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Edited Transcript of VVUS earnings conference call or presentation 26-Feb-19 9:30pm GMT

Q4 2018 Vivus Inc Earnings Call

Mountain View Mar 1, 2019 (Thomson StreetEvents) -- Edited Transcript of VIVUS Inc earnings conference call or presentation Tuesday, February 26, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* John P. Amos

VIVUS, Inc. - CEO & Director

* Mark K. Oki

VIVUS, Inc. - Senior VP, CFO & CAO

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Conference Call Participants

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* Charles Joseph Whitesell

Wells Fargo Securities, LLC, Research Division - Associate Analyst

* John D. Vandermosten

Zacks Investment Research, Inc. - Senior Biotechnology Research Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to the VIVUS Fourth Quarter and Full Year 2018 Financial Results Conference Call. Today's call is being recorded.

For introductions and opening remarks, I'd like to turn the call over to Mr. Mark Oki, VIVUS Chief Financial Officer. Please go ahead, sir.

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Mark K. Oki, VIVUS, Inc. - Senior VP, CFO & CAO [2]

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Thank you, operator. Good afternoon, everyone, and welcome to today's teleconference. With me on the call is John Amos, VIVUS' Chief Executive Officer.

Before we get started, I would like to remind everyone that during this conference call, we'll make certain statements that are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words such as anticipate, believe, estimate, expect, forecast, intend, likely, may, opportunity, plan, potential, predict and should, among others. These forward-looking statements are based on VIVUS' current expectations, and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. Investors are advised to read the risk factors set forth in VIVUS' Form 10-K for the year ended December 31, 2018, that was filed earlier today, February 26, 2019, as well as periodic reports filed with the Securities and Exchange Commission. VIVUS does not undertake an obligation to update or revise any forward-looking statements made on this call.

I will now review the fourth quarter financial results for 2018 and then turn the call over to John who will provide a business update and discuss several key initiatives that will be a focus in 2019.

Qsymia net product revenue was $10.1 million in the fourth quarter of 2018 as compared to $8.9 million in the fourth quarter of 2017. The increase was primarily due to improvements in Qsymia's gross-to-net deductions, including sales returns and discounts. Shipments were approximately 87,000 units in the fourth quarter of 2018 as compared to 88,000 units in the same period in 2017. Approximately 83,000 and 91,000 Qsymia prescriptions were dispensed in the fourth quarters of 2018 and 2017, respectively.

PANCREAZE net revenue -- net product revenue in the U.S. was $7.4 million in the fourth quarter of 2018, up sequentially from $6.7 million in the third quarter of 2018 and represents the company's second full quarter of PANCREAZE revenue. During this period, we shipped approximately 32,000 units of PANCREAZE. Beginning in the first quarter of 2019, we anticipate that future PANCREAZE net revenue -- net product revenue will be impacted by higher wholesaler fees as VIVUS takes over supply chain management and implements certain promotional strategy, including the issuance of discount coupon.

During the fourth quarter of 2018, we recognized $0.5 million of royalty revenue from Canadian PANCREASE MT sales and $0.5 million of royalties from Menarini for net sales of SPEDRA.

Supply revenue to our licensees, Menarini and Metuchen, for SPEDRA and STENDRA were $1.7 million and $2.3 million in the fourth quarter of 2018 and 2017, respectively. Both Menarini and Metuchen have minimum order requirements, and their orders do not necessarily reflect end user demand.

Total cost of goods sold, excluding amortization, was $5.2 million and $3.8 million in the fourth quarters of 2018 and 2017, respectively. The increase was primarily a result of the addition of PANCREAZE product revenue during the quarter.

Amortization of intangible assets was $3.6 million and $91,000 in the fourth quarters of 2018 and 2017, respectively. The increase was due to the amortization of costs capitalized with the acquisition of PANCREAZE.

Research and development expenses were $1.8 million and $1.2 million in the fourth quarters of 2018 and 2017, respectively. Research and development expenses were impacted by the assumption of certain post marketing requirements, or PMRs, from Janssen as part of the PANCREAZE acquisition and the initiation of the Qsymia PMR of an adolescent safety and efficacy study.

