AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 21, 2004
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VIVUS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-3136179
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1172 CASTRO STREET
MOUNTAIN VIEW, CA 94040
(650) 934-5200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LELAND F. WILSON
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
VIVUS, INC.
1172 CASTRO STREET
MOUNTAIN VIEW, CA 94040
(650) 934-5200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
MARIO M. ROSATI
MARK L. REINSTRA
JOHN L. SLEBIR
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement. [ ]
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]_________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]_________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS OF SECURITIES MAXIMUM OFFERING AMOUNT OF
TO BE REGISTERED PRICE (1) REGISTRATION FEE
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Common Stock, $0.001 par value...... $50,000,000 $5,885
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(1) This figure is an estimate made solely for the purpose of calculating the
registration fee in accordance with Rule 457(o) under the Securities Act of
1933, as amended.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED DECEMBER 21, 2004
PROSPECTUS
$50,000,000
VIVUS, INC.
COMMON STOCK
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VIVUS, Inc. may offer shares of its common stock from time to time. We
will specify in an accompanying prospectus supplement the terms of any offering.
Our common stock is listed on the Nasdaq National Market under the symbol
"VVUS." On December 21, 2004, the last reported sale price of our common stock
on the Nasdaq National Market was $4.62 per share.
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You should read this prospectus, any prospectus supplement and the
documents incorporated by reference in this prospectus or any prospectus
supplement carefully before you invest. THIS PROSPECTUS MAY NOT BE USED TO OFFER
AND SELL SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 5 OF THIS
PROSPECTUS BEFORE YOU MAKE AN INVESTMENT DECISION.
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The common stock offered by this prospectus may be offered in amounts,
at prices and at terms determined at the time of the offering and may be sold
directly by us to investors, through agents designated from time to time or to
or through underwriters or dealers. We will set forth the names of any
underwriters or agents in the accompanying prospectus supplement. For additional
information on the methods of sale, you should refer to the section entitled
"Plan of Distribution." The net proceeds we expect to receive from such sale
will also be set forth in a prospectus supplement.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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This prospectus is dated December 21, 2004
TABLE OF CONTENTS
PAGE
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SUMMARY 1
RISK FACTORS.................................................................5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...........................18
USE OF PROCEEDS.............................................................19
DESCRIPTION OF COMMON STOCK.................................................20
PLAN OF DISTRIBUTION........................................................22
LEGAL MATTERS...............................................................24
EXPERTS.....................................................................24
WHERE YOU CAN FIND MORE INFORMATION.........................................24
INFORMATION INCORPORATED BY REFERENCE.......................................24
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No person has been authorized to give any information or make any
representations in connection with this offering other than those contained or
incorporated by reference in this prospectus and any accompanying prospectus
supplement in connection with the offering described herein and therein, and, if
given or made, such information or representations must not be relied upon as
having been authorized by us. Neither this prospectus nor any prospectus
supplement shall constitute an offer to sell or a solicitation of an offer to
buy offered securities in any jurisdiction in which it is unlawful for such
person to make such an offering or solicitation. Neither the delivery of this
prospectus or any prospectus supplement nor any sale made hereunder shall under
any circumstances imply that the information contained or incorporated by
reference herein or in any prospectus supplement is correct as of any date
subsequent to the date hereof or of such prospectus supplement.
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES,
INCLUDED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. YOU
SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH IN THIS ENTIRE PROSPECTUS,
INCLUDING THE "RISK FACTORS" SECTION, THE APPLICABLE PROSPECTUS SUPPLEMENT FOR
SUCH SECURITIES AND THE OTHER DOCUMENTS WE REFER TO OR THAT WE INCORPORATE BY
REFERENCE. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERMS "VIVUS," "WE," "US,"
THE COMPANY AND "OUR" REFER TO VIVUS, INC., A DELAWARE CORPORATION.
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission, or SEC, utilizing a "shelf"
registration process. Under this shelf process, we may, from time to time, sell
up to an aggregate of $50,000,000 of our common stock in one or more offerings.
This prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement, including the risk factors, together with additional information
described below under the heading "Where You Can Find More Information" and
"Information Incorporated by Reference."
VIVUS, INC.
VIVUS, Inc. is a specialty pharmaceutical company focused on the
research, development and commercialization of products to restore sexual
function in women and men. In addition to our currently marketed therapies, we
have a pipeline that includes both new chemical entities and existing compounds
that are being developed to address unmet medical needs. Our business strategy
is to apply our scientific and medical expertise to identify, develop and
commercialize therapies that restore sexual function. In the United States, we
market MUSE(R) (alprostadil) as a prescription product for the treatment of
erectile dysfunction. For international markets, we have entered into supply and
distribution agreements with established pharmaceutical companies to market and
distribute MUSE in certain foreign countries.
We currently have four significant research and development programs in
progress targeting male and female sexual function:
o ALISTA TM to treat female sexual arousal disorder;
o Evamist TM (Estradiol MDTS(R)), a short-term therapy to alleviate
symptoms associated with menopause;
o Testosterone MDTS(R) to treat hypoactive sexual desire disorder; and
o Avanafil for the treatment of erectile dysfunction.
ALISTA entered Phase 3 clinical development in the third quarter of
2004 and Evamist entered Phase 3 clinical development in the fourth quarter of
2004. The other two research and development programs are in Phase 2 clinical
development.
When we were founded in 1991, our sole purpose was to develop a therapy
for men suffering from erectile dysfunction. In 1997, we commercially launched
MUSE in the United States. At that time, MUSE revolutionized erectile
dysfunction therapy at a time when few effective therapies existed. Developing
and bringing MUSE to the market provided us experience in clinical and
regulatory matters when no intra-urethral drugs had been approved for this
indication. This experience serves us well today in making progress towards
developing and commercializing product candidates in our research and
development programs for the treatment of sexual disorders.
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OUR FUTURE
It is our objective to become a global leader in the development and
commercialization of products that help to restore sexual health in women and
men. We believe that we have strong intellectual property supporting many
opportunities in sexual health. Our future growth will come from further
development and approval of our product candidates as well as in-licensing and
product line extensions.
FEMALE SEXUAL HEALTH
We believe that the market for the treatment of sexual disorders in
women is large and underserved. Today, there are no treatments on the market
that have been approved by the United States Food and Drug Administration, or
the FDA, for the treatment of sexual disorders in women. A paper published in
the JOURNAL OF THE AMERICAN MEDICAL ASSOCIATION in 1999, noted 43% of women
between the ages of 18 and 65 identified themselves as afflicted with a sexual
disorder, with two prevalent conditions being low sexual desire and arousal
disorder. VIVUS' research and development programs in female sexual health
address both of these conditions.
ALISTA
ALISTA is a topical formulation of alprostadil applied locally to the
female genitalia as an on-demand treatment for female sexual arousal disorder.
It increases blood flow in the genital region, allowing for greater sensitivity
and sexual arousal. ALISTA has a fast onset of action with low systemic
distribution.
In the second quarter of 2004, we completed an at-home Phase 2 study to
assess the efficacy and safety of ALISTA when used by pre-menopausal women with
female sexual arousal disorder. The study demonstrated that ALISTA significantly
increased the percentage of satisfying sexual events in pre-menopausal women
when compared with placebo. Results from this Phase 2 clinical trial were
similar to the results from earlier clinical trials in post-menopausal women.
At the end of the third quarter of 2004, we began a Phase 3 study of
ALISTA.
METERED DOSE TRANSDERMAL SPRAY, OR MDTS
In the first quarter of 2004, we entered into license agreements with a
subsidiary of Acrux Limited, a specialty pharmaceutical company based in
Melbourne, Australia, pursuant to which we have the exclusive rights to market
two drugs in the United States, estradiol and testosterone, using Acrux's
Metered Dose Transdermal Spray, or MDTS. The MDTS is a small, easy-to-use,
handheld spray that delivers either estradiol or testosterone topically to the
skin. It dries in approximately 30 seconds, and when dry, is invisible. Data
generated to date suggests that, once dry, there is little chance for transfer
or removal by washing.
