Headline: Vivus Shares Plummet On News Production Changes Will Hurt Sales
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MENLO PARK, Calif. -(Dow Jones)- Shares of Vivus Inc. sank Wednesday
after the company warned it won't meet its production goals for the
fourth quarter, hurting revenue, because of efforts to expand production
capacity into its new 90,000-square-foot plant.
Shares of Vivus (VVUS), which makes the impotence treatment Muse,
fell $7.313, or 36%, to $12.813 on heavy volume of more than 2.6 million
shares in early trading. The news comes as investors are already
skittish that a competing product from Pfizer Inc. could hurt Muse.
The company said that in an effort to complete construction and focus
on international and U.S. regulatory approvals for the new plant, it
shifted existing equipment and personnel to the new plant.
Vivus said it also plans to suspend production from Christmas to New
Year's Day at its existing plant to complete needed maintenance because
the plant has run at full capacity since the product was launched.
The company said it expects about a 25% reduction in fourth quarter
product revenues from the third quarter as it continues to be "capacity
constrained" because of the expansion and the suspension.
For the third quarter ended Sept. 30, Vivus had $39.1 million in
revenues. For the fourth quarter ended Dec. 31, 1996, the company had no
revenues.
Vivus anticipates that shipments from its new plant to Europe and
U.S. will be delayed until the first and second quarters, respectively,
subject to regulatory approvals. The company expects capacity
constraints until then.
The company's impotence treatment combines an easy-to-use plastic
applicator that inserts the generic drug alprostadil, an already proven
medication. The product has advantages over painful injections or
implants.
However, Muse may not be as easy to use as Pfizer's oral pill, which
is under expedited review at the Food and Drug Administration. Pfizer
has touted its drug, Viagra, as a "breakthrough" and said it helped
improve erections in roughly 80% of those who tried it, according to
assessments from both patients and their partners, the company has said.
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