General and administrative expenses were $4.6 million and $5.7 million for the fourth quarters of 2018 and 2017, respectively. The decreases were primarily due to cost-control initiatives during the year. In 2019, we expect a slight increase in general and administrative costs as we continue the integration of PANCREAZE activities. In addition, G&A expenses may vary materially based on business development activities.

Selling and marketing expenses totaled $3.1 million and $3.0 million in the fourth quarters of 2018 and 2017, respectively. The slight increase was due to marketing expenses associated with PANCREAZE. We expect our sales and marketing expenses to increase from fourth quarter levels with the launch of PANCREAZE in the first quarter of 2019, which John will describe in greater detail shortly. Additional expenses will include growth in our field force and potential administrative, partnering and/or promotional activities.

Total interest and other expense net was $6.3 million and $8.2 million for the fourth quarters of 2018 and 2017, respectively.

Fourth quarter 2018 results include a $1.4 million gain on the repurchase of $8.574 million of convertible notes. On an annual basis, we will pay approximately $19.6 million in annual interest payments on our outstanding convertible and senior secured notes.

Net loss for the fourth quarter of 2018 was $4.5 million as compared to $10.1 million in the fourth quarter of 2017. Cash, cash equivalents and available-for-sale securities were $111.2 million at December 31, 2018.

Non-GAAP EBITDA for the fourth quarter of 2018 was $6.1 million as compared to a negative EBITDA of $1 million in the fourth quarter of 2017. Reconciliation of these non-GAAP measures can be found in the press release filed earlier today with the Securities and Exchange Commission.

With that, I will now turn the call over to John for a business update and discussion of our goals and strategy going forward.

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John P. Amos, VIVUS, Inc. - CEO & Director [3]

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Cool. Thanks, Mark, and thanks to everyone on the call for your time this afternoon. It's great to have a chance to discuss VIVUS with you.

2018 year -- 2018 was a year of transformation for the company. We started the year with a board member, Tom King, serving in the role of interim CEO, with the daunting of executing on the strategy to transform VIVUS into a fully integrated biopharmaceutical company that generates positive EBITDA. Tom did a great job, and we thank him dearly.

The strategy began to take further shape with the addition of management with significant commercial and M&A experience, in myself, Ken Suh and Scott Oehrlein. And at the same time, we acquired PANCREAZE. Starting July 1, 2018, we effectively [decluded] the company. In the second half of 2018, we generated $10.9 million of recurring EBITDA, a major improvement compared to a loss of $7 million in the fiscal year 2017. We intend to continue to execute on our strategy by acquiring new products and reenergizing our existing products, PANCREAZE and Qsymia.

In addition to delivering on the goal of generating positive return on EBITDA, we have corrected or made significant progress on 14 identified issues with the business. This included executing a reverse stock split, buying down and restructuring a portion of our debt, improving analytics, improving profitability on Qsymia, integrating PANCREAZE, improving the financial discipline of VIVUS and developing a go-forward plan for VI-0106.

We know from our experience that turning around companies like VIVUS typically takes about 10 financial quarters. July 1, 2018 through December 2018 represents the completion of the first 2 of these 10 quarters. In other words, we're about 20% of the way through our turnaround. We're very pleased with our progress, and we believe there is still so much more stockholder value that can be created with VIVUS in the next 24 months and beyond.

So let's talk about the next 24 months and the other 80% of the turnaround. We're focused on the following core activities: one, growing PANCREAZE profitably; two, growing Qsymia profitably; three, continuing to license STENDRA/SPEDRA; four, continuing development of VI-0106; five, managing and preparing to pay down our May 2020 convertible notes of $181.4 million; and continuing our business development activities to acquire assets and find licensing deals.

First, we'll discuss PANCREAZE. On February 19, 2019, last week, following an efficient and smooth transition of the product from Janssen to VIVUS ownership, we relaunched PANCREAZE. In combination with [all] leadership, we have secured a tremendous [fan] leader, along with an incredibly experienced sales force (inaudible) who will focus on GI and cystic fibrosis health care providers. The sales force has an average of 10.5 -- 10 to 15-plus years of pharmaceutical experience, primarily in the fields of gastroenterology and pulmonology. We are targeting approximately the top 40% of U.S. physicians who prescribe treatment for exocrine pancreatic insufficiency, or EPI, with our sales effort.