The MDTS drug formulations utilize proprietary skin penetration
enhancers commonly found in sunscreens. The once-per-day dosing has demonstrated
a sustained plasma level of drug over a 24-hour period.
o Evamist - The estradiol spray is a low-dose estrogen-only
treatment addressing the symptoms associated with menopause,
primarily hot flashes. This proprietary spray product utilizes the
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MDTS technology, which is patented. This transdermal spray product
is simple to apply and may have safety benefits compared to
certain oral estrogen pills.
At the end of the fourth quarter of 2004, we began a phase 3 study
of Evamist.
o Testosterone MDTS - This proprietary spray product is designed to
treat females with low sexual desire, or Hypoactive Sexual Desire
Disorder ("HSDD"). There are estimated to be over 10 million women
in the United States afflicted with HSDD and there are no FDA
approved therapies for this condition.
In October 2004, Acrux completed a Phase 2 clinical trial, which
enrolled approximately 260 patients for the evaluation of the
safety and efficacy of the testosterone spray. This study was
completed under an Investigational New Drug application on file
with the FDA. We expect the results of this Phase 2 study to be
available in early 2005.
MALE SEXUAL HEALTH
The erectile dysfunction market produces revenues in excess of $2.0
billion annually. Pfizer reported that it sold approximately $1.8 billion of
Viagra(R), a phosphodiesterase type 5 (PDE5) inhibitor, worldwide in 2003.
Pfizer received clearance from the FDA to market Viagra in 1998. In late 2003,
two additional PDE5 inhibitors were approved by the FDA: Levitra(R), launched by
Bayer and GlaxoSmithKlineBeecham, and Cialis(R), launched by Lilly ICOS LLC.
Based on the aging baby boomer population and their desire to maintain an active
sexual lifestyle, we believe the market for PDE5 inhibitors should continue to
grow.
Avanafil
We are developing avanafil, an orally administered PDE5 inhibitor,
licensed from Tanabe Seiyaku Co., Ltd., or Tanabe, in 2001. Avanafil, formerly
known as TA-1790, is currently in Phase 2 clinical development. Pre-clinical and
clinical data to date suggests the product candidate is:
o Highly selective to PDE5, which we believe should result in a
favorable side effect profile; and
o Faster acting than the currently available PDE5 inhibitors.
In March 2004, we began enrolling patients in an at-home, double blind,
randomized, parallel design Phase 2 clinical study to evaluate the safety and
efficacy of avanafil. One of the primary goals of this study is to confirm the
appropriate dose range in a large group of patients. Enrollment is anticipated
to be completed during the first half of 2005 and data from this study should be
available during the second half of 2005. VIVUS has initiated drug interaction
studies with avanafil during 2004 and anticipates completing Phase 2 development
in 2005.
VIVUS was incorporated in California on April 16, 1991 and completed a
re-incorporation in the state of Delaware in May 1996. VIVUS' headquarters and
mailing address is 1172 Castro Street, Mountain View, California 94040, and the
telephone number at that location is (650) 934-5200. VIVUS' website address is
www.vivus.com and it makes its periodic and current reports that are filed with
the Securities and Exchange Commission available, free of charge, on its website
as soon as reasonably practicable after such material is electronically filed
with, or furnished to, the Securities and Exchange Commission. Our common stock
trades on the Nasdaq National Market under the symbol "VVUS."
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THE SECURITIES WE MAY OFFER
We may offer up to an aggregate of $50,000,000 of common stock in one
or more offerings. A prospectus supplement, which we will provide to you each
time we offer securities, will describe the specific amounts, prices and terms
of these securities.
We may sell the common stock to or through underwriters, dealers or
agents or directly to purchasers. Our agents and we reserve the sole right to
accept and to reject in whole or in part any proposed purchase of securities.
Each prospectus supplement will set forth the names of any underwriters, dealers
or agents involved in the sale of the common stock described in that prospectus
supplement and any applicable fee, commission or discount arrangements with
them.
Common stock holders are entitled to receive dividends declared by the
board of directors out of funds legally available for the payment of dividends,
subject to rights, if any, of preferred stock holders. We have never paid a cash
dividend and do not anticipate paying any cash dividends in the foreseeable
future. Each holder of common stock is entitled to one vote per share. The
holders of common stock have no preemptive rights or cumulative voting rights. A
prospectus supplement will describe the specific amounts, prices and terms of
any common stock to be issued.
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RISK FACTORS
An investment in our securities involves a high degree of risk. You
should carefully consider the risks described below before making an investment
decision. You should also refer to the other information in this prospectus,
including our financial statements and the related notes incorporated by
reference into this prospectus. The risks and uncertainties described below are
not the only risks and uncertainties we face. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial also may impair
our business operations. If any of the following risks actually occur, our
business, results of operations and financial condition could suffer. In that
event, the trading price of our common stock could decline, and you may lose all
or part of your investment in our common stock. The risks discussed below also
include forward-looking statements and our actual results may differ
substantially from those discussed in these forward-looking statements.
RISKS RELATING TO OUR PRODUCT DEVELOPMENT EFFORTS
WE FACE SIGNIFICANT RISKS IN OUR PRODUCT DEVELOPMENT EFFORTS.
The process of developing new drugs and/or therapeutic products is
inherently complex, time-consuming, expensive and uncertain. We must make
long-term investments and commit significant resources before knowing whether
our development programs will result in products that will receive regulatory
approval and achieve market acceptance. Product candidates that may appear to be
promising at early stages of development may not reach the market for a number
of reasons. Product candidates may be found ineffective or may cause harmful
side effects during clinical trials, may take longer to progress through
clinical trials than had been anticipated, may fail to receive necessary
regulatory approvals, may prove impracticable to manufacture in commercial
quantities at reasonable cost and with acceptable quality or may fail to achieve
market acceptance.
IF THE RESULTS OF FUTURE CLINICAL TESTING INDICATE THAT OUR PROPOSED
PRODUCTS ARE NOT SAFE OR EFFECTIVE FOR HUMAN USE, OUR BUSINESS WILL SUFFER.
All of the drug candidates that we are currently developing require
extensive pre-clinical and clinical testing before we can submit any application
for regulatory approval. Before obtaining regulatory approvals for the
commercial sale of any of our proposed drug products, we must demonstrate
through pre-clinical testing and clinical trials that our product candidates are
safe and effective in humans. Conducting clinical trials is a lengthy, expensive
and uncertain process. Completion of clinical trials may take several years or
more. Our commencement and rate of completion of clinical trials may be delayed
by many factors, including:
o ineffectiveness of the study compound, or perceptions by physicians
that the compound is not effective for a particular indication;
o inability to manufacture sufficient quantities of compounds for use
in clinical trials;
o failure of the United States Food and Drug Administration, the FDA,
to approve our clinical trial protocols;
o slower than expected rate of patient recruitment;
o inability to adequately follow patients after treatment;
o unforeseen safety issues; or
o government or regulatory delays.
The clinical results we have obtained to date do not necessarily
predict that the results of further testing, including later stage controlled
human clinical testing, will be successful. If our trials are not successful or
are perceived as not successful by the FDA or physicians, our business,
financial condition and results of operations will be materially harmed.
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WE FACE SIGNIFICANT GOVERNMENTAL REGULATION DURING OUR PRODUCT
DEVELOPMENT ACTIVITIES.
The research, testing, manufacturing, selling and marketing of drug
candidates are subject to extensive regulations by the FDA and other regulatory
agencies in the United States and other countries. We cannot predict with
certainty if or when we might submit for regulatory review those product
candidates currently under development. Our product candidates address sexual
dysfunction and any observed or perceived side effects may receive heightened
scrutiny by the FDA based on a perception that these drug candidates are
lifestyle-enhancing rather than life-saving in nature. The FDA can suspend
clinical studies at any time if the agency believes that the subjects
participating in such studies are being exposed to unacceptable health risks.
Regulatory approval is never guaranteed, and the approval process
typically takes several years and is extremely expensive. The FDA has
substantial discretion in the drug approval process. Despite the time and
expense exerted, failure can occur at any stage, and we could encounter problems
that cause us to abandon clinical trials or to repeat or perform additional
pre-clinical trials and clinical trials. The number of pre-clinical studies and
clinical trials that will be required for FDA approval varies depending on the
drug candidate, the disease condition that the drug candidate is designed to
address and the regulations applicable to any particular drug candidate. The FDA
could determine that additional studies are required before a product candidate
will be approved.
