On Thursday, VIVUS (NASDAQ:VVUS) reported total revenues for Q1 2007 of $1.7 million (versus $1.3 million in the same quarter last year). This resulted in a net loss of $7.4 million, or $0.13 per share, versus a net loss of $8.8 million, or $0.20 per share, for the same quarter last year. The lower net loss this year was the result of increased revenues and lower operating expenses.

The pharmaceutical company stands to benefit from two drugs: one to help menopausal women and one to help obese people.

In late March of this year, VIVUS announced an agreement with KV Pharma (NYSE:KV-A) to transfer its exclusive rights related to EvaMist, an investigational spray for the treatment of menopause symptoms that is absorbed through the skin. This transaction is expected to close by mid-2007, after the completion of a review by the Federal Trade Commission for antitrust issues.

VIVUS is set to receive an upfront $10 million payment at the closing of the deal, an additional $140 million upon approval of the New Drug Application for EvaMist, and payments of up to $30 million based on sales milestones. The NDA is under review by the FDA, with a decision expected by July 29.

With a current market cap just north of $300 million, the EvaMist deal is significant for VIVUS; the company stands to gain $140 million upon approval for a drug with peak estimated sales of around $100 million. It appears likely that the FDA will approve EvaMist based on a similar topical estrogen-replacement therapy product approved earlier this year: Biosante's (AMEX:BPA) Elestrin. These transdermal therapies are designed to expose women to the lowest possible dose of the hormone, thereby minimizing the risk of side effects, while also relieving symptoms like hot flashes.

However, the major potential for VIVUS lies in its experimental obesity drug, Qnexa, which had positive results released last year in a small study with 200 patients. Qnexa is a combination of already-approved drugs topiramate (better known as its brand Topamax) and phentermine. The company is expected to initiate a larger phase three trial for Qnexa later this year. The major upside for VIVUS based on the potential for Qnexa could come as a major licensing deal, or, given the current biotech buyout binge, a takeover by a larger biotech or drug company.

Mike Havrilla, R.Ph., B.S., Pharm.D., is a Rite Aid pharmacist who lives and works in the small Pennsylvania town of Portage. He invites your comments and feedback at mikerx77@yahoo.com. Mike does not have a position in any company mentioned here. The Fool has a disclosure policy.