In addition to the balance sheet and robust sales force, we [attributed] the PANCREAZE Advantage program, partly evolving VIVUS Health Platform. Our pharmaceutical advantage programs encompass our physician sampling program, patient access programs, co-pay cards, vitamins and nutritional supplement. We believe our program will be recognized as the easiest to use and most efficient patient support program in the U.S. pharmaceutical industry.

We built the program using a handful of HIPAA-compliant cloud technologies, coupled with the VIVUS Amazon storefront, demonstrating our ability to leverage technology to advance the marketing and adoption of our products. We are hopeful and believe that the combination of our sales force, the pharmaceutical quality and efficacy of PANCREAZE and the PANCREAZE Advantage program will enable VIVUS to generate above-market growth for the brand. We believe we will be able to generate 6 to 9 percentage points of EPI market share in the next 24 months to 36 months. As a reminder, each point of market share is worth approximately $1.1 million of net revenue.

To provide us with an additional dose for adult pancreatitis patients, we're working closely with our manufacturing partner, Nordmark, to develop our high-dose unit of measure PANCREAZE pill, with the goal of launching this dose through the first half of 2021.

Typically, with the relaunch of a legacy-branded products, it takes between 2 quarters and 3 quarters to see meaningful sales growth. We believe that at the third quarter of 2019, we will see meaningful sales growth for the PANCREAZE brand. We are optimistic that our new initiatives will lead to a faster uptick in sales, and we will have greater insight into our market position as we move forward with the PANCREAZE and VIVUS product over the next several quarters.

As Mark noted, however, the launch of PANCREAZE in the first quarter of 2019 may put pressure on our operating results for the next 2 -- few quarters due to increased investment in sales, marketing and distribution.

Let's move on to Qsymia. First and foremost, we were pleased with how Qsymia performed in the fourth quarter, and we believe there is additional growth for this important product. Approximately 90 million Americans with BMI greater than 30, which may make them eligible to take Qsymia. Given the safety and efficacy of Qsymia and the long-known health benefits of losing weight, Qsymia is the drug that eligible Americans and their physicians should seriously consider as part of their treatment for high BMI.

The VIVUS team is working hard to make sure that more and more Americans and health care professionals have the required knowledge of and access to Qsymia, which should expand the use of Qsymia in patients who can benefit from weight loss. Given the safety and pharmaceutical efficacy of Qsymia, we are often asked why the product has been challenged to deliver on the expectations initially laid out for it in 2012.

I'd like to take a moment now to review some of the historical challenges with Qsymia that have been barriers to realizing its full clinical and commercial potential. There are a number of misunderstandings about the annual [BC] market. First, the assumption that BMI therapeutics would be reimbursed like typical branded pharmaceuticals turned out to be incorrect. BMI therapeutics have little to no payer reimbursement, thus exposing the brand to more consumer-like price elasticity, shaping and effectively shrinking the market based on actual price. Second, Wall Street overestimated the number of people with the desire to take a pill to aid weight loss. Reality is only about 10% to 15% of the eligible high-BMI patients are willing to take a pill to aid in weight loss. And among these patients, a pill could be an over-the-counter weight loss supplement or a prescribed therapeutic. Three, finally, the company and the analyst community overestimated the duration that these patients would want to be on our BMI pharmaceutical. While the initial expectation that these therapies would be used chronically, the reality is that they're more typically used for just 3 months to 6 months.

We believe that these 3 factors create a shrinking effect on the market acceptance of Qsymia. In addition to these 3 factors, VIVUS has been running a 15-day trial offer, in time for our [Qsymia] launch, with the goal of providing patients free access to the initial titration dose. Program has garnered a lot of these therapeutic starts, however, because patients haven't been on the product long enough or higher doses to experience weight loss, about 50% of the patients don't continue with therapy beyond the free trial. Many of these patients are led to believe the product doesn't work for them, which probably isn't the case. We're in the process of replacing the 15-day free trial program with an initial prescription of 45 days at $98, that allows the patient to titrate onto Qsymia [plus the responders] experience weight loss. These generates $98 of revenue versus $50 in a straight loss from free trial off a script.

