VIVUS Inc.’s (VVUS) third-quarter 2014 loss (excluding one-time items) of 11 cents per share was much narrower than the Zacks Consensus Estimate of a loss of 21 cents and the year-ago loss of 27 cents.

The company’s total revenues for the third quarter of 2014 came in at $33.9 million as compared to $27.4 million in the year-ago period. The third quarter 2014 revenues included $15.1 million of license and milestone revenues, $5.3 million of supply revenues and $1.1 million of royalty revenues related to its erectile dysfunction (ED) drug, Stendra (EU trade name: Spedra). Revenues were above the Zacks Consensus Estimate of $28 million.

Quarter in Details

The company’s weight management drug Qsymia generated net product sales of $12.5 million as compared to $11 million in the second quarter of 2014. Qsymia prescriptions (approximately 140,000) witnessed an approximately 1.4% sequential increase. In the reported quarter, 63% of total prescriptions were a free good or on a discount offer. On the third quarter conference call, the company stated that it is still looking for partnership opportunities for Qsymia.

Apart from Qsymia, the company’s portfolio consists of another product Stendra. Auxilium Pharmaceuticals Inc. (AUXL) had launched the product in the U.S. in Dec 2013, while Menarini launched the drug in the EU in Apr 2014. VIVUS has licensed Sanofi (SNY) for the development and commercializing of the drug in Africa, the Middle East, Turkey, and the Commonwealth of Independent States (:CIS) including Russia.

In Sep 2014, Stendra’s label was expanded in the U.S. Stendra can now be taken as early as approximately 15 minutes before sexual activity. The previously approved prescribing information recommended administration of Stendra approximately 30 minutes before.

In the third quarter of 2014, research and development expenses were $2.6 million, down 69.4% year over year. Selling, general and administrative expenses were down 27.1% to $27.8 million.

Our Take

We are encouraged by VIVUS’ third-quarter results. We are also pleased with Qsymia’s prescription growth.

However, the competitive nature of the obesity market, given the presence of Belviq and others, keeps us concerned. The successful commercialization of Qsymia is crucial for the financial performance of VIVUS. We also believe that the company needs to find a suitable partner for Qsymia soon to maximize its potential.

Meanwhile, Stendra’s successful label expansion in the U.S. is another positive for VIVUS.

VIVUS currently sports a Zacks Rank #1 (Strong Buy). An equally attractive stock in the health care sector is AMAG Pharmaceuticals, Inc. (AMAG).

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