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Biotech / Medical : VVUS: VIVUS INC. (NASDAQ)
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To: alan laValley who wrote (13536)8/17/1998 9:57:00 PM
From: VLAD  Read Replies (1) of 23519
 
al,

I agree but the equipment leased is the equipment used as collateral.

On a much smaller scale, many doctors use a similar type of lease plan where instead of buying the equipment the doctor leases it and often at the end of the lease the doctor is allowed to buy the equipment for let's say one penny. The company is getting the use of equipment it could not otherwise afford to pay cash for and does indeed get to own the equipment at the end of the lease. This is not bad. As far as using future product payments as a source of financing this is never mentioned in the Q form--I believe that martin mentioned this as a viable alternative as done by Zonagen to get money for Vasomax research and approval. If Vivus can get payment from Astra or Janssen for the RIGHTS to market and sell Alibra then this is a totally different story.

I agree that the stock buy back decision was a critical error. Vivus sure could have used this money to cushion the Viagra effect and in fact they could now have bought back the same number of shares with over 15 million to spare.

IMO Wilson and the CFO should show some loyalty to the company and shareholders and pay for their poor judgement by doing what Lee Iococa did when he worked for Chrysler (take an annual salary of $1.00). The stock buy back was a temporary cure which now creates a longer term problem.

I myself feel that they should not spend a penny on the Ireland plant until the new New Jersey plant is running at near full capacity. I am sure that if Vivus ran 8 lines in the new plant with 3 shifts 7 days a week then along with the PACO plant they can produce enough product to supply both domestic and international markets through the middle of 1999 when the international Viagra effect will be known.

Management has a lot of responsibility to at least get the financial aspects in line after their past poor judgements.

Another option that I feel would help would be for Astra or JNJ to take an equity stake in the company with the understanding that with such a stake they would have significant say in the management decisions. They certainly would have better insight into what they can or can not do in foreign markets where Viagra is available.
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