VIVUS Inc.’s (VVUS - Analyst Report) fourth-quarter 2014 loss (excluding one-time items) of 25 cents per share was wider than the Zacks Consensus Estimate loss by a penny and the year-ago loss of 9 cents. The wider loss was primarily due to lower revenues.

The company’s total revenues for the fourth quarter of 2014 came in at $21.7 million as compared to $44.1 million in the year-ago period. Fourth quarter 2014 revenues did not include license and milestone revenues as compared to $38.8 million in the year-ago quarter. Revenues were below the Zacks Consensus Estimate of $23 million.VIVUS’s 2014 loss (excluding one-time items) of 74 cents per share was narrower than the year-ago loss of $1.30 and the Zacks Consensus Estimate loss of 76 cents. Annual revenues came in at $114.2 million, up 40.8%. Revenues were in line with the Zacks Consensus Estimate.

Quarter in Details

Fourth quarter revenues included $8.2 million of supply revenues and $0.8 million of royalty revenues related to its erectile dysfunction (ED) drug, Stendra (EU trade name: Spedra).

The company’s weight management drug Qsymia generated net product sales of $12.7 million as compared to $12.5 million in the third quarter of 2014. Qsymia prescriptions (approximately 136,000) witnessed an approximate 2.9% sequential decline. In the reported quarter, 61% of total prescriptions were a free good or on a discount offer. On the fourth 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. 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 - Analyst Report) for developing and commercializing the drug in Africa, the Middle East, Turkey, and the Commonwealth of Independent States (CIS) including Russia.

In Jan 2015, Stendra was approved in the EU and can now be taken as early as approximately 15 minutes before sexual activity. In Sep 2014, Stendra’s label was expanded in the same indication in the U.S. as well. The previously approved prescribing information recommended administration of Stendra approximately 30 minutes before.

In the reported quarter, research and development expenses were $2.7 million, down 46% year over year. Selling, general and administrative expenses were down 26.8% to $26.8 million.

Our Take

We are disappointed by VIVUS’ fourth-quarter results as both loss per share and revenues during the quarter missed our estimates. We are also disappointed by the sequential decline in Qsymia’s prescriptions.

Moreover, 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. and EU is positive for VIVUS.

VIVUS currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Cytokinetics, Incorporated (CYTK - Snapshot Report) and Affymetrix Inc. (AFFX - Analyst Report). Both stocks hold a Zacks Rank #1 (Strong Buy).

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