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TheStreet Open House

The Five Dumbest Things on Wall Street This Week: March 1

Stocks in this article: MSOLYVAHVVUSAVID

3.) Vivus Marketing Mess

The sales and marketing folks at Vivus (VVUS) better start pulling their weight soon, or the company's market cap is going to slim down in a hurry.

Or should we say, slim down even more!

Shares of the biotech shriveled 12.5% Tuesday after it said sales of the highly anticipated weight loss drug Qsymia totaled $2 million in the latest quarter, a sum that was $1 million short of downgraded analyst consensus. Last fall, in case you forgot, analysts on average were looking for more than $24 million in Qsymia sales during the December quarter.

On the whole, Vivus said it lost $56.7 million, or 56 cents per share, during the fourth quarter compared with a loss of $11.5 million, or 13 cents, last year. Wall Street's pencil-pushers expected a loss of 25 cents per share and $3 million in revenue. For all of 2012, Vivus lost $139.9 million, or $1.42 per share, wider than its net loss of $46.1 million, or 55 cents, in 2011.

Yeah, it was a pretty big miss by any stretch of the imagination both by the company itself, as well as Wall Street's so-called experts. And what makes it all the more painful for everybody involved - except merry-old us of course - is the amount the company spent to ring up that measly sales result.

Vivus shelled out more than $50 million in SG&A to generate those lousy $2 million in Qsymia sales in the fourth quarter. Add in R&D costs and Vivus' total operating expenses topped $58 million.

Holy cow guys! We know there is limited insurance coverage and high copays for this drug. Furthermore, we are well aware the drug is only available through mail order. Nevertheless, that ROI is miniscule given the push Vivus has given this product in the form of free trials and other PR shenanigans.

And according to TheStreet's biotech ax Adam Feuerstein, if Vivus doesn't get more bang for its marketing bucks, the company could wither away by this time next year.

"Vivus ended last year with $213 million in the piggy bank and refused to offer any spending guidance for 2013 except to acknowledge that marketing expenses for Qsymia will remain high. Even if Qsymia sales pick up, Vivus' current and expected rate of spending means there's less than a year's cash remaining," wrote Feuerstein.

If that's the case, Vivus employees better shrink their marketing budget to fit their actual sales figures in a hurry.

Either that or start fattening up their resumes even quicker.

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