For example, an FDA advisory panel recently recommended against
approval of a testosterone patch being developed by another company to address
female sexual dysfunction, specifically Hypoactive Sexual Desire Disorder and
indicated that more study would be required before it would be in a position to
recommend approval. These additional studies will be time consuming and may
significantly delay the introduction of this product to the marketplace. We are
also developing a transdermal testosterone product candidate, Testosterone MDTS,
that is designed to address Hypoactive Sexual Desire Disorder. In light of the
FDA panel's recommendation, we may be required to undertake additional or
expanded clinical trials, which could be expensive. As a result, we could
experience delays in our ability to submit our product candidate to the FDA for
consideration, and we may be unsuccessful in obtaining FDA approval of our
product candidate.
We are not permitted to market any of our product candidates in the
United States until we receive approval from the FDA. As a consequence, any
failure to obtain or delay in obtaining FDA approval for our drug candidates
would delay or prevent our ability to generate revenue from our product
candidates, which would adversely affect our financial results and our business.
WE RELY ON THIRD PARTIES TO CONDUCT CLINICAL TRIALS FOR OUR PRODUCT
CANDIDATES IN DEVELOPMENT AND THOSE THIRD PARTIES MAY NOT PERFORM
SATISFACTORILY.
We do not have the ability to independently conduct clinical studies
for any of our products currently in development, and we rely on third parties
to perform this function. The third parties used to perform this function are
usually Clinical Research Organizations ("CRO's") that have significant
resources and experience in the conduct of clinical studies. The CRO's will
usually perform project management, data management, statistical analysis, and
other reporting functions. We will use several different CRO's for all of our
clinical studies. If third parties do not successfully carry out their
contractual duties or meet expected timelines, we may not be able to obtain
regulatory approvals for our proposed products and may not be able to
successfully commercialize these proposed products. If third parties do not
perform satisfactorily, we may not be able to locate acceptable replacements or
enter into favorable agreements with them, if at all.
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WE RELY ON THIRD PARTIES TO MANUFACTURE SUFFICIENT QUANTITIES OF
COMPOUNDS FOR USE IN OUR PRE-CLINICAL AND CLINICAL TRIALS AND AN INTERRUPTION TO
THIS SERVICE MAY HARM OUR BUSINESS.
We do not have the ability to manufacture the materials we use in our
pre-clinical and clinical trials, and we rely on various third parties to
perform this function. There can be no assurance that we will be able to
identify and qualify additional sources for clinical materials. If interruptions
in this supply occur for any reason, including a decision by the third parties
to discontinue manufacturing, labor disputes or a failure of the third parties
to follow regulations, we may not be able to obtain regulatory approvals for our
proposed products and may not be able to successfully commercialize these
proposed products.
RISKS RELATING TO OUR OPERATIONS
IF WE, OR OUR SUPPLIERS, FAIL TO COMPLY WITH FDA AND OTHER GOVERNMENT
REGULATIONS RELATING TO OUR MANUFACTURING OPERATIONS, WE MAY BE PREVENTED FROM
MANUFACTURING OUR PRODUCTS OR MAY BE REQUIRED TO UNDERTAKE SIGNIFICANT
EXPENDITURES TO BECOME COMPLIANT WITH REGULATIONS.
After regulatory approval is obtained, products are subject to
continual regulatory review. Manufacturing, labeling and promotional activities
are continually regulated by the FDA and equivalent foreign regulatory agencies.
For example, our third-party manufacturers are required to maintain satisfactory
compliance with current Good Manufacturing Practices, or cGMPs. If these
manufacturers fail to comply with applicable regulatory requirements, our
ability to manufacture, market and distribute our products may be adversely
affected. In addition, the FDA could issue warning letters or could require the
seizure or recall of products. The FDA could also issue warning letters, civil
penalties or require the closure of our manufacturing facility until cGMP
compliance is achieved.
We obtain the necessary raw materials and components for the
manufacture of MUSE as well as certain services, such as testing and
sterilization, from third parties. We currently contract with suppliers and
service providers, including foreign manufacturers. We and these suppliers and
service providers are required to follow cGMP requirements and are subject to
routine unannounced periodic inspections by the FDA and by state and foreign
regulatory agencies for compliance with cGMP requirements and other applicable
regulations. Upon inspection of these facilities, the FDA may find the
manufacturing process or facilities are not in compliance with cGMP requirements
and other regulations.
Failure to achieve satisfactory cGMP compliance as confirmed by routine
unannounced inspections could have a material adverse effect on our ability to
continue to manufacture and distribute our products and, in the most serious
case, result in the issuance of a regulatory warning letter or seizure or recall
of products, injunction and/or civil penalties or closure of our manufacturing
facility until cGMP compliance is achieved.
OUR MARKETING ACTIVITIES FOR OUR PRODUCTS ARE SUBJECT TO CONTINUED
GOVERNMENTAL REGULATION.
After product approval by the FDA, our marketing activities continue to
be subject to FDA and other regulatory review. The labeling and other marketing
information that may permissibly be provided are subject to FDA review. If
products are marketed in contradiction with FDA mandates, the FDA may issue
warning letters that require specific remedial measures to be taken, as well as
an immediate cessation of the impermissible conduct. For example, the FDA issued
a Warning Letter to us in May 2004 in which the FDA objected to a specific
television commercial, as well as information contained on our website,
promoting MUSE, our FDA approved product for the treatment of erectile
dysfunction. The letter indicated that we had failed to provide or had minimized
certain risks associated with MUSE. Through discussions with the FDA, we agreed
to produce and have released a television commercial correcting the earlier
information. We incurred costs in providing this corrective information, which
would have likely been utilized by us in a different manner.
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WE MUST CONTINUE TO MONITOR THE USE OF OUR APPROVED DRUGS AND MAY BE
REQUIRED TO COMPLETE POST-APPROVAL STUDIES MANDATED BY THE FDA.
Even if we receive regulatory approval of our products, such approval
may involve limitations on the indicated uses or marketing claims we may make
for our products. Further, later discovery of previously unknown problems could
result in additional regulatory restrictions, including withdrawal of products.
The FDA may also require us to commit to perform lengthy post-approval studies,
for which we would have to expend additional resources, which could have an
adverse effect on our operating results and financial condition. Failure to
comply with the applicable regulatory requirements can result in, among other
things, civil penalties, suspensions of regulatory approvals, product recalls,
operating restrictions and criminal prosecution. The restriction, suspension or
revocation of regulatory approvals or any other failure to comply with
regulatory requirements could have a material adverse effect on our business,
financial condition and results of operations.
WE HAVE LIMITED SALES AND MARKETING CAPABILITIES IN THE UNITED STATES.
We support MUSE sales in the United States through a small sales
support group targeting major accounts that include the top prescribers of MUSE.
Telephone marketers also focus on urologists who prescribe MUSE. Physician and
patient information/help telephone lines are available to answer additional
questions that may arise after reading the inserts or after actual use of the
product. The sales force actively participates in national urologic and sexual
dysfunction forums and conferences, such as the American Urological Association
annual and regional meetings and the International Society for Impotence
Research. There can be no assurance that our sales programs will effectively
maintain or potentially increase current sales levels. There can be no assurance
that demand for MUSE will continue or that we will be able to adequately support
sales of MUSE in the United States in the future.
WE DEPEND EXCLUSIVELY ON THIRD-PARTY DISTRIBUTORS OUTSIDE OF THE UNITED
STATES AND WE HAVE VERY LIMITED CONTROL OVER THEIR ACTIVITIES.
We entered into agreements granting Meda AB exclusive marketing and
distribution rights for MUSE and ACTIS in all Member States of the European
Union, the Baltic States, the Czech Republic, Hungary, Iceland, Norway, Poland,
Switzerland and Turkey. These agreements do not have minimum purchase
commitments and we are entirely dependent on Meda AB's efforts to distribute and
sell our products effectively in all these markets. There can be no assurance
that such efforts will be successful or that Meda AB will continue to support
the products.
