Eventhough Vivus appears to be a screaming buy at these levels, I have the following concerns and comments about this stock. I AM NOT SHORT, but I'd like to be convinced that this recent renewal of enthusiasm is justified. I bring up these points for discussion purposes only and NOT to precipitate a conflagration between longs and shorts. Save your vitriol for the class-action suit.
--- End of the year liabilities may reduce Vivus' cash hoard to about $70mm instead of the $100mm number being thrown around. Due to tax considerations, I also doubt that they'll be able to earn the $1.00+ now quoted by most analysts.
--- It's STILL not so clear to me that management DIDN'T know about all these production issues beforehand and that additional negative announcements aren't just around the corner (I hope not but I have NO FAITH in management).
--- Rumor has it that the acquisition of a private female incontinence company fell through about 6 weeks ago. This was a major blow to the credibility of this company on the street.
--- A larger than expected amount of Muse may be shipped to overseas partners at a 60% discount to U.S. prices. What will this do to gross margins?
--- On Oct. 8th, Vivus management stated that there wasn't an inventory buildup in the wholesale channel but on Dec. 11th they conceded that product WAS in the channel (first 15 days, then 30, now 45!). Measured against the $39mm in Q3, this would be close to $20 million worth of Muse sitting in the wholesale channel! Does this story wash?
--- FWIW, rumor has it that Viagra's NDA has bypassed the FDA Advisory Committee which would shorten its anticipated launch date by 30-45 days. This would push up the potential release of Viagra to late March or April of next year. Further, PFE reps will be sampling the product to doctor's offices.
--- Depending on how one looks at it, Viagra's early release could initially hurt Vivus but may be ultimately benefial to the company as the market for ED quickly expands and possible synergy between the two products is explored. Early release of Viagra, however, will doom Zonagen's hope of obtaining fast-track approval for Vasomax' NDA (which is actually a mute point since Zonagen is a fraud, IMO).
Bradpalm1 |
