Whenever short-sellers start jumping into a stock with both feet, it's generally a good idea to understand why. 

VIVUS (NASDAQ:VVUS) has seen its short interest skyrocket this year to over 35% of the float, while the company's share price has subsequently dropped more than 40% year to date. With that in mind, let's consider three reasons why shorts are taking aim at this once high flying biotech. 

VVUS Chart

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Reason No. 1
The commercial performance of both of VIVUS's approved drugs, Stendra and Qsymia, have been lackluster to date. In the first quarter, Qsymia generated only $9.1 million in sales and Stendra brought in a mere $0.8 million in royalties.

Although Qsymia sales have more than doubled year over year, they are still on track to generate less than $40 million in annual revenue for the company. For a drug that was once believed to be a potential blockbuster, that's certainly not a good sign. And because VIVUS' drugs haven't performed well commercially, the company isn't close to becoming cash flow positive any time soon, with cash decreasing about $27 million sequentially from fourth quarter 2013 on a net income loss of almost $16 million.

Reason No. 2
The obesity drug space has proven to be a tough nut to crack, and competition is only expected to increase in the near future. For instance, Arena Pharmaceuticals' (NASDAQ:ARNA) competing drug, Belviq, appears to be on track to fall below $50 million in sales this year and Orexigen's (NASDAQ:OREX) experimental drug Contrave is looking to gain approval in the third quarter.  

And adding to this malaise, Novo Nordisk could have an obesity drug approved soon and Zafgen is developing an injected obesity treatment that could be more potent than any of the currently approved therapies. In sum, Qsymia is facing a number of tough challenges in its quest to increase sales and gain market share. 

Reason No. 3
Despite Qsymia's anemic sales, generic drugmakers are already knocking on the door. Specifically, Actavis (NYSE:AGN) filed an Abbreviated New Drug Application, or ANDA, with the FDA earlier this year for a generic version of Qsymia, resulting in a lawsuit being filed by VIVUS in an attempt to block a formal review of the application.

Why Actavis is interested in this drug is somewhat puzzling, but this is yet another threat to VIVUS' core business that will cost the company precious resources. Looking ahead, VIVUS' lawsuit will delay a formal review of Actavis' ANDA until either a ruling is made regarding Qsymia's patents or 30 months from VIVUS' receipt of the application. 

Foolish wrap-up
VIVUS presently boasts of one of the highest short interests in the biotech industry. And while such a scenario lends itself to a possible squeeze type situation, it's hard to imagine a catalyst coming into play that would scare shorts away en masse. 

Although we heard rumors of a potential takeover by Aspen Investment awhile back, the proposed deadline for a tender offer has come and gone. And as things stand now, I don't think we'll see other suitors lining up for this struggling biotech.

The overarching problem is that doctors, by and large, simply haven't bought into this new generation of obesity drugs. At the end of the day, none of these drugs provide more than modest weight loss and their side effect profiles in the real world are still being understood. Put simply, I don't think VIVUS is setting up for a major turnaround and the company's rising short interest shouldn't be taken lightly moving forward.