The physician and patient feedback to date has been very positive. Due to this change, we will anticipate experiencing a decline in the number of Qsymia starter dose prescriptions. But overall, we believe the change will have a positive effect on patient new starts, profitability and revenue.

In addition to the free offer trial change, our outstanding sales and marketing team have kicked off the relaunch of Qsymia as of yesterday, February 25, 2019. Part of the relaunch, we are doing the following: one, we are moving the market from the traditional retail channel to track -- to patient home channel. This changes several things; most importantly, lowers the out-of-pocket cost to the patient by 40% with minimal change in net revenue to VIVUS on a per script basis. We're enabling patients to order the product from home via the web once a prescription has been filed. We intend to launch telemedicine experience for patients, along with nutritional products and weight loss-focused vitamins, as part of the evolving VIVUS Health Platform and the Qsymia Advantage program.

We are creating a managed care program focused on self-insured employers and Medicare Advantage members. We don't expect this program to be live until 2020, but the initial discussions in the market have been extremely positive.

We have increased the size of our Qsymia sales team from 18 to 21, utilizing 3 inside sales reps to contact health care professionals that would not be able -- that we would not be able to address efficiently through our existing field-based sales force.

Qsymia has been used to treat over 600,000 Americans to date, and we believe that based on the changes that we're making to our Qsymia sales and marketing strategies, we will be able to expand the market size in the range of 6 million to 11 million individuals in the United States alone. A very high price point for Qsymia to date has merely constrained the size of the market. We think that these changes will translate into meaningfully increased annual U.S. revenues.

Last month, we announced that the data supporting the cardiovascular safety of Qsymia has been published in The Journal of Clinical Endocrinology & Metabolism. In concert with this announcement, we also summarized key findings from multiple clinical trials and peer-reviewed publications that all support the cardiovascular safety of Qsymia. We believe that this robust body of safety data will afford patients and physicians useful information that the use of Qsymia does not increase the risk of major adverse cardiovascular events.

We intend to include these findings from a retrospective observational study and claims database in our ongoing discussions with the U.S. Food and Drug Administration related to our requested label modification for Qsymia. The requested modification will allow for the safe and effective short-term use of Qsymia and could potentially reduce or modify the need for a cardiovascular outcomes study.

As for the EU, we're planning for a decentralized submission in certain EU countries in the second half of 2019. We previously underwent a centralized Qsymia MAA submission but were denied approval. We believe that a decentralized approach will increase our opportunities to gain approval and marketing experience in certain EU countries. In addition, we expect our first ex-U. S. approval of Qsymia in 2019.

Finally, we want to update you on our ongoing dialogue with the FDA regarding our cardiovascular outcomes trial, or CVOT, post marketing requirements. By way of background, the approval of Qsymia included a number of post marketing requirements, including the CVOT. To date, VIVUS has satisfied or advanced each of the post marketing requirements with the exception of the CVOT, which we are seeking to either significantly reduce or eliminate.

As we mentioned earlier on the call, Qsymia is not used chronically despite this indication of its label. The vast majority of the patients take Qsymia for 3 months to 6 months. We have generated a significant amount of usage data supporting the CV and safety profile of Qsymia. The short-term use of Qsymia, coupled with real world safety data and our own opinion, supports reduction or elimination of the CVOT requirement.

As I mentioned previously, we submitted an sNDA Qsymia label modification from chronic to short-term usage, which we believe will justify the reduction or elimination of the CVOT. The sNDA is pending with no anticipated time frame or response from the FDA.

In addition, we continue to respectfully engage with the FDA to identify alternative studies to the CVOT, and we'll provide the FDA with additional Qsymia CV safety data. It's our hope that such alternative studies would significantly reduce or eliminate the need for the CVOT. But to date, we have not reached final agreement with the FDA on the design of any such study or the impact that any such study would potentially have on the CVOT post marketing requirement.

