VIVUS Reports 1997 Year End And Fourth Quarter Financial Results And Settlement Of Lawsuit
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Jan. 15, 1997--VIVUS, Inc. (NASDAQ:VVUS) today reported net income of $5.8 million, or $0.17 per share, on $29 million in product revenues for the fourth quarter and $36.6 million, or $1.03 per share, on $129.3 million in product revenues for the year ended December 31, 1997.
Included in these results is the settlement of a lawsuit with a former consultant of the Company for $5.1 million and the impact of reducing the Company's estimated effective tax rate. These results compare to losses of $9.2 million, or $0.28 per share, and $16.5 million, or $0.55 per share, for the respective periods in 1996.
"Product revenues of nearly $130 million on sales of 8 million units far exceeded our initial expectations," commented Leland Wilson, President and CEO of VIVUS, Inc. "This performance ranks MUSE among the most successful product launches in the history of the urology marketplace."
Product revenues for the fourth quarter were $29.0 million, a decrease of $10.1 million or 26 percent from the third quarter. The Company did not meet its production goals for the fourth quarter resulting in this decline. Product revenues were $129.3 million for the year ended December 31, 1997. Revenues and net earnings for the fourth quarter and year ended December 31, 1997 were higher than the same periods last year due to the commercial launch of the Company's first product, MUSE (R)(alprostadil), in January 1997.
Research and development expenses for the fourth quarter and year ended December 31, 1997 were less than the same periods in 1996 due to higher pre-launch manufacturing expenses, as well as higher costs in 1996 associated with the preparation and filing of the Company's New Drug Application for MUSE (alprostadil), and expenses associated with obtaining certain patent rights. Selling, general and administrative expenses increased in the fourth quarter and for the year ended December 31, 1997 compared with the same periods in 1996 primarily as a result of higher marketing expenses and the hiring of additional personnel.
During the quarter, the Company recorded the settlement of a lawsuit with a former consultant. Payment of the $5.1 million settlement was made on January 5, 1998. Because of the lower fourth quarter product sales and the settlement of the lawsuit, the Company revised its estimated 1997 effective tax rate to 8 percent from 18 percent, resulting in a fourth quarter tax benefit of $3.5 million.
Cash, cash equivalents and available-for-sale securities at December 31, 1997 totaled $91.7 million, compared with $84.3 million at December 31, 1996. Net accounts receivable of $12.8 million related primarily to commercial sales of MUSE (alprostadil). During 1997, net inventories increased $4.5 million, almost entirely due to raw materials. Net fixed assets at December 31, 1997 increased by $30.1 million from December 31, 1996 primarily resulting from approximately $23 million of costs associated with the Company's new 90,000 square foot production facility in New Jersey.
"It is critical for the Company to receive regulatory approvals of its new manufacturing facility," stated Wilson. "We have held off initiating MUSE advertising programs throughout 1997 because of our production capacity constraints. Without substantial efforts to build the market in 1997, we have seen a decline in demand. In anticipation of receiving regulatory approvals of our new facility and because inventories are stable at the wholesale level, VIVUS will launch its first direct-to-consumer advertising campaign. This campaign will kick off its first television commercial on January 31, 1998 during the AT&T Pebble Beach National Pro-Am and will include other major TV, newspaper and magazine placements."
"Until we receive the required approvals for our new facility, both domestic and international markets will need to be supplied from our current facility," continued Wilson. "If international sales increase as anticipated, product available for the domestic market will be reduced and gross margins will be adversely impacted."
"While we face short-term challenges, we have invested aggressively to build our manufacturing capabilities and are now able to invest in demand generation," added Wilson. "This strategy positions us well in 1998 to compete effectively around the world for market leadership for the treatment of erectile dysfunction."
Founded in 1991, VIVUS, Inc. is a leader in the development of advanced therapeutic systems for the treatment of erectile dysfunction, commonly referred to as impotence. VIVUS has pioneered a novel therapy for erectile dysfunction known as the transurethral system for erection. This therapy consists of a proprietary, non-invasive drug delivery system that delivers pharmacologic agents via the urethra. -0- Note To Editors and Investors: Additional written materials, recent releases and Company information are available through a variety of sources, including the VIVUS home page (www.vivus.com) and the VIVUS Fax-On-Demand Service (1-888/329-5719). -0- *T
VIVUS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31, 1997 1996 1997 1996
(unaudited)
Net product revenue $ 28,970 $ - $129,337 $ - Milestone revenue 4,000 - 9,000 20,000
Net revenues 32,970 - 138,337 20,000
Cost of goods sold 9,368 - 38,288 -
Gross margin 23,602 - 100,049 20,000
Operating expenses: Research and development 4,209 5,271 12,123 28,279 Selling, general and
administrative 13,357 5,232 47,931 11,733 Settlement of lawsuit 5,050 - 5,050 -
Total operating
expenses 22,616 10,503 65,104 40,012
Income (loss) from
operations 986 (10,503) 34,945 (20,012)
Interest and other income 1,365 1,294 4,856 3,485
Income (loss) before
taxes 2,351 (9,209) 39,801 (16,527)
Income tax provision
(benefit)(a) (3,495) - 3,184 -
Net income (loss) $ 5,846 $ (9,209) $ 36,617 $(16,527)
Net income (loss) per
common and equivalent
share: (b) Basic $ 0.18 $ (0.28) $ 1.11 $ (0.55)
Diluted $ 0.17 $ (0.28) $ 1.03 $ (0.55)
Shares used in the
computation of net
income (loss) per
share: (b) Basic 33,183 32,424 32,996 29,833
Diluted 35,422 32,424 35,559 29,833
(a) The Company's estimate of its effective tax rate for the year ended December 31, 1997 was revised in the fourth quarter to 8 percent as compared with an estimate of 18 percent earlier this year resulting in a tax benefit for the quarter.
(b) As of December 15, 1997, the Company adopted SFAS No. 128, "Earnings per Share" for the year ended December 31, 1997. All prior periods presented have been restated to conform with this new statement. Additionally, all amounts reflect the 2 for 1 stock split which occurred in the second quarter of 1997.
VIVUS, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) ASSETS
December 31, December 31, 1997 1996 Current assets: Cash $ 6,161 $ 555
Available-for-sale securities 52,955 60,710
Trade and other receivables 12,802 748
Inventories 9,084 4,540
Prepaid expenses and other 625 587
Total current assets 81,627 67,140
Property & equipment 36,462 6,332
Available-for-sale securities, non-current 32,580 23,060
Total $ 150,669 $ 96,532
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 6,574 $ 3,324
Accrued and other liabilities 20,165 3,428
Total current liabilities 26,739 6,752 Stockholders' equity: Common stock; $.001 par value; shares authorized 200,000,000; shares outstanding - Dec. 31, 1997, 33,167,964; Dec. 31, 1996; 32,454,340(a); 33 32
Paid in capital 153,336 156,173
Unrealized gain on securities 98 77
Deferred compensation - (348) Accumulated deficit (29,537) (66,154) ------------- ------------
Total stockholders' equity 123,930 89,780
Total $ 150,669 $ 96,532
(a) Prior period shares have been adjusted to reflect the 2 for 1 stock split which occurred in the second quarter of 1997.
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CONTACT:
VIVUS, Inc.
Nina W. Ferrari or David Yntema, 650/934-5200
IR@VIVUS.com |
