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VIVUS, Inc. (NASDAQ:VVUS)

Q1 2014 Earnings Conference Call

May 5, 2014 4:30 PM ET

Executives

Dana Shinbaum – Corporate Development and IR

Seth Fischer – CEO

Svai Sanford – CFO

Analysts

Cory Kasimov – JPMorgan

Alan Carr – Needham & Company

Lee Kalowski – Credit Suisse

Steve Byrne – Bank of America

Marko Kozul – Leerink Partners

Matthew Andrews – Wells Fargo Securities

Thomas Wei – Jefferies

Jason Butler – JMP Securities

Bob Ai – WallachBeth

Operator

Good day, ladies and gentlemen, and welcome to the VIVUS First Quarter 2014 Financial Results Teleconference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, teleconference is being recorded.

Now, I will turn the program over to Mr. Dana Shinbaum, Corporate Development and Investor Relations.

Dana Shinbaum

Thank you, operator. Before we get started, I would like to remind you that during this conference call, VIVUS will 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’s 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.

VIVUS does not undertake an obligation to update or revise any forward-looking statements. Investors should read the risk factors set forth in the VIVUS Form 10-K for the year ended December 31, 2013, and Form 10-K/A filed on April 30, 2014 and periodic reports filed with the Securities and Exchange Commission.

I will now turn the call over to Mr. Seth Fischer, CEO of VIVUS.

Seth Fischer

Hello, everyone. And welcome to our first quarter 2014 update and financial results teleconference. Joining me today in addition to Dana, are Svai Sanford, Interim CFO and John Slebir, Senior Vice President, Business Development and General Counsel.

Today, we will review with you our financial results and progress made during the most recent quarter.

As you know, we have faced challenges in Qsymia including reluctance to treat, reimbursement barriers and general lack of awareness of Qsymia and its benefits.

We intensified our focus throughout this past quarter on the most productive prescribers within the anti-obesity market by realigning sales territories and reprioritizing our targeting efforts.

This effort resulted in some disruption in the field during the first quarter. In early March 2014, we completed our realignment and finished our national re-training process for the field sales force.

With the realignment completed, we are focused on the parameters of the high-need patient on initiating conversations with physicians about obesity treatment. By discussing with potential prescribers, specific patient types and depicting what pensive self weight loss can accomplish in the treatment paradigm.

We’ve been able to bring new prescribers into the franchise and also have existing prescribers thinking about additional patients for Qsymia, they offered benefits that they had not fully considered.

Our market research revealed our continuing challenge among prescribers with respect to navigating prior authorization procedures and procuring reimbursement for Qsymia patients.

We have supported healthcare providers with some new reimbursement of systems that will help to take much of the prior authorization burden away from the prescribers and their administrative staff. These services have been well received and are being successfully implemented.

In parallel to these reimbursement of system services, we will seek to drive coverage at the payer level and increase pull-through at the provider level by emphasizing where medically appropriate, the availability of Qsymia as a standard benefit.

We are also working to secure greater insurance coverage with Qsymia at Tier 2, which would increase Qsymia utilization and patient persistence. The ramps REMS modification in mid-2013 eliminated the regulatory barriers to impending Qsymia and local certified retail pharmacies.

As we recently discussed, we have refined our Qsymia discount offers in an ongoing effort to lower out-of-pocket cost for patients. We are now providing a discount of up to $75 off, any amount of co-pay about $60 for covered patients and a cash discount of $75 for patients who are paying cash.

These offers cover all doses, and are good for up to 12 prescriptions. With these new discounts programs, we are broadening the availability of savings across the franchise and extending the time period during which patients can save money on the Qsymia therapy.

Here again, we believe that these programs should increase Qsymia utilization and patient persistence. We are maintaining the free-to-start program that provides the first 14 days of Qsymia starting dose, free of charge for all patients. VIVUS also offers assistance to covered patients with high monthly co-pays.

On March 19, 2014, we announced that Shari Belafonte had teamed with VIVUS to educate American adults about picking medical treatment for chronic weight management when diet and physical activity alone have not been successful.

As you know, a 10% weight loss score is recommended by the National Institutes of Health, as a benchmark to outpatients to reduce the risk of developing other medical conditions while making a meaningful difference in health and well being.

