ability to successfully commercialize Qsymia, including our ability to improve patient and physician access to Qsymia; risks and uncertainties related to the impact of promotional programs for Qsymia on our net product revenue and net income (loss) in future periods; risks and uncertainties related to our ability to sell through the Qsymia retail pharmacy network and the Qsymia Advantage Program; risks and uncertainties related to our ability to successfully develop or acquire a proprietary formulation of tacrolimus; risks and uncertainties related to our ability to identify, acquire and develop new product pipeline candidates; risks and uncertainties related to our ability to demonstrate through clinical testing the quality, safety, and efficacy of our current or future investigational drug candidates or approved products; risks and uncertainties related to the timing, strategy, tactics and success of the launches and commercialization of STENDRA/SPEDRA (avanafil) by our current or potential collaborators; 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 our ability to work with FDA to significantly reduce or remove the requirements of the clinical post-approval cardiovascular outcomes trial (“CVOT”); risks and uncertainties related to our dialog with certain concerned member states in Europe relating to the pending decentralized Marketing Authorization Application, the timing and scope of the assessment by such Concerned Member State health authorities of our Marketing Authorization Application, and ultimately the decision of such Concerned Member State health authorities whether to grant Marketing Authorization for Qsymia in such EU countries; 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 Board of Directors and 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, 2018 as filed on February 26, 2019, 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. Investor Relations: Lazar FINN Partners
Mark Oki David Carey
Chief Financial Officer Senior Partner
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
|September 30,||December 31,|
|Cash and cash equivalents||$||40,113||$||30,411|
|Accounts receivable, net||24,065||25,608|
|Prepaid expenses and other current assets||6,979||7,538|
|Total current assets||101,165||167,527|
|Property and equipment, net||273||341|
|Intangible and other non-current assets||123,366||134,279|
|LIABILITIES AND STOCKHOLDERS’ DEFICIT|
|Accrued and other liabilities||34,304||33,044|
|Current portion of lease liability||768||—|
|Current portion of long-term debt||184,190||—|
|Total current liabilities||226,672||43,200|
|Long-term debt, net of current portion||58,538||294,446|
|Deferred revenue, net of current portion||3,376||4,290|
|Lease liability, net of current portion||788||—|
|Non-current accrued and other liabilities||—||234|
|Commitments and contingencies|
|Preferred stock; $.001 par value; 5,000 shares authorized; no shares issued and outstanding at September 30, 2019 and December 31, 2018||—||—|
|Common stock; $.001 par value; 200,000 shares authorized; 10,643 and 10,636 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively||11||11|
|Additional paid-in capital||842,185||840,751|
|Accumulated other comprehensive loss||(6)||(270)|
|Total stockholders’ deficit||(63,271)||(40,023)|
|Total liabilities and stockholders’ deficit||$||226,103||$||302,147|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
|Three Months Ended|
|Net product revenue||$||14,849||$||15,104|
|Cost of goods sold (excluding amortization)||3,016||4,377|
|Amortization of intangible assets||3,638||3,638|
|Selling, general and administrative||9,207||10,070|
|Research and development||3,266||2,352|
|Total operating expenses||19,127||20,437|
|Loss from operations||(1,157)||(2,047)|
|Interest expense and other expense, net||9,911||3,880|
|Loss before income taxes||(11,068)||(5,927)|
|Provision for income taxes||4||8|
|Basic and diluted net loss per share:||$||(1.04)||$||(0.56)|
|Shares used in per share computation:|
|Basic and diluted||10,643||10,640|
GAAP to NON-GAAP RECONCILIATION
NET LOSS to EBITDA
A reconciliation between net loss on a GAAP basis and non-GAAP EBITDA is as follows:
|Three Months Ended|
|Interest expense and other expense, net||9,911||3,880|
|Depreciation of fixed assets||36||37|
|Amortization of intangible assets||3,638||3,638|
|Share-based compensation expense||483||467|
|Provision for income taxes||4||8|
|Fees from debt buy down||656||—|
|Non-GAAP recurring EBITDA||$||1,156||$||2,095|
Use of Non-GAAP Financial Measures
We supplement our condensed consolidated financial statements presented on a GAAP basis by providing an additional measure which is considered non-GAAP under applicable SEC rules. We believe that the disclosure of this non-GAAP measure provides investors with additional information that reflects the basis upon which our management assesses and operates our business. This non-GAAP financial measure is not in accordance with GAAP and should not be viewed in isolation or as a substitute for GAAP net loss and is not a substitute for, or superior to, measures of financial performance performed in conformity with GAAP.
We define non-GAAP EBITDA as net loss before interest expense and other expense, depreciation of fixed assets, amortization of intangible assets, share-based compensation expense and provision for or benefit from income taxes. We define non-GAAP Recurring EBITDA as non-GAAP EBITDA adjusted for certain non-recurring revenues and expenses, such as non-recurring milestone revenues, non-recurring restructuring and transaction costs and the one-time impact of changes in accounting estimates or the impact of new accounting standards. Management believes that non-GAAP EBITDA is a meaningful indicator of our performance and provides useful information to investors regarding our results of operations and financial condition.