We entered into an agreement granting Paladin Labs exclusive marketing
and distribution rights for MUSE in Canada. This agreement does not have minimum
purchase commitments and we are entirely dependent on Paladin Labs' efforts to
distribute and sell our product effectively in Canada. There can be no assurance
that such efforts will be successful or that Paladin Labs will continue to
support the product.
SALES OF OUR CURRENT AND ANY FUTURE PRODUCTS ARE SUBJECT TO CONTINUED
GOVERNMENTAL REGULATION.
Sales of our products both inside and outside the United States will be
subject to regulatory requirements governing marketing approval. These
requirements vary widely from country to country and could delay the
introduction of our proposed products in those countries. After the FDA and
international regulatory authorities approve a product, we must manufacture
sufficient volumes to meet market demand. This is a process that requires
accurate forecasting of market demand. There is no guarantee that there will be
market demand for any future products or that we will be able to successfully
manufacture or adequately support sales of any future products.
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THE MARKETS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE AND WE MAY BE
UNABLE TO COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS OR ESTABLISHED COMPANIES
WITH GREATER RESOURCES.
Competition in the pharmaceutical and medical products industries is
intense and is characterized by extensive research efforts and rapid
technological progress. Several large pharmaceutical companies are also actively
engaged in the development of therapies for the treatment of erectile
dysfunction and female sexual dysfunction. These companies have substantially
greater research and development capabilities as well as substantially greater
marketing, financial and human resources abilities than we do. In addition, many
of these companies have significantly greater experience than us in undertaking
pre-clinical testing, human clinical trials and other regulatory approval
procedures. Our competitors may develop technologies and products that are more
effective than those we are currently marketing or developing. Such developments
could render our products less competitive or possibly obsolete. We are also
competing with respect to marketing capabilities and manufacturing efficiency,
areas in which we have limited experience.
The most significant competitive therapy for MUSE is an oral medication
marketed by Pfizer under the name Viagra, which received regulatory approvals in
the United States in March 1998 and in the European Union in September 1998. The
commercial launch of Viagra in the United States in April 1998 significantly
decreased demand for MUSE. Another oral medication under the name Uprima was
approved and launched in Europe by Abbott Laboratories and Takeda in May 2001.
In February 2003, a new oral medication under the name Cialis was launched in
Europe by Lilly ICOS LLC and in Australia and New Zealand by Eli Lilly and
Company. Cialis was launched in the United States in January 2004. Bayer AG and
GlaxoSmithKline plc launched Levitra in the European Union and the United States
in March and September 2003, respectively.
Other treatments for erectile dysfunction exist, such as needle
injection therapy, vacuum constriction devices and penile implants, and the
manufacturers of these products will most likely continue to improve these
therapies. Additional competitive products in the erectile dysfunction market
include needle injection therapy products from Pfizer (formerly Pharmacia),
Schwartz Pharma, Fornier and Senetek.
IF OUR RAW MATERIAL SUPPLIERS FAIL TO SUPPLY US WITH ALPROSTADIL WE MAY
EXPERIENCE DELAYS IN OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION.
We are required to initially receive regulatory approval for suppliers
and we obtained our supply of alprostadil from two approved sources. The first
is NeraPharm, formerly Spolana Chemical Works a.s., in Neratovice, Czech
Republic. The second is Chinoin Pharmaceutical and Chemical Works Co., Ltd. We
have manufacturing agreements with Chinoin and NeraPharm respectively, to
produce quantities of alprostadil for us. We must assure that any new receipts
of alprostadil meet regulatory specifications. There can be no guarantees
the new material will pass these requirements and be usable material in our
manufacturing process.
Furthermore, alprostadil is subject to periodic re-testing to ensure it
continues to meet specifications. There can be no guarantees that our inventory
of alprostadil will pass these re-testing procedures and continue to be usable
material. There is a long lead-time for manufacturing alprostadil. A short
supply of alprostadil to be used in the manufacture of MUSE would have a
material adverse effect on our business, financial condition and results of
operations. There can be no assurance that we will be able to identify and
qualify additional suppliers of alprostadil, if necessary, in a timely manner,
if at all.
-9-
WE OUTSOURCE SEVERAL KEY PARTS OF OUR OPERATIONS AND ANY INTERRUPTION
IN THE SERVICES PROVIDED COULD HARM OUR BUSINESS.
We entered into a distribution agreement with Cardinal Health. Under
this agreement, Cardinal Health takes the following actions:
o warehouses our finished goods for United States distribution;
o takes customer orders;
o picks, packs and ships our products;
o invoices customers; and
o collects related receivables.
As a result of this distribution agreement, we are heavily dependent on
Cardinal Health's efforts to fulfill orders and warehouse our products
effectively in the United States. There can be no assurance that such efforts
will continue to be successful.
Gibraltar Laboratories performs sterility testing on finished product
manufactured by us to ensure that it complies with product specifications.
Gibraltar Laboratories also performs microbial testing on water and compressed
gases used in the manufacturing process and microbial testing on environmental
samples to ensure that the manufacturing environment meets appropriate cGMP
regulations and cleanliness standards. As a result of this testing agreement, we
are dependent on Gibraltar Laboratories to perform testing and issue reports on
finished product and the manufacturing environment in a manner that meets cGMP
regulations. There can be no assurance that such efforts will be successful.
We have an agreement with WRB Communications to handle patient and
healthcare professional hotlines for us. WRB Communications maintains a staff of
healthcare professionals to answer questions and inquiries about MUSE and ACTIS.
These calls may include complaints about our products due to efficacy or
quality, as well as the reporting of adverse events. As a result of this
agreement, we are dependent on WRB Communications to effectively handle these
calls and inquiries. There can be no assurance that such efforts will be
successful.
We entered into a distribution agreement with Integrated
Commercialization Services, or ICS, a subsidiary of Bergen Brunswig Corporation.
ICS provides "direct-to-physician" distribution capabilities in support of
United States marketing and sales efforts. As a result of this distribution
agreement, we are dependent on ICS's efforts to distribute product samples
effectively. There can be no assurance that such efforts will be successful.
WE CURRENTLY DEPEND ON A SINGLE SOURCE FOR THE SUPPLY OF PLASTIC
APPLICATOR COMPONENTS, AND AN INTERRUPTION TO THIS SUPPLY SOURCE COULD HARM OUR
BUSINESS.
We rely on a single injection molding company, Medegen, for our supply
of plastic applicator components. In turn, Medegen obtains its supply of resin,
a key ingredient of the applicator, from a single source, Huntsman Corporation.
There can be no assurance that we will be able to identify and qualify
additional sources of plastic components. We are required to initially receive
FDA approval for suppliers. Until we secure and qualify additional sources of
plastic components, we are entirely dependent upon Medegen. If interruptions in
this supply occur for any reason, including a decision by Medegen to discontinue
manufacturing, labor disputes or a failure of Medegen to follow regulations, the
development and commercial marketing of MUSE and other potential products could
be delayed or prevented. An extended interruption in the supply of plastic
components could have a material adverse effect on our business, financial
condition and results of operations.
-10-
ALL OF OUR MANUFACTURING OPERATIONS ARE CURRENTLY CONDUCTED AT A SINGLE
LOCATION, AND A PROLONGED INTERRUPTION TO OUR MANUFACTURING OPERATIONS COULD
HARM OUR BUSINESS.
We lease 90,000 square feet of space in Lakewood, New Jersey for our
manufacturing operation, which includes formulation, filling, packaging,
analytical laboratories, storage, distribution and administrative offices. The
FDA and the Medicines and Healthcare products Regulatory Agency, formerly the
Medicines Control Agency, the regulatory authority in the United Kingdom,
authorized us to begin commercial production and shipment of MUSE from this
facility in June and March 1998, respectively. MUSE is manufactured in this
facility and we have no immediate plans to construct another manufacturing site.
Since MUSE is produced with custom-made equipment under specific manufacturing
conditions, the inability of our manufacturing facility to produce MUSE for
whatever reason could have a material adverse effect on our business, financial
condition and results of operations.