Ms. Belafonte, an actress, model, photographer, writer, singer and daughter of musician and actor Harry Belafonte, had struggled in recent years with being overweight had developed high cholesterol and was increasingly concerned about a family history that included cardiovascular disease and diabetes.

She worked with a primary care physician and was able to achieve her weight loss score with an available prescription medication and start-up a brand including proper nutrition and physical activity.

Ms. Belafonte plans to share new photographic work between patients like herself who have successfully achieved and maintained meaningful weight loss, improving their health and well being.

On March 25, 2014, we announced that a review article had been published online in the journal of hypertension, the official publication of the International Society of Hypertension and the European Society of Hypertension, summarizing the cardiovascular benefit risk profile of Qsymia.

The data suggested that Qsymia can be a safe and effective weight loss option for overweight obese patients with cardiovascular risk factors such as hypertension or Type 2 diabetes. Available data from the study did not indicate any increased cardiovascular risks associated with Qsymia.

We are seeing further evidence of a recent shift in thinking on the reimbursement front. First, as of March 2014, we have expanded to 30% the portion of Qsymia prescriptions that are covered by insurance. Second, a recent communication was sent by the U.S. Office of Personal Management or OPM to all insurance carriers providing coverage under the Federal Employee Health Benefit program or FEHB.

The letter stated explicitly, that while diet and exercise are the preferred methods for losing weight, drug therapy can provide assistance for obese adults who do not achieve weight loss scores by these means alone. And that excluding weight loss drugs from FEHB coverage is not permissible.

We believe this specific directive from OPM to FEHB carriers demonstrate an understanding on the part of a major decision making authority regarding the need to actively treat obesity and the proper way to think about appropriate and FDA approved therapies.

The impact of this decision maybe requested as early at 2015 within the population of approximately 2.7 million federal workers. And we hope that the OPM decision will influence other major insurers.

Just a reminder, with respect to our pathway for Qsymia in Europe, as you are aware, we modified the design of a Phase IV CVOT trial required for Qsymia by the FDA in order to establish the potential pathway to European approval through a centralized European Union procedure.

We received helpful feedback over this year from the European Union officials regarding the acclaimed CVOT protocol, then we resubmitted the protocol to FDA. We hope to hear from the FDA during the second quarter of 2014 but we cannot make any specific predictions.

Our Qsymia parting efforts are ongoing and we remain open to establishing commercial alliances for Qsymia on a global or regional basis as they create value for stockholders. We cannot provide guidance with respect to the timing or structure of the potential partnership. But we intend to update the market when appropriate regarding any material developments.

Throughout the balance of 2014, we intend to continue to develop the obesity market and the Qsymia brand. We believe that the foundation of the obesity market has been and will continue to be education of healthcare providers and a wide professional regarding the need to treat obesity with the proper clinical tools, including increased diet and exercise along with effective, safe and well tolerate pharmacotherapy such as Qsymia.

We planned to continue to deliver this message through influence and promotion, continuing medical education and peer-to-peer programs, clinical publications and participation in major scientific meetings.

For the first quarter of 2014, there were approximately 121,000 Qsymia prescriptions dispensed compared 124,000 in the fourth quarter of 2013. Approximately 54% of Qsymia total prescriptions in the first quarter of 2014 including either a free good or discount offer.

Net revenue per prescription, including free trial offer prescriptions reached approximately $77 up from approximately $62 for the fourth quarter of 2013. You would recall that we’ve established a goal of achieving at least $100 in net revenues per prescription by year-end 2014.

Turning now to Avanafil, as we have discussed previously, we successfully monetized our erectile dysfunction product known as STENDRA in the U.S. and SPEDRA in Europe by establishing productive commercial alliances with Auxilium, Menarini and Sanofi, our partners for the U.S., Europe and other rest of world territories respectively.

Auxilium wants STENDRA in the U.S. in December 2013, and as of April 2014, Menarini has completed the launch of SPEDRA in the EU5.

I will now pass the call over to Svai Sanford, our Interim-CFO, for an update on the financials.

Svai Sanford

Thank you, Seth. Good afternoon, everyone. I will discuss our financial results for the quarter.

