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What: Shares of VIVUS (NASDAQ:VVUS), a biopharmaceutical company engaged in the development of anti-obesity, diabetes, and erectile dysfunction therapies, rose by as much as 15% after it reported better-than-expected first-quarter results.

So what: For the quarter, VIVUS delivered a close to 800% increase in revenue to $36.7 million while its loss shrank considerably to just $15.6 million, or $0.15 per share, from $53.6 million, or $0.53 per share, in the year-ago period. VIVUS recognized a number of milestone and royalty revenue payments this past quarter which helped push its results well past the $11.4 million in revenue and $0.37 EPS loss that Wall Street had expected. With the exception of the sequential fourth quarter, VIVUS had reported a wider-than-expected loss in eight straight quarters, so investors appear pleased that losses are shrinking and VIVUS is finally topping the Street's lowered estimates.

Now what: But all is not what it seems. As I also noted earlier this morning VIVUS' anti-obesity drug Qsymia put up another dud of a quarter. Although revenue rose to $9.1 million from $4.1 million, prescriptions written actually fell to 121,000 in Q1 from 124,000 in the sequential fourth quarter. Although you can read my more in-depth analysis here, my main points as to why Qsymia is struggling revolves around its less favorable safety profile relative to its peers, its inability to gain much ground with insurers, the fact that it still has no marketing partner and its peers do, and that Contrave's PDUFA date is coming up and physicians may be holding off on prescribing Qsymia until they know the outcome of the FDA's decision.

All told, investors would be wise not to count on this quarters' milestone revenue as recurring revenue and should instead focus on the large disappointment that Qsymia has been thus far. Unless VIVUS gains a marketing partner with experience, I'm not sure sales of its anti-obesity drug are ever going to take off. What that means for investors is more losses and more cash burn – and that's a recipe to keep your distance if I've ever seen one.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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