WE ARE DEPENDENT UPON A SINGLE APPROVED THERAPEUTIC APPROACH TO TREAT
ERECTILE DYSFUNCTION.
MUSE relies on a single approved therapeutic approach to treat erectile
dysfunction, a transurethral system. The existence of side effects or
dissatisfaction with this product may impact a patient's decision to use or
continue to use, or a physician's decision to recommend, this therapeutic
approach as a therapy for the treatment of erectile dysfunction, thereby
affecting the commercial viability of MUSE. In addition, technological changes
or medical advancements could diminish or eliminate the commercial viability of
our product, the results of which could have a material effect on our business
operations and results.
IF WE FAIL TO RETAIN OUR KEY PERSONNEL AND HIRE, TRAIN AND RETAIN
QUALIFIED EMPLOYEES, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY, WHICH COULD
RESULT IN REDUCED REVENUES.
Our success is highly dependent upon the skills of a limited number of
key management personnel. To reach our business objectives, we will need to
retain and hire qualified personnel in the areas of manufacturing, research and
development, regulatory affairs, clinical trial management and pre-clinical
testing. There can be no assurance that we will be able to hire or retain such
personnel, as we must compete with other companies, academic institutions,
government entities and other agencies. The loss of any of our key personnel or
the failure to attract or retain necessary new employees could have an adverse
effect on our research, product development and business operations.
WE ARE SUBJECT TO ADDITIONAL RISKS ASSOCIATED WITH OUR INTERNATIONAL
OPERATIONS.
MUSE is currently marketed internationally. Changes in overseas
economic and political conditions, terrorism, currency exchange rates, foreign
tax laws or tariffs or other trade regulations could have an adverse effect on
our business, financial condition and results of operations. The international
nature of our business is also expected to subject us and our representatives,
agents and distributors to laws and regulations of the foreign jurisdictions in
which we operate or where our products are sold. The regulation of drug
therapies in a number of such jurisdictions, particularly in the European Union,
continues to develop, and there can be no assurance that new laws or regulations
will not have a material adverse effect on our business, financial condition and
results of operations. In addition, the laws of certain foreign countries do not
protect our intellectual property rights to the same extent, as do the laws of
the United States.
-11-
ANY ADVERSE CHANGES IN REIMBURSEMENT PROCEDURES BY MEDICARE AND OTHER
THIRD-PARTY PAYORS MAY LIMIT OUR ABILITY TO MARKET AND SELL OUR PRODUCTS.
In the United States and elsewhere, sales of pharmaceutical products
are dependent, in part, on the availability of reimbursement to the consumer
from third-party payors, such as government and private insurance plans. Third
party payors are increasingly challenging the prices charged for medical
products and services. While a large percentage of prescriptions in the United
States for MUSE have been reimbursed by third party payors since our commercial
launch in January 1997, there can be no assurance that our products will be
considered cost effective and that reimbursement to the consumer will continue
to be available or sufficient to allow us to sell our products on a competitive
basis.
In addition, certain healthcare providers are moving towards a managed
care system in which such providers contract to provide comprehensive healthcare
services, including prescription drugs, for a fixed cost per person. We hope to
further qualify MUSE for reimbursement in the managed care environment. However,
we are unable to predict the reimbursement policies employed by third party
healthcare payors. Furthermore, reimbursement for MUSE could be adversely
affected by changes in reimbursement policies of governmental or private
healthcare payors.
The healthcare industry is undergoing fundamental changes that are the
result of political, economic and regulatory influences. The levels of revenue
and profitability of pharmaceutical companies may be affected by the continuing
efforts of governmental and third party payors to contain or reduce healthcare
costs through various means. Reforms that have been and may be considered
include mandated basic healthcare benefits, controls on healthcare spending
through limitations on the increase in private health insurance premiums and
Medicare and Medicaid spending, the creation of large insurance purchasing
groups and fundamental changes to the healthcare delivery system. Due to
uncertainties regarding the outcome of healthcare reform initiatives and their
enactment and implementation, we cannot predict which, if any, of the reform
proposals will be adopted or the effect such adoption may have on us. There can
be no assurance that future healthcare legislation or other changes in the
administration or interpretation of government healthcare or third party
reimbursement programs will not have a material adverse effect on us. Healthcare
reform is also under consideration in some other countries.
RISKS RELATING TO OUR INTELLECTUAL PROPERTY
WE MAY BE SUED FOR INFRINGING ON THE INTELLECTUAL PROPERTY RIGHTS OF
OTHERS.
There can be no assurance that our products do not or will not infringe
on the patent or proprietary rights of others. Third parties may assert that we
are employing their proprietary technology without authorization. In addition,
third parties may obtain patents in the future and claim that use of our
technologies infringes these patents. We could incur substantial costs and
diversion of the time and attention of management and technical personnel in
defending ourselves against any such claims. Furthermore, parties making claims
against us may be able to obtain injunctive or other equitable relief that could
effectively block our ability to further develop, commercialize and sell
products, and such claims could result in the award of substantial damages
against us. In the event of a successful claim of infringement against us, we
may be required to pay damages and obtain one or more licenses from third
parties. We may not be able to obtain these licenses at a reasonable cost, if at
all. In that event, we could encounter delays in product introductions while we
attempt to develop alternative methods or products or be required to cease
commercializing affected products and our operating results would be harmed.
-12-
OUR INABILITY TO ADEQUATELY PROTECT OUR PROPRIETARY TECHNOLOGIES COULD
HARM OUR COMPETITIVE POSITION AND HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.
We hold various patents and patent applications in the United States
and abroad targeting male and female sexual health. The success of our business
depends, in part, on our ability to obtain patents and maintain adequate
protection of our intellectual property for our proprietary technology and
products in the United States and other countries. The laws of some foreign
countries do not protect proprietary rights to the same extent as the laws of
the United States, and many companies have encountered significant problems in
protecting their proprietary rights in these foreign countries. These problems
can be caused by, for example, a lack of rules and processes allowing for
meaningful defense of intellectual property rights. If we do not adequately
protect our intellectual property, competitors may be able to use our
technologies and erode our competitive advantage, and our business and operating
results could be harmed.
The patent positions of pharmaceutical companies, including our patent
position, are often uncertain and involve complex legal and factual questions.
We will be able to protect our proprietary rights from unauthorized use by third
parties only to the extent that our proprietary technologies are covered by
valid and enforceable patents or are effectively maintained as trade secrets. We
apply for patents covering our technologies and products, as we deem
appropriate. However, we may not obtain patents on all inventions for which we
seek patents, and any patents we obtain may be challenged and may be narrowed in
scope or extinguished as a result of such challenges. We could incur substantial
costs in proceedings before the United States Patent and Trademark Office,
including interference proceedings. These proceedings could also result in
adverse decisions as to the priority of our inventions. There can be no
assurance that our patents will not be successfully challenged or designed
around by others.
Our existing patents and any future patents we obtain may not be
sufficiently broad to prevent others from practicing our technologies or from
developing competing products. Others may independently develop similar or
alternative technologies or design around our patented technologies or products.
These companies would then be able to develop, manufacture and sell products
that compete directly with our products. In that case, our revenues and
operating results would decline.
We seek to protect our confidential information by entering into
confidentiality agreements with employees, collaborators and consultants.
Nevertheless, employees, collaborators or consultants may still disclose or
misuse our confidential information, and we may not be able to meaningfully
protect our trade secrets. In addition, others may independently develop
substantially equivalent information or techniques or otherwise gain access to
our trade secrets. Disclosure or misuse of our confidential information would
harm our competitive position and could cause our revenues and operating results
to decline.
RISKS RELATING TO OUR FINANCIAL POSITION AND NEED FOR FINANCING
IF WE REQUIRE ADDITIONAL CAPITAL FOR OUR FUTURE OPERATING PLANS, WE MAY
NOT BE ABLE TO SECURE THE REQUISITE ADDITIONAL FUNDING ON ACCEPTABLE TERMS, IF
AT ALL.