For the first quarter of 2014, total net revenue was $36.7 million compared to $4.1 million for the first quarter of 2013. Of the total revenue for the current quarter, net product revenue was $9.1 million from sales of Qsymia compared to $4.1 million for the first quarter of 2013.

In addition, under our commercialization agreement for STENDRA and SPEDRA, we recognized we recognized $19.4 million in license and milestone revenue, $7.4 million in supply revenue and $0.8 million in royalty revenue.

The license and milestone revenue consists primarily of milestone payments for the launch of SPEDRA in Europe, the supply revenue represents product shipment to our commercialization partner. And for this period, it includes $2.7 million of Avanafil API sold to Sanofi for a manufacturing technology transfer project.

Total research and development expense was $4.4 million for the first quarter of 2014 compared to $7 million for the first quarter of 2013.

Selling, general and administrative expense was $28.6 million for the first quarter of 2014, excluding non-recurring charges of $2.1 million compared to $44.7 million for the first quarter of 2013.

Selling and marketing expenses for the commercialization of Qsymia totaled $18.7 million for the first quarter of 2014, compared to $28.6 million for the first quarter of 2013.

Net loss was $15.6 million or $0.15 net loss per share for the first quarter of 2014, compared to a net loss of $53.6 million or $0.53 net loss per share for the first quarter of 2013.

Cash, cash equivalents and available-for-sale securities collectively cash totaled $316.2 million at March 31, 2014 compared to $343.3 million at December 31, 2013. The decrease of $27.1 million was primarily due to cash used in operating activities. Subsequent to the quarter end, we received cash payments of $16.6 million for the launch of SPEDRA in Europe. These payments were earned and recognized as well in the first quarter.

I will now turn the call back to Seth for closing comments.

Seth Fischer

We continue to work with a broad range of constituents from prescribers at Medical Society to Grassroots Organizations to gain acceptance of obesity as a disease and adoption of Qsymia as the drug of choice among healthcare providers, payers and patients.

The areas of focus for VIVUS for the balance of 2014 remain as follows. Deliver a strong efficacy and safety message about Qsymia to patients and doctors. Target the most appropriate patients and the healthcare providers most likely to treat those patients.

Improve overall Qsymia insurance coverage, improve critical prescriptions, Qsymia net revenues. Continue our efforts to secure a partner for Qsymia. And manage our Avanafil alliances with Auxilium, Menarini and Sanofi to help insure the commercial success of this important erectile dysfunction medication around the world.

With that, we will now take your questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from Cory Kasimov from JPMorgan. Your line is open. Please go ahead.

Cory Kasimov – JPMorgan

Hi, good afternoon guys. Thank you for taking the questions. I have a few of them for you. I guess, the first one is, I’m wondering what the average duration of therapy is at this point for Qsymia and how that’s evolved over the last couple of quarters?

Seth Fischer

So, Cory, the last information we actually had that really looked at persistence was the information that we had coming from the mail-order cohort, which we ended when we want them to retail, that ended about 4.2 months persistence on the product.

We do know that there has been improvement since we’ve come into retail but we do not have a set number as we’re continuing to develop that cohort. It’s a very a very difficult cohort at retail because of the broad range of retail, also the involvement of tracking patients etcetera. So it does become more difficult but it is something that we continue to look at.

Cory Kasimov – JPMorgan

Okay. And then, on the partnership front, if you are unable or you determine at some point in time that a partnership is not likely, what’s your contingency plan with regard to building on your sales force?

Seth Fischer

So, we continue to believe that we can land or partner the product with another party. But it’s in fact that does not happen. We are evaluating how we would expand our coverage of physicians. And again, that would be those same productive physicians that we believe are going to be, make the biggest difference to the growth of Qsymia overall.

Cory Kasimov – JPMorgan

All right. And then, on the expense side, can you remind us of the total anticipated cost of the ACCLAIM CVOT study?

Seth Fischer

Yes. So, what’s we’ve talked about ACCLAIM the cognitive study of CVOT is somewhere between 180 and 240 and that depends on when we start the trial, once we hear from FDA.