To conclude on Qsymia, (inaudible) product in the market, since approval and especially in the last 8 months, [to say in] application product that delivers the final outcome of weight loss. We tested a couple of programs to drive sales, and they've worked. We're rolling those programs out to a larger portion of the U.S. population. We believe that we can grow the revenue and the profitability of Qsymia. You should expect some negative impact on script numbers as we change the sales roles, but be assured we intend to keep working to grow this product.

Let me now turn to avanafil, which is marketed as STENDRA in the United States and SPEDRA in Europe. As we've previously discussed, avanafil is largely managed as a licensing opportunity, and it's approved in addition -- and as it's approved in additional territories around the globe, we will have additional licensing opportunities.

In 2018, we received notifications of approvals to commercialize SPEDRA for Jordan, Saudi Arabia and Turkey and just recently, received regulatory approval in the United Arab Emirates. We are expecting the completion of regulatory review in Russia in 2019. Although we will continue to drive licensing opportunities for avanafil and manage our partnerships, we only see it as royalty-like contributor to VIVUS' long-term financial performance.

Our product portfolio also includes the development asset, VI-0106. This development asset is a proprietary, liquid-based soft capsule formulation of tacrolimus that's being developed for the treatment of pulmonary arterial hypertension, or PAH, a serious, rare and progressive disease with a significant unmet medical need and no curative therapy. New therapies that address the underlying cause of the disease are urgently needed, and available data suggest that VI-0106 may fill this need as a potentially class/disease-modified medicine that could extend survival for PAH patients. We believe there's an opportunity for VI-0106 to receive Fast Track and/or clinical breakthrough designation from the FDA.

Tacrolimus has been approved in multiple organ transplant settings, atopic dermatitis and ulcerative colitis. A robust body of safety data for tacrolimus should help streamline the regulatory pathway for VI-0106, as should preliminary data we have related to the use -- the approved tacrolimus formations for patients with PAH. If VI-0106 receives breakthrough designation therapy, we believe there is a clinical and regulatory pathway that could lead to approval in May 2021 or 2022.

We believe the capacity [youth] data, our U.K.-based Phase I trial data, the investigator-[read] Phase II trial data, the long-standing use of tacrolimus in humans for other indications and the dosing required for the PAH indication being less than required for immunosuppression will lend significant support to our ongoing effort to obtain approval for the treatment of PAH.

We're frequently asked about the timing of partnering this asset. While we have had preliminary conversations with interested parties around partnering, we believe that more value can be realized by moving the product further through the development process for a relatively nominal investment. While still constantly evaluating our partnering options, partnering at this moment in time would result in our missing out on much of the upside of the asset if VI-0106 ultimately gains approval. Additionally, some strategic partners we have spoken with have financial capabilities that we don't have. But VIVUS' pharmaceutical approval track record is better. So though partners may have broader commercial capabilities, the VI-0106 doesn't require an extensive sales force, only probably about 10 people for a single dedicated medical direct. Plus VIVUS' financial position has significantly improved from mid-2018. As it stands right now, we are planning to file an investigation new drug application with the FDA in 2019. We will continue to explore our options with respect to raising capital specifically for VI-0106. We are just unwilling to do something prematurely that would likely not retain value for VIVUS shareholders.

Now I'd like to address the topic of our debt. We currently we have a net debt position of $182 million as of December 31, 2018. If we take our fourth quarter 2018 EBITDA and annualize it, we're running at approximately 7.45 turns of net debt-to-EBITDA versus what we consider an acceptable standard of 5x net debt-to-EBITDA. While we recognize this company is still modestly over-levered, we believe we have greatly improved the quality of the balance sheet of the company. Our continued focus on improving the operations and profitability should continue to further mitigate this risk. We've been in the market discussing our credit needs for the first half of next year due to the fact that we will need to refinance a portion of our debt due to our significant improvement in performance in the second half of 2018 and the plans that we have in place for 2019 and the first quarter of 2020 for collective [anxiety] significantly] starting]. We now believe there are multiple [pathways] to solve this issue once and for all. As I said in the introduction, (inaudible) a challenge, but we believe this risk has significantly been reduced.