Our capital resources from operating activities are expected to
continue to decline over the next several quarters as the result of increased
spending for research and development projects, including clinical trials. We
expect that our existing capital resources combined with future cash flows will
be sufficient to support operating needs for at least the coming year. Financing
in future periods will most likely be required to fund development of our
research and development pipeline and the possible launch of any future
products. Our future capital requirements will depend upon numerous factors,
including:
-13-
o the progress of our research and development programs;
o the scope, timing and results of pre-clinical testing and clinical
trials;
o the results of operations;
o the cost, timing and outcome of regulatory reviews;
o the rate of technological advances;
o ongoing determinations of the potential commercial success of our
products under development;
o the level of resources devoted to sales and marketing capabilities;
and
o the activities of competitors.
To obtain additional capital when needed, we will evaluate alternative
financing sources, including, but not limited to, the issuance of equity or debt
securities, corporate alliances, joint ventures and licensing agreements.
However, there can be no assurance that funding will be available on favorable
terms, if at all. If we are unable to obtain additional capital, management may
be required to explore alternatives to reduce cash used by operating activities,
including the termination of research and development efforts that may appear to
be promising to the Company.
WE HAVE AN ACCUMULATED DEFICIT OF $121.7 MILLION AS OF SEPTEMBER 30,
2004 AND EXPECT TO CONTINUE TO INCUR SUBSTANTIAL OPERATING LOSSES FOR THE
FORESEEABLE FUTURE.
We have generated a cumulative net loss of $121.7 million for the
period from our inception through September 30, 2004 and we anticipate losses
for the next several years due to increased investment in our research and
development programs and limited revenues. There can be no assurance that we
will be able to achieve profitability on a sustained basis. Accordingly, there
can be no assurance of our future success.
IF WE BECOME SUBJECT TO PRODUCT LIABILITY CLAIMS, WE MAY BE REQUIRED TO
PAY DAMAGES THAT EXCEED OUR INSURANCE COVERAGE.
The commercial sale of MUSE and our clinical trials exposes us to a
significant risk of product liability claims due to its availability to a large
population of patients. In addition, pharmaceutical products are subject to
heightened risk for product liability claims due to inherent side effects. We
detail potential side effects in the patient package insert and the physician
package insert, both of which are distributed with MUSE. While we believe that
we are reasonably insured against these risks, we may not be able to obtain
insurance in amounts or scope sufficient to provide us with adequate coverage
against all potential liabilities. A product liability claim in excess of, or
excluded from, our insurance coverage would have to be paid out of cash reserves
and could have a material adverse effect upon our business, financial condition
and results of operations. Product liability insurance is expensive, difficult
to maintain, and current or increased coverage may not be available on
acceptable terms, if at all.
RISKS RELATING TO AN INVESTMENT IN OUR COMMON STOCK
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE.
The market price of our common stock has been volatile and is likely to
continue to be so. The market price of our common stock may fluctuate due to
factors including, but not limited to:
o announcements of technological innovations or new products by us or
our competitors;
o our ability to increase demand for our products in the United States;
o our ability to successfully sell our products in the United States
and internationally;
o actual or anticipated fluctuations in our financial results;
-14-
o our ability to obtain needed financing;
o economic conditions in the United States and abroad;
o comments by or changes in Company assessments or financial estimates
by security analysts;
o adverse regulatory actions or decisions;
o any loss of key management;
o the results of our clinical trials or those of our competitors;
o developments or disputes concerning patents or other proprietary
rights;
o product or patent litigation; or
o public concern as to the safety of products developed by us.
These factors and fluctuations, as well as political and market
conditions, may materially adversely affect the market price of our common
stock. Securities class action litigation is often brought against a company
following periods of volatility in the market price of its securities. We may be
the target of similar litigation. Securities litigation, whether with or without
merit, could result in substantial costs and divert management's attention and
resources, which could harm our business and financial condition, as well as the
market price of our common stock.
Additionally, volatility or a lack of positive performance in our stock
price may adversely affect our ability to retain key employees, all of whom have
been granted stock options.
VOLATILITY IN THE STOCK PRICES OF OTHER COMPANIES MAY CONTRIBUTE TO
VOLATILITY IN OUR STOCK PRICE.
The stock market in general, and the Nasdaq National Market and the
market for technology companies in particular, have experienced significant
price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of those companies. Further, there has been
particular volatility in the market prices of securities of early stage and
development stage life sciences companies. These broad market and industry
factors may seriously harm the market price of our common stock, regardless of
our operating performance. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation has
often been instituted. A securities class action suit against us could result in
substantial costs, potential liabilities and the diversion of management's
attention and resources.
OUR SHARE OWNERSHIP IS CONCENTRATED, AND OUR OFFICERS, DIRECTORS AND
PRINCIPAL STOCKHOLDERS CAN EXERT SIGNIFICANT CONTROL OVER MATTERS REQUIRING
STOCKHOLDER APPROVAL.
Due to their combined stock holdings, our officers, directors and
principal stockholders (stockholders holding greater than 5% of our common
stock) acting collectively may have the ability to exercise significant
influence over matters requiring stockholder approval including the election of
directors and approval of significant corporate transactions. In addition, this
concentration of ownership may delay or prevent a change in control of the
Company and may make some transactions more difficult or impossible to complete
without the support of these stockholders.
OUR OPERATING RESULTS MAY FLUCTUATE FROM QUARTER TO QUARTER AND THIS
FLUCTUATION MAY CAUSE OUR STOCK PRICE TO DECLINE.
Our quarterly operating results have fluctuated in the past and are
likely to fluctuate in the future. Factors contributing to these fluctuations
include, among other items, the timing and enrollment rates of clinical trials
for our drug candidates, our need for clinical supplies and the re-measurement
of certain deferred stock compensation. Thus, quarter-to-quarter comparisons of
our operating results are not indicative of what we might expect in the future.
As a result, in some future quarters our operating results may not meet the
expectations of securities analysts and investors, which could result in a
decline in the price of our stock.
-15-
THERE MAY NOT BE AN ACTIVE, LIQUID TRADING MARKET FOR OUR COMMON STOCK.
There is no guarantee that an active trading market for our common
stock will be maintained on the Nasdaq National Market. Investors may not be
able to sell their shares quickly or at the latest market price if trading in
our stock is not active.
OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD MAKE AN ACQUISITION OF OUR
COMPANY DIFFICULT, EVEN IF AN ACQUISITION MAY BENEFIT OUR STOCKHOLDERS.
Our Board of Directors has adopted a Preferred Shares Rights Plan. The
Preferred Shares Rights Plan has the effect of causing substantial dilution to a
person or group that attempts to acquire us on terms not approved by our Board
of Directors. The existence of the Preferred Shares Rights Plan could limit the
price that certain investors might be willing to pay in the future for shares of
our common stock and could discourage, delay or prevent a merger or acquisition
that a stockholder may consider favorable.
Certain provisions of our Amended and Restated Certificate of
Incorporation and Bylaws could also delay or prevent a change in control of our
company. Some of these provisions:
o authorize the issuance of preferred stock by the Board of Directors
without prior stockholder approval, commonly referred to as "blank
check" preferred stock, with rights senior to those of common stock;
o prohibit stockholder actions by written consent;
o specify procedures for director nominations by stockholders and
submission of other proposals for consideration at stockholder
meetings; and
o eliminate cumulative voting in the election of directors.
In addition, we are governed by the provisions of Section 203 of
Delaware General Corporate Law. These provisions may prohibit large
stockholders, in particular those owning 15% or more of our outstanding voting
stock, from merging or combining with us. These and other provisions in our
charter documents could reduce the price that investors might be willing to pay
for shares of our common stock in the future and result in the market price
being lower than it would be without these provisions.
CHANGES IN ACCOUNTING STANDARDS REGARDING STOCK OPTION PLANS COULD
LIMIT THE DESIRABILITY OF GRANTING STOCK OPTIONS, WHICH COULD HARM OUR ABILITY
TO ATTRACT AND RETAIN EMPLOYEES, AND COULD ALSO REDUCE OUR PROFITABILITY.
The Financial Accounting Standards Board is considering whether to
require all companies to treat the value of stock options granted to employees
as an expense. The United States Congress and other governmental and regulatory
authorities have also considered requiring companies to expense stock options.