Cory Kasimov – JPMorgan

All right. And then, last question is, among the post marketing trials that the FDA required is part of the NDA approval, there is a randomized controlled study evaluating renal function. That was supposed to be submitted by this past December. So, is there any update on that study?

Seth Fischer

Yes. We are currently engaged in the renal trial, so that’s something that we’re already engaged in. And that is in cooperation with the FDA.

Cory Kasimov – JPMorgan

Okay. But it’s said in the approval, I remember that the final report was supposed to be submitted by last December so that that’s okay though, then it hasn’t been completed yet?

Seth Fischer

It has not been completed.

Cory Kasimov – JPMorgan

Okay. Thanks for taking the questions.

Operator

Thank you. And our next question comes from Alan Carr from Needham & Company. Your line is open. Please go ahead.

Alan Carr – Needham & Company

Thank you for taking my questions. One of you could comment a bit about expectations for other milestone payments around Avanafil this year, I guess in the 15-minute duration expansion? And also can you comment on new progress that you made with margins around Qsymia and underlying drivers there in getting to 100? Thanks.

Svai Sanford

We do not comment on potential milestone from Avanafil because it’s difficult to predict. The next milestones were related to sales for the annual period but that definitely depends on our partnership activities and their commercial activity.

With regards to Qsymia, the improvement to the revenue per script I think I believe as I lead correctly that your question is that, it is due to our discount offer program is chained from anywhere $75 to $75 off. And also from insurance coverage, our insurance coverage has improved. And at the end of the quarter, we were at 30% about scripts covered by insurance.

Alan Carr – Needham & Company

One other thing I was wondering, I mean, with the data that you have around the REMS program, how much resolution do you have there, how much – how closely do you look at that data that you get from the REMS program in terms of reasons why patients are discontinuing?

Seth Fischer

We looked very closely at the REMS data because we believe it’s data that really none of the other products in obesity have and that’s an advantage. Because we do see – we’re able to track our patients very closely which is very important obviously to the FDA requirements as well.

In terms of the actual reason for discontinuation, if it’s related to a side-effect, etcetera, that would be reported. If a patient just discontinues for no other reason, that’s pretty difficult to track even with the REMS.

Alan Carr – Needham & Company

Okay. Thanks very much.

Operator

Thank you. Our next question comes from Lee Kalowski from Credit Suisse. Your line is open. Please go ahead.

Lee Kalowski – Credit Suisse

Great, thank you. So, I believe you said that for your discounted, this quarter was 54% and I think it was – you were given 56% last quarter and some break-up between free and discounted. I’m wondering if you could do the same this quarter especially in light of the ASP coming up. I’m just trying to think about the two components, the change in the discounting program as well as the impact of the free program? And then I have a follow-up.

Svai Sanford

The break-up of the 54% is the discount program is about 33% of our total prescription. That leaves 21% of our free starting dose, free-good program.

Lee Kalowski – Credit Suisse

Got it, okay. As far as the ASP trends within the quarter – so clearly we see it going from $62 to $77 and oh you set a goal of $100 by year end. Do you, do you have any data or any information in for the quarter do you see that in the early parts of Q2 continuing to rise from $77?

Svai Sanford

We do not see interim data as you described. We do look it at from if we were at the 21% FTO scripts we do get approximately $95 per prescription?

Lee Kalowski – Credit Suisse

Okay. And maybe one last question for you Seth, sort of bigger picture. You were talking about continuing to secure a partner. In the interim how do you see running the business, is it for this sort of level of cash burn or are you thinking of new opportunities to invest and grow behind Qsymia. And I know that you had talked about realigning the sales force. When you started thinking about targeting non-obesity drug writers, isn’t that what would, sort of would grow the overall market here?

Seth Fischer

Yes. No, you’re exactly right. Where we are right now with the investment that we are making, we thought it was prudent to focus the current sales representatives, which is 150 reps on the productive positions within the class.

Because the data is so clear, when we ever see a position that begins writing in the class, we are able to cover those positions. And that’s exactly the way we have decided to do it today. We are hopeful that through our efforts as well as the efforts of arena or ASI as well as contrary and if you cater in the future.

