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The Deal: Vivus Considers Next Steps With Big Pharma Partners

NEW YORK ( The Deal) -- Tony Zook is facing major headwinds in his effort to steer the fortunes of Vivus (VVUS - Get Report), and crucial to that effort is bringing the right licensing partner on board to help commercialize its weight-loss drug Qsymia.

"A large pharmaceutical partner is critical to realize the full potential of the Qsymia franchise and to build the market. To date we've made good progress in this area," Zook, Vivus' new CEO, said during the company's second quarter sales and earnings conference call with investors held late Tuesday, Aug. 7.

Vivus developed the promising weight-loss drug Qsymia, and received approval for it a little more than a year ago by the Food and Drug Administration. But it had a disappointing launch and this was borne out in its second-quarter financials. While Qsymia prescriptions were up 37% quarter over quarter, they translated into a mere $5.5 million in sales, and Vivus spent $52.5 million during the quarter. All those scripts were filled via its four certified mail-order pharmacies, a burdensome FDA requirement that has since been lifted.

Vivus recently suffered through a mutiny of sorts, a difficult proxy fight that was finally settled in favor of its 9.9% investor First Manhattan Corp. FMC insisted on the ouster of top management and the creation of a new 11-member board including CEO Tony Zook, a former AstraZeneca executive who has successfully commercialized several drugs. The new board was carefully selected, FMC said, to help provide the necessary expertise for the turnaround. Only one of the four non-FMC-chosen board members, Mark Logan, was appointed prior to April, when FMC began its activist campaign.

However, as the proxy fight was raging, Vivus started to make strides in its Qsymia launch. The company has signed up more than 10,000 certified retail pharmacies, including national and retail chains such as Walgreen (WAG) and Duane Reade. Independent pharmacies will come on board in the fourth quarter, the company said. Along with expanding access to retail outlets, the company has been working with insurers to bring co-pays down to a more consumer-friendly $25 to $35, from the earlier $50 to $65 range.

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