If this change were to become mandatory, we and other companies would be
required to record a compensation expense equal to the fair market value of each
stock option granted. This expense would be spread over the vesting period of
the stock option. Currently, we account for stock compensation under Accounting
Principles Board, or APB, No. 25, Accounting for Stock Issued to Employees,
which results in no compensation expenses recorded in connection with stock
options granted to our employees. If we were required to expense stock option
grants, it would reduce the attractiveness of granting stock options because of
the additional expense associated with these grants, which would reduce our
profitability. However, stock options are an important employee recruitment and
retention tool, and we may not be able to attract and retain
-16-
key personnel if we reduce the scope of our employee stock option program.
Accordingly, in the event we are required to expense stock option grants, our
profitability would be reduced, as would our ability to use stock options as an
employee recruitment and retention tool.
-17-
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to this other information contained or incorporated by
reference in this prospectus, you should carefully consider the risk factors
disclosed in this prospectus or any prospectus supplement when evaluating an
investment in our common stock. This prospectus contains forward-looking
statements that are based upon current expectations that are within the meaning
of the Private Securities Reform Act of 1995. It is our intent that such
statements be protected by the safe harbor created thereby.
Forward-looking statements involve risks and uncertainties and our
actual results and timing of events may differ significantly from the results
discussed in the forward-looking statements. Examples of such forward-looking
statements include, but are not limited to:
o statements about our history of losses and variable quarterly
results;
o statements about the potential benefits of our drug candidates;
o statements relating to the timing, substance and sufficiency of
materials required for or anticipated results of our clinical
development of our drug candidates;
o statements about the size of the potential market for our products;
o statements about upcoming announcements by the Company;
o statements about future market acceptance of our drug candidates;
o statements about future expectations regarding trade secrets,
technological innovations, licensing agreements and outsourcing of
certain business functions;
o statements about potential competitors or products;
o statements about risks related to the failure to protect our
intellectual property and litigation in which we may become involved;
o statements about our reliance on sole source suppliers;
o statements about our limited sales and marketing efforts and our
reliance on third parties;
o statements about failure to continue to develop innovative products;
o statements about risks related to noncompliance with United States
Food and Drug Administration regulations development of our internal
systems and infrastructure; and
o statements about other factors that are described from time to time
in our periodic filings with the Securities and Exchange Commission.
-18-
USE OF PROCEEDS
Unless otherwise indicated in the prospectus supplement, the net
proceeds from the sale of securities offered by this prospectus will be used for
general corporate purposes and working capital requirements. We may also use a
portion of the net proceeds to fund possible investments in and acquisitions of
complimentary businesses, partnerships, minority investments, products or
technologies. Currently, there are no commitments or agreements regarding such
acquisitions or investments that are material. Pending their ultimate use, we
intend to invest the net proceeds in money market funds, commercial paper and
governmental and non-governmental debt securities with maturities of up to three
years.
-19-
DESCRIPTION OF COMMON STOCK
Our certificate of incorporation authorizes us to issue up to
200,000,000 shares of common stock, $0.001 par value. As of December 10, 2004,
there were 38,123,381 shares of common stock issued and outstanding.
The holders of shares of our common stock are entitled to one vote per
share on all matters to be voted on by stockholders. Common stock holders are
entitled to receive dividends declared by the board of directors out of funds
legally available for the payment of dividends, subject to the rights, if any,
of preferred stock holders. We have never paid a dividend and we do not
anticipate paying a dividend in the foreseeable future. Upon any liquidation,
dissolution or winding up of our business, the holders of common stock are
entitled to share equally in all assets available for distribution after payment
of all liabilities and provision for liquidation preference of shares of
preferred stock then outstanding. The holders of common stock have no preemptive
rights and no rights to convert their common stock into any other securities.
There are also no redemption or sinking fund provisions applicable to our common
stock. All outstanding shares of common stock are fully paid and nonassessable.
The transfer agent and registrar for the common stock is Computershare
Investor Services, 2 N LaSalle, 2nd Floor, Chicago, Illinois 60602.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the time that such stockholder
became an interested stockholder, unless:
(1) prior to such time, the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder,
(2) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned:
o by persons who are directors and also officers, and
o by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange
offer, or
(3) at or subsequent to such time, the business combination is
approved by the board of directors and is authorized at an annual
or special meeting of the stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested
stockholder.
Section 203 defines "business combination" to include:
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(1) any merger or consolidation involving the corporation and the
interested stockholder,
(2) any sale, transfer, pledge or other disposition of 10% or more of
the assets of the corporation involving the interested
stockholder,
(3) subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder,
(4) any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder, or
(5) the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
In general, Section 203 defines an "interested stockholder" as any
entity or person who or which beneficially owns (or within three years did own)
15% or more of the outstanding voting stock of the corporation and any entity or
person affiliated with or controlling or controlled by such entity or person.
The existence of this provision would be expected to have an
anti-takeover effect with respect to transactions not approved in advance by our
board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by
stockholders.
-21-
PLAN OF DISTRIBUTION
We may sell the securities:
o through one or more underwriters or dealers,
o directly to purchasers,
o through agents, or
o through a combination of any of these methods of sale.
We may distribute the securities:
o from time to time in one or more transactions at a fixed price or
prices, which may be changed from time to time,
o at market prices prevailing at the times of sale,
o at prices related to such prevailing market prices, or o at
negotiated prices.
We will describe the method of distribution of the securities in the
applicable prospectus supplement.
We may determine the price or other terms of the securities offered
under this prospectus by use of an electronic auction. We will describe how any
auction will determine the price or any other terms, how potential investors may
participate in the auction and the nature of the obligations of the underwriter,
dealer or agent in the applicable prospectus supplement.
If underwriters are used in the sale, they will acquire the common
stock for their own account and may resell the stock from time to time in one or
more transactions at a fixed public offering price. The obligations of the
underwriters to purchase the common stock will be subject to the conditions set
forth in the applicable underwriting agreement. We may offer the common stock to
the public through underwriting syndicates represented by managing underwriters
or by underwriters without a syndicate. Underwriters, dealers or agents may
receive compensation in the form of discounts, concessions or commissions from
us or our purchasers (as their agents in connection with the sale of
securities). These underwriters, dealers or agents may be considered to be
underwriters under the Securities Act. As a result, discounts, commissions, or
profits on resale received by the underwriters, dealers or agents may be treated
as underwriting discounts and commissions. Each prospectus supplement will
identify any such underwriter, dealer or agent, and describe any compensation
received by them from us. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Underwriters, dealers and agents may be entitled to indemnification by
us against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments made by the underwriters,
dealers or agents, under agreements between us and the underwriters, dealers and
agents.
We may grant underwriters who participate in the distribution of
securities an option to purchase additional securities to cover over-allotments,
if any, in connection with the distribution.
-22-
Underwriters or agents and their associates may be customers of, engage
in transactions with or perform services for us in the ordinary course of
business.
In connection with the offering of the common stock, certain persons
participating in such offering may engage in transactions that stabilize,
maintain or otherwise affect the market price, including over-allotment,
stabilizing transactions, short covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act. Over-allotment involves
sales in excess of the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Short covering transactions
involve purchases of the common stock in the open market after the distribution
is completed to cover short positions. Penalty bids permit the underwriters to
reclaim a selling concession from a dealer when the common stock originally sold
by the dealer is purchased in a covering transaction to cover short positions.
Those activities may cause the price of the common stock to be higher than it
would otherwise be. If commenced, the underwriters may discontinue any of the
activities at any time.
Any underwriters who are qualified market makers on the Nasdaq National
Market may engage in passive market making transactions in the common stock on
the Nasdaq National Market in accordance with Rule 103 of Regulation M, during
the business day prior to the pricing of the offering, before the commencement
of offers or sales of the common stock. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid at a price not
in excess of the highest independent bid for such security; if all independent
bids are lowered below the passive market maker's bid, however, the passive
market maker's bid must then be lowered when certain purchase limits are
exceeded.
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution.
-23-
LEGAL MATTERS
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, will pass upon the validity of the issuance of the securities
offered by this prospectus.
