To all:
I think it is fair to say, unless you were short, VVUS has not been the place to be over the last seven or eight months. We have people frustrated, elated, fighting, hyping, dogging, and anything else imaginable. It is all very understandable. Many people, like myself, have lost a lot of money in VVUS. In these negative times, people begin to question their decisions, and rightfully so. Like pain, bad stock prices alert us that something may be wrong. Sometimes it is just a scratch, and sometimes there is something more signifcant going on. So, in the case of VVUS, us shareholders are forced to decide which is it, a scratch or a lost limb?
For current shareholders and people interested in becoming one, here is a list (incomplete, I'm sure) of pros and cons to this stock.
Cons
1.Overall market sentiments seem more bearish lately.
2.Viagra. VVUS sales have been killed since Viagra's launch and we have seen no sign of recovery. What is to prevent this from happening internationally.
3.Management seems shakey at best. They did a great job of creating the product and selling in an uncompetitve market, but they seem ilequiped to handle the competition. Not to mention, their PR is barely existent at best.
4.The lawsuit. It may not cost the company much financially, but it weighs heavy on their minds and ours.
5.More competition coming to market. Not soon, but will we have to go through this whole process again?
6.Two quarters of selling all we can produce and still in the red.
7. A huge short position. Many people have accused shorts of keeping the stock down. On one hand, there is a chance of a squeeze (unlikely), but on the other, why fight the battle. There are plenty of stocks with out such an incredible short position.
Pros
1.In down markets, people might be looking for more value. If you assume VVUS is going to recover and you assume their delivery system is worth more than $180 MM there is certainly value here.
2.Overseas, VVUS has marketing parners, Astra and Jansen, who are
much more apt to deal with competition. These are strong companies who know their way around marketing pharm's.
3.They are trying to hire a PR firm. I don't know when it will happen, but at least they acknowledge their shortcoming. As far as MNGMT. goes, I am not sure how to defend them. They are open to using a domestic marketing partner. I, for one, would be very happy to see this. They are too small and green to deal with US marketing. Bring in Merck, that's what I say.
4.Most of the future competition will be orals, mostly competing with PFE. It is true, the people who came back to Muse (where Viagra didn't work) may try the new drugs, but, I would think after trying one and finding VVUS to work, they would be less apt to try again.
5.The effects of the new marketing force have not been seen yet. So, for this quarter especially, the are contributing to the expenses.
For Q1, this is not the case. I don't exactly know the reason. Probably international sales. VVUS gets significantly lower margins from overseas sales because they don't get rewarded for marketing efforts, since they have none. When the new plant is up and running, I expect to see costs down and margins up. I agree with taking a loss now if it means getting product to market. Get the name out there so when we do start producing at reduced costs, we have a market to sell to.
I am sure there are more points, but I want to end this post, now. If I think of more, I will post them. I'm sure others will add. The important thing here is to do your homework, evaluate your position, then reevaluate you postion and go from there. I certainly have considered cutting my losses, but at these levels, I think it worth enduring for a couple of months to see if the story unfolds the way I think (and hope) it will.
My two cents,
Colby |
