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Biotech / Medical : VVUS: VIVUS INC. (NASDAQ)

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To: Neil_L who wrote (4601)	1/15/1998 5:07:00 PM
From: ChinuSFO	Read Replies (4) of 23519

I extracted some statements that concern me (My comments are CAPITALIZED) <<During 1997, net inventories increased $4.5 million, almost entirely due to raw materials.>> HMMMM . . . . DO I BELIEVE THAT? IF I DO, WHY ARE RAW MATERIALS SITTING AROUND COSTING US MONEY? WHAT IS THE LEAD TIME ON THESE ITEMS? COULD IT BE THAT THEY PURCHASED THEM IN ANTICIPATION OF DEMAND WHICH DID NOT MATERIALIZE? <<Without substantial efforts to build the market in 1997, we have seen a decline in demand.>> OUCH! <<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.>> AGAIN, THIS STATEMENT IMPLIES DECREASED DEMAND. If international sales increase as anticipated, product available for the domestic market will be reduced and gross margins will be adversely impacted. HOW WILL THAT REDUCE GROSS MARGINS? SOMEBODY PLEASE EDUCATE ME . . . . . . (COULD THEY BE SING INTERNATIONAL SALES AS AN EXCUSE?) REGARDLESS, GROSS MARGINS GOING DOWN IS NEVER GOOD. <<While we face short-term challenges, we have invested aggressively to build our manufacturing capabilities and are now able to invest in demand generation.>> WHAT HAPPENED TO DEMAND? DO WE FINALLY HAVE ENOUGH CAPACITY AND NO DEMAND? CR (I hope the conference call was better than the press release . . . )

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