EXPERTS
The consolidated financial statements and schedules of VIVUS, Inc. and
subsidiaries as of December 31, 2003 and 2002 and for each of the years in the
two-year period ended December 31, 2003 have been incorporated by reference
herein in reliance upon the reports of KPMG LLP, independent accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
Our consolidated financial statements as of and for the year ended
December 31, 2001, incorporated by reference in this prospectus and in the
registration statement (of which this prospectus is a part) from our Annual
Report on Form 10-K of and for the year ended December 31, 2003 have been
audited by Arthur Andersen LLP, independent accountants, as stated in their
report with respect thereto and incorporated by reference herein. After
reasonable efforts, we have been unable to obtain Arthur Andersen's consent to
the incorporation by reference of their audit report on the financial statements
and schedule from our Annual Report on Form 10-K as of and for the year ended
December 31, 2001. Accordingly, Arthur Andersen LLP has not consented to the
inclusion of their report in this prospectus, and we have dispensed with the
requirement to file their consent in reliance on rule 437a under the Securities
Act. Because Arthur Andersen LLP has not consented to the inclusion of their
report in this prospectus, you will not be able to recover against Arthur
Andersen LLP under Section 11 of the Securities Act for any untrue statements of
a material fact contained in the financial statements audited by Arthur Andersen
LLP incorporated by reference in this prospectus or any omissions to state a
material fact required to be stated therein. Additionally, due to Arthur
Andersen's current financial and legal circumstances, the ability of Arthur
Andersen LLP to satisfy claims will be limited as a practical matter.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission, in accordance with the Securities Exchange
Act of 1934. You may read and copy any materials that we file with the
Securities and Exchange Commission at the following address:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Please call the Commission at 1-800-SEC-0330 for further information
about the public reference rooms. Our reports, proxy statements and other
information filed with the Commission are available to the public over the
Internet at the Commission's World Wide Web site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by reference" the information
into this prospectus. This means that we can disclose important information to
you by referring you to another document filed separately with the Securities
and Exchange Commission. The information incorporated by reference is
-24-
considered to be a part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made by us with the Commission under Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act until our offering is complete:
o Annual Report on Form 10-K for the fiscal year ended December 31,
2003;
o Definitive Proxy Statement on Schedule 14A for our annual meeting of
stockholders held on June 14, 2004, filed on April 28, 2004.
o Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2004, June 30, 2004 and September 30, 2004.
o Current Reports on Form 8-K filed with the Securities and Exchange
Commission on January 30, 2004, February 9, 2004, February 12, 2004,
April 29, 2004, July 15, 2004, July 22, 2004, August 13, 2004,
October 22, 2004, November 4, 2004 and November 10, 2004; and
o The description of the Common Stock of the Registrant that is
contained in the Registration Statement on Form 8-A filed pursuant to
Section 12 of the Exchange Act that became effective on April 7,
1994, including any amendments or reports filed for the purpose of
updating such description.
We will provide to each person who so requests, including any
beneficial owner to whom a prospectus is delivered, a copy of these filings
excluding exhibits except to the extent such exhibits are specifically
incorporated by reference. You may request a copy of these filings, at no cost,
by writing or telephoning us at the following address:
Christina Weisgerber
VIVUS, Inc.
1172 Castro Street
Mountain View, CA 94040
(650) 934-5200
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
-25-
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The aggregate estimated (other than the registration fee) expenses to
be paid by the Registrant in connection with this offering are as follows:
Securities and Exchange Commission registration fee...... $ 5,885
Accounting fees and expenses............................. 25,000
Legal fees and expenses of the registrant................ 45,000
Printing fees............................................ 15,000
Miscellaneous............................................ 9,115
----------
Total.................................................... $ 100,000
----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF VIVUS, INC.
Section 145 of the Delaware General Corporation Law ("Delaware Law")
authorizes a court to award or a corporation's board of directors to grant
indemnification to directors and officers in terms that are sufficiently broad
to permit indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended. Our bylaws provide for the mandatory indemnification of our
directors and officers to the maximum extent permitted by Delaware law. Our
bylaws also provide (i) that we may modify the scope of indemnification by
individual contracts with our directors and officers, and (ii) that we shall not
be required to indemnify any director or officer unless the indemnification is
required by law, the proceeding in which indemnification is sought was
authorized in advance by our board of directors, the indemnification is provided
by us, in our sole discretion pursuant to powers vested in us under the General
Corporation Law of Delaware or the indemnification is required by individual
contract. In addition our bylaws give us the power to indemnify our employees
and agents to the maximum extent permitted by Delaware law.
Our amended and restated certificate of incorporation provides for the
indemnification of directors to the fullest extent permitted under Delaware law.
We refer you to the form of underwriting agreement to be filed as an
exhibit to this Registration Statement as incorporated by reference as an
exhibit to a current Report on Form 8-K for certain provisions regarding
indemnification of our officers and directors by the underwriters.
We have entered into indemnification agreements with our directors and
executive officers, in addition to indemnification provided for in our bylaws,
and we intend to enter into indemnification agreements with any new directors
and executive officers in the future.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference
herein:
II-1
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
1.1 Form of Underwriting Agreement.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.*
23.1 Consent of KPMG, LLP, independent auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
24.1 Power of Attorney of certain directors and officers of VIVUS, Inc.
(see page II-4 of this Form S-3).
- ----------------
* To be filed by amendment or as an exhibit to a current report of the
registrant and incorporated herein by reference.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(a) To include any prospectus required by Section 10(a)(3)
of the Securities Act,
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement,
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that clauses (a) and (b) do not apply if the information
required to be included in a post-effective amendment by such clauses is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
II-2
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities, other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding, is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Mountain View, State of California, on December
21, 2004.
VIVUS, INC.
By: /s/ LELAND F. WILSON
-------------------------
Leland F. Wilson
President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Leland F. Wilson and Timothy E. Morris
and each of them individually, as his true and lawful attorneys-in-fact and
agents with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities to sign the Registration
Statement filed herewith and any or all amendments to said Registration
Statement (including post-effective amendments and registration statements filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
otherwise), and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission granting
unto said attorneys-in-fact and agents the full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the foregoing, as full to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or his or her substitute, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/S/ LELAND F. WILSON President and Chief Executive Officer December 21, 2004
- ------------------------ (principal executive officer)
Leland F. Wilson
/S/ VIRGIL A. PLACE Chairman of the Board Director and Chief December 21, 2004
- ------------------------ Scientific Officer and Director
Virgil A. Place
/S/ TIMOTHY E. MORRIS Vice President of Finance and Chief December 21, 2004
- ------------------------ Financial Officer (principal financial
Timothy E. Morris and accounting officer)
/S/ MARIO M. ROSATI Director and Secretary December 21, 2004
- ------------------------
Mario M. Rosati
/S/ GRAHAM STRACHAN Director December 21, 2004
- ------------------------
Graham Strachan
II-4
SIGNATURE TITLE DATE
--------- ----- ----
/S/ MARK B. LOGAN Director December 21, 2004
- ------------------------
Mark B. Logan
/S/ LINDA M. DAIRIKI SHORTLIFFE, M.D. Director December 21, 2004
- -------------------------------------
Linda M. Dairiki Shortliffe, M.D.
II-5
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
1.1 Form of Underwriting Agreement.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.*
23.1 Consent of KPMG, LLP, independent auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
24.1 Power of Attorney of certain directors and officers of VIVUS, Inc.
(see page II-4 of this Form S-3).
- ------------------
* To be filed by amendment or as an exhibit to a current report of the
registrant and incorporated herein by reference.
II-6
EXHIBIT 23.1
------------
CONSENT OF KPMG LLP, INDEPENDENT AUDITORS
We consent to use of our report dated January 22, 2004 with respect to
the consolidated balance sheets of VIVUS, Inc. and subsidiaries as of December
31, 2003 and 2002, and the related consolidated statements of operations and
other comprehensive loss, stockholders' equity, and cash flows for each of the
years in the two-year period ending December 31, 2003, incorporated herein by
reference, and to the reference to our firm under the heading "Experts" in the
registration statement.
/s/ KPMG LLP
San Francisco, California
December 21, 2004