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To: Mark Fowler who wrote (135870)	12/16/2001 1:23:26 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

I bought Vivus. >>December, 14, 2001: (STRONG BUY) Goldman Sachs Inc. Vivus Succeeds Where Pfizer and Lilly-ICOS Have Failed- Raising Rating to Strong Buy more Vivus, Inc. Dec , 14 , 2001 , 08:00 : Erectile dysfunction is already a $1.5 billion market and could grow to more than $3 billion in 2005 if Cialis and vardenafil are approved next year. Yet, there are currently no FDA-approved products approved to treat female sexual dysfunction (FSD) despite the fact that there is a higher prevalence of FSD among women (43%) than ED among men (31%). Years of early research have been committed to finding potential pharmaceutical solutions for FSD; but, these efforts, by companies such as Pfizer and Lilly-ICOS, have failed to demonstrate a significant benefit in early clinical trials. Thus, the results of Vivus’ recently completed Phase II trial of ALISTA represent a significant advancement in the search for a possible treatment for FSD. Moreover, the timing of possible FDA approval is now predictable. Vivus is planning to initiate the first pivotal study (Phase II/III) of ALISTA in 1Q02. If successful, Vivus could enter into a confirmatory Phase III trial in 1Q03 with a possible NDA filing and FDA approval following in 2004. We believe Vivus is the leader in the race to get a product approved to treat FSD, a feat that should draw the attention of media and investors when the data is published in peer reviewed medical journals and presented at scientific meetings next year. If Vivus maintains its leadership position and succeeds on the clinical and regulatory front with ALISTA, we believe first year sales could easily reach $100 million in 2005. Peak sales could reach multiples of this figure, but would depend upon physician acceptance, patient satisfaction, and the competitive landscape at that time. We previously ignored the potential value of ALISTA due to the lack of supporting clinical evidence. Now, ALISTA appears to be Vivus’ lead compound. On its own, ALISTA could be worth $5 per share, nearly the value we assign to Vivus other compounds combined. Though we are not raising our $7 target price at this time, we are increasing our rating to Strong Buy from Buy.