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Biotech / Medical : VVUS: VIVUS INC. (NASDAQ)
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To: ChinuSFO who wrote (4604)1/15/1998 5:52:00 PM
From: bigg e   of 23519
 
CR...Just go off CC. Didn't sound much different from last CC with the exception that CEO did state that old plant was producing at full capacity (approx 600,000 units per month). What I'm assuming, going forward, sounded like Q1 could earnings will probably less than stellar.This is based on following factors. 1) Company indicated Q4 they shipped approx 150K units to ASTRA. Q1 '98 they said ASTRA shipment would be significantly higher but they would not give specific numbers. Product shipped to ASTRA is at greatly reduced margins, although they did not specify what that number is. They did indicate that previous to Q4 margins were running in 71% range. Q4 margins were approx 53%. Not good without MCA approval for new plant. 2) MCA approval for new plant will hopefully occur in mid FEB. Product is being produced at new facility at risk and could be shipped to ASTRA with final MCA approval. They did not indicate how much product from new plant has been produced or what the production capability of new facility is at this point. Nor did they address what new plant prodution capability would be with final MCA approval or how many lines would be operational. 3) Indications of pretty large capital expenditure with upcoming advertising campaign that could have effect on bottom line for Q1 net. But the ad campaign is a necessity and these expenditures should not catch anyone off guard. 4) In reference to stock repurchase plan, indicated of 2M share buyback plan, approx 340K shares had been purchased in fiscal '97. Would not disclose any further repurchase plans for Q1 '98 as this was not company policy. Would seem to me that at these prices, company would be rather aggressive in marketplace. Again we're left guessing. 5) Did not address what effect new facilty would have on bottom line as far as production costs. Would seem that a new state of the art facility would create higher yield and decrease time from product initiation to completion. I believe new facility has in house labratory also which should increase efficiency and lower costs. None of this was addressed in CC. Overall, don't look for any major moves upward based on CC. Believe street will again take a wait and see approach pending MCA approval and effects of marketing campaign
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