As we work to maximize the value of our current product portfolio and advance VI-0106, we're also seeking new cash flow-positive products and corporate acquisition opportunities. We have evaluated 24-plus deals and still have a number of legs in the tank. We lost a couple of deals because of price. We offered lower ROIs. And in one case, we were outbid by 50 plus percent. Some of the other deals are still under consideration.

We are evaluating candidates of (inaudible) and better criteria for meeting patient needs while working towards profitability and building stockholder value. Bottom line is we want to and can acquire assets but will only do so if they meet our criteria.

We're also evaluating co-promotion deals as well. We understand that the commercial capabilities are in managed programs, along with the ever-expanding VIVUS Health Platform that can serve very attractive co-promotion purposes.

In conclusion, I believe that 2018 was a truly transformative year for VIVUS. Our newly combined management team was developed and is successfully executing on an array of strategies designed to position us for long-term sustainable profitability and success. As I mentioned, we are just about 20% of the way through our turnaround. We believe that the changes and progress that we've already achieved in reducing our debt, increasing our EBITDA, developing and implementing new sales and marketing strategies and identifying multiple opportunities to grow revenues from our current commercial portfolio should provide clear evidence that we have what it takes to reach our goals.

We've already made significant progress on our key portfolio objectives for 2019 by relaunching PANCREAZE out of the VIVUS brand and the deployment of our sales force team. Our extended sales force [with] multiple new capabilities around Qsymia are very exciting. We're also focused on implementing the advantaged model for Qsymia and PANCREAZE. As I indicated each quarter since becoming CEO last spring, reducing our debt, increasing EBITDA, acquiring EBITDA-positive assets and achieving appropriate leverage ratio will continue to be our overarching priorities in 2019 and 2020.

Operator, you may now open the line for the question-and-answer period.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We'll take our first question from Jim Birchenough with Wells Fargo Securities.

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Charles Joseph Whitesell, Wells Fargo Securities, LLC, Research Division - Associate Analyst [2]

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This is Chuck Whitesell for Jim. I know you talked about your plans for refinancing debt and making progress on that front. Can you speak at all, given the insight, to cash runway at this point?

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Mark K. Oki, VIVUS, Inc. - Senior VP, CFO & CAO [3]

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Sorry, we had a hard time hearing you. Can you repeat that?

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John P. Amos, VIVUS, Inc. - CEO & Director [4]

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Yes.

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Charles Joseph Whitesell, Wells Fargo Securities, LLC, Research Division - Associate Analyst [5]

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Yes. Thanks for the update on the plans to refinance debt and -- through 2020. Can you speak to the cash runway position, how that looks?

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Mark K. Oki, VIVUS, Inc. - Senior VP, CFO & CAO [6]

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Yes. I mean, our biggest factor is the convertible notes that are due in May of 2020. We have more than sufficient cash to get us to that point, but we have to do some refinancing or raising capital in some way prior to actually paying off that debt.

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John P. Amos, VIVUS, Inc. - CEO & Director [7]

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Yes. Maybe just further to that, I mean, we're effectively not burning cash anymore; maybe a little bit because our expenses are going to go up in Q1, Q2 just because of the relaunch of PANCREAZE. But overall, we've made tremendous progress in kind of eliminating the cash burn that the company has had over the last few years.

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Operator [8]

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(Operator Instructions) And the next question comes from John Vandermosten.

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John D. Vandermosten, Zacks Investment Research, Inc. - Senior Biotechnology Research Analyst [9]

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Wanted to ask just about additional geographic opportunities for licensing of avanafil, and I'm especially thinking about the former Sanofi territories. What opportunities are ahead in that area?

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John P. Amos, VIVUS, Inc. - CEO & Director [10]

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Yes. So definitely, the Middle East is a big opportunity for us there. So we're looking at a comprehensive set of -- there are probably 3 or 4 folks that we're having conversations with right now around continuing to extend our market penetration particularly in the Middle East. As we see Russia and Central America and Mexico, those are additional opportunities as well for us. So we probably see 7 or 8 territories probably encompassing, call it, 0.5 billion people from a population perspective or, call it, 250 million people from a population perspective.

