Vivus, Inc.
Investext: PAINEWEBBER INC. , 03/01/1999, 1 page.
RESEARCH NOTE
March 1, 1999
Vivus (VVUS-$2.59)[2,3]
Rating: Buy
Vivus: German Approval; $2 Million Milestone Payment
KEY POINTS
* Vivus has received German approval for the MUSE, triggering a $2 million milestone payment to the company from Astra, its European marketing partner.
* Denmark, the Netherlands, Ireland, Luxembourg, and Finland have also recently granted regulatory approval for the product. Astra is planning to launch MUSE in these countries during the June quarter of this year.
* Our forecast continues to call for an incremental $6 million in milestone payments by the end of the second quarter. VVUS is rated Buy for speculative, risk-tolerant accounts.
Key Data
52-Wk Range $13-2
Eq. Mkt.Cap. (MM) $83
Sh. Out. (MM) 32
Float 92%
Inst.Hldgs. 20.7%
Av. Dly.Vol. (K) 790
Curr. Div./Yield None/NA
Sec.Grwth.Rate
12-mo. Tgt Price $9.00
12-mo. Ret. Pot'l 247.5%
Convertible? No
Quarterly Earnings Per Share
1997A 1998A Prev 1999E Prev
1Q $0.22 ($0.07)A $0.01
2Q 0.22 (0.56)A 0.10
3Q 0.25 (0.02)A 0.02
4Q 0.14 0.03A 0.07
Year $0.83 ($0.61) $0.20
FC Cons.: $1.03 ($0.86) $0.21
Revs. (MM): $129 $72 $41
P/E: 3.1x NM 12.9x
Vivus is a developer of advanced therapeutic systems for the treatment of erectile dysfunction, including the Medicated Urethral System for Erection (MUSE), a non-invasive, easy to use system that delivers pharmacological agents into the urethra.
SUMMARY AND INVESTMENT RECOMMENDATION
Vivus has received notification that the license necessary for the introduction of MUSE in Germany has been granted, triggering a $2 million milestone payment to the company from Astra (A-$19.81), one of its international marketing partners. Several additional countries in the European Union have also recently issued licenses for MUSE, including Denmark, the Netherlands, Ireland, Luxembourg, and Finland. Astra is planning to launch MUSE in these countries during the June quarter of this year. At the end of 1998, Vivus had $24 million in cash and equivalents on its balance sheet. Our forecast continues to call for an incremental $6 million in milestone payments that are linked to other European approvals, all of which should be recognized by the end of the second quarter. VVUS remains Buy rated for speculative, risk-tolerant accounts.
RISKS
Our main concerns relate to whether Vivus can manufacture its product in sufficient commercial quantities at a much lower cost and market it successfully to its customer base. We are also monitoring the regulatory progress of competitive products that may reach the market this year or next.
2. PaineWebber Incorporated makes a market in this security.
3. PaineWebber Incorporated has acted in an investment banking capacity for this company.
The information contained herein is based on sources we believe to be reliable, but its accuracy is not guaranteed. PaineWebber Incorporated and/or Mitchell Hutchins Asset Management Inc., affiliated companies and/or their officers, directors, employees or stockholders may at times have a position, including an arbitrage or option position, in the securities described herein and may sell or buy them to or from customers. These companies may from time to time act as a consultant to a company being reported upon.
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