VIVUS (VVUS) will release its quarterly report on Monday, and investors haven't been happy with the way that the obesity-drug maker's stock has performed. Despite the huge potential in the obesity-treatment space that sent shares of VIVUS, Arena Pharmaceuticals (ARNA), and Orexigen Therapeutics (NASDAQ: OREX) soaring in early 2012, VIVUS has seen its stock lose half its value over the past year as its Qsymia drug hasn't lived up to high expectations.

Source: VIVUS.

The poor performance from VIVUS and Arena has been particularly surprising because of the lack of viable obesity drugs in the market before their respective offerings gained approval. Because of that, most analysts expected that sales of both Qsymia and Arena's Belviq would soar once they got FDA approval. Yet struggles to create growth in Qsymia sales have led many investors to give up on VIVUS stock entirely. Let's take an early look at what's been happening with VIVUS over the past quarter and what we're likely to see in its report.

Stats on VIVUS

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$28.2 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can the VIVUS earnings report make investors more confident?
Analysts in recent months have marked down their views on VIVUS earnings, widening their loss expectations by a penny per share for the fourth quarter and $0.02 per share for the full 2014 year. The stock has kept sliding, losing more than 30% of its value since mid-November.

VIVUS started the quarter on a downbeat note, with third-quarter results pointing to the continuing troubling trend of subpar sales growth. More than 75% of the revenue VIVUS brought in during the quarter came from a licensing agreement for its erectile-dysfunction drug avanafil, with Qsymia generating just $6.4 million in sales. In response, the company said it would cut 20 workers, representing about a sixth of its workforce, in order to help reduce overhead costs.

Unfortunately, this quarter might not represent a big turning point for VIVUS. Arena's Belviq sales for the fourth quarter amounted to just $7.5 million, and while that's up almost 40% from the third quarter, it's still just a fraction of what the company had expected. So far, neither company seems to have done a good job convincing doctors that their drugs are a good treatment option for patients, and with health-insurance companies having been reluctant to cover their cost, VIVUS and Arena's marketing partner Eisai have been in the tough position of having to offer discounts to keep customers.

Further competition is also on its way, as Orexigen's Contrave is expected to come up for FDA by mid-year. Like Belviq, Contrave doesn't produce as much weight loss as Qsymia does, but it also has a more attractive safety profile than the VIVUS drug. Yet some believe that Contrave could actually help Qsymia sales by drawing more attention to the obesity-drug space overall.

VIVUS is also making further efforts to boost its prospects. Last month, the company said it would work with health insurer Aetna (AET) on a weight-loss program for the insurance company's members in hopes of boosting Qsymia's sales. Moreover, with a licensing deal with Auxilium Pharmaceuticals (NASDAQ: AUXL) to market Stendra, one of avanafil's brand names, VIVUS will bring in $30 million in upfront payments and as much as $300 million in future milestone payments.

In the VIVUS earnings report, watch to see what the company's plans are for adding sales. With CEO Seth Fisher having said that he hopes to get Medicare Part D coverage for Qsymia, it'll be interesting to see what other tricks VIVUS might have up its sleeve to try to restore investor confidence in the company.

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