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Operator [11]

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(Operator Instructions) If there are no further questions, I will turn the line back over to John Amos for closing remarks. Sir, you may proceed.

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John P. Amos, VIVUS, Inc. - CEO & Director [12]

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Operator, it appears that we have one more question from [Steve Schlaven].

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Operator [13]

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Mr. [Schlaven], you may please go ahead.

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Unidentified Participant, [14]

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Congratulations on a nice turnaround. It looks very impressive. I had a question about your new marketing for Qsymia, and I was wondering if you're going to do some any type of television advertising or going directly to people that might not think about going through a doctor but aren't aware of the product. Because you have such a great story and a great track record, I think that TV ads, sending them to a website would possibly help. What are your thoughts on that?

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John P. Amos, VIVUS, Inc. - CEO & Director [15]

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Yes. It's a great question, [Steve], and I appreciate it. I think what we did do as one of the initiatives, we changed the way that we're managing our digital campaign. And what we found is that the return on investment for focused digital campaigns are a much better return on investment than television advertising. It allows us to do a much more finite and targeted messaging. And we're able to -- through our digital ad campaigns, we're able to more quickly and rapidly identify patients that will benefit from our therapy. I think the -- if you look at some of the other competitors in the product, they did focus and utilize television ad campaigns to drive their [borrowings]. And while they were initially successful, ultimately it led to basically a bankrupt, financial outlay. They just ended up not working properly. And so what we further doing is really improving access around the program as well, too. So with the introduction of telemedicine, we're effectively eliminating a number of the barriers. Right now, a patient has to go into the physician's office; actually that's [really inefficient]. What we're really trying to do is make this a process that is very -- something that you can do from the comfort of your own home. This is also -- weight loss is very similar to ED in terms of its -- what is referred to as a door handle conversation. So right before the patient leaves the physician's office, as they're holding the door handle, they turn around, and they say, "Hey, what about weight loss products?" And by moving to telemedicine and utilizing advanced digital metrics that -- for patient identification, we believe that we'll be able to drive some growth there. So we're going to stay off of traditional television, just burns a lot of cash, hard to measure ROI, and we're going to stick with programs that are more effective in terms of driving share of [wallet].

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Unidentified Participant, [16]

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Okay. Another question -- yes, and also, what are the possibilities of this product before the patent expires or your exclusivity about getting a -- an over-the-counter type of approval? Is that any possibility?

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John P. Amos, VIVUS, Inc. - CEO & Director [17]

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No. That's -- I would never say never, but I'd say pretty close to never. You have [central mean], central mean is a controlled substance. It's called C4 class of drug. And for the vast majority of -- well, all C4, C3, C2 drugs are all managed and monitored pretty heavily by the DEA. So I think that the probability of us moving to that over-the-counter is severely -- very, very extraordinarily low probability, and it's not something that we're pursuing with the FDA.

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Unidentified Participant, [18]

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All right. And I really do notice the way you guys are turning the company around and turning it into an actual business where you're running it kind of like a business model instead of just throwing products around. And I believe that you're doing a great job.

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John P. Amos, VIVUS, Inc. - CEO & Director [19]

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Thank you very much. I appreciate the comment.

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Mark K. Oki, VIVUS, Inc. - Senior VP, CFO & CAO [20]

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Thank you.

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Operator [21]

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If there are no further questions, I will now turn the call back over to John Amos for closing remarks.

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John P. Amos, VIVUS, Inc. - CEO & Director [22]

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All right. Thanks, everybody. We're excited for 2019 and it'll be our first full year under new management team and believe that the accomplishments we made just a few months of 2018 and the beginning of 2019 are important evidence of what we'll achieve in the year ahead. Mark and I will look forward to sharing our progress with you.

And operator, we'll hand it back over to you.

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Operator [23]

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And that concludes today's call. All parties, you may now disconnect. Have a great day.