That in fact will continue to expand the market both on the payer side as well on the provider side. And we believe that we’re capable of taking advantage of that. That’s both through our current sales force or the opportunity to partnerships or our own to expand our current sales footprint.

Lee Kalowski – Credit Suisse

Okay. Thank you.

Seth Fischer

Yes.

Operator

Thank you. Our next question comes from Steve Byrne from Bank of America. Your line is open. Please go ahead.

Steve Byrne – Bank of America

Is the level of SG&A that you recorded in this first quarter sustainable, it sounds like your number of reps out in the field is unchanged so what led to the sequential decline in SG&A?

Svai Sanford

Yes, Steve, it’s some programs that moves between quarter to another depending on timing of our marketing programs that are shifting. So that did lead to some of the quarter-over-quarter jump.

Steve Byrne – Bank of America

So, would you expect a rebound in the second quarter for that line item?

Seth Fischer

Now, there are some programs Steve that are also ineffective as well that we’re picking out of the spending. Now you may have seen spending in the first year of launch that we will not repeat in the second year of launch. So part of this is becoming more efficient and more targeted in our spending overall. So, I don’t know if that’s a safe assumption to suggest that that money will be spent going forward.

Steve Byrne – Bank of America

Okay. Can you split up the COGS between Qsymia and Avanafil, is the supply agreements that you have, do you get a markup on those or is that basically a pass-through from COGS up to revenue?

Svai Sanford

Hi, it’s Svai, I can respond to that. The supply revenue, we get approximately 10 plus 10 markup to the gross margin on that is about 10%. The Qsymia COGS is consistent with what we had in the past. The detail of the break-out would be reported in our 10-Q which we expect to file tomorrow.

Steve Byrne – Bank of America

Okay. And then, just with respect to moving formulary coverage to Tier 2. What basically is involved is in that, do you – does that generally require an increase in the rebate you provide to the PBM or managed care provider to get moved to Tier 2?

Seth Fischer

So, usually it’s between us as a company and the provider as well as the overall, in this case it would be PBM etcetera. But the provider does have to be the one to decide to go to Tier 2.

When we go forward with our contracting, we usually offer rebates for placement either on Tier 3 or Tier 1, then it becomes their ability to go out to those individual providers and insurers to decide whether they want to cover it at that level or not. So, it’s really a mirror hands at that point.

We also know that in other drug categories, once volume increases in the particular category and the insurer gets more predictability around the cost of covering the medication, that also could cause the medication to move to Tier 2 as well.

Steve Byrne – Bank of America

Thank you.

Operator

Thank you. Our next question comes from Marko Kozul from Leerink Partners. Your line is open. Please go ahead.

Marko Kozul – Leerink Partners

Hi, good afternoon. And then, thanks for taking my questions as well. For the 30% of your sales from patients with reimbursements, can you walk us through maybe the proportions that have Tier 2 and Tier 3 currently, and any goals you may have by the end of the year?

Seth Fischer

The great majority of our overall 30% is in fact at Tier 3. We do have some at our Tier 2. There are even very, very few that in fact are at Tier 1. And in fact what I mean by that is some of them even offer to you something at zero co-pay but again it’s a very, very small percentage. The wide majority, the great majority is still at Tier 3, between $50 and $60 co-pay.

Marko Kozul – Leerink Partners

Thanks for that, Seth. Have you seen any incremental growth in the Tier 2 quarter-over-quarter or is it about the same as the fourth quarter?

Seth Fischer

This price is fairly steady. I mean, we do see some changes from quarter to quarter but it’s fairly small.

Marko Kozul – Leerink Partners

All right, thanks. And just on STENDRA, maybe could you review for us what you see as the key factors to growing STENDRA 2014 in the marketplace?

Seth Fischer

No. The only thing I would tell you of STENDRA is, we’re clearly excited about the ongoing launches by our partners. And we’re all looking forward to the FDA’s responses as well as the European response to the new labeling around 15-minute duration or 15-minute onset.

Marko Kozul – Leerink Partners

Great. Thanks for taking my questions.

Seth Fischer

Sure.

Operator

Thank you. Our next question comes from Matthew Andrews from Wells Fargo Securities. Your line is open. Please go ahead.

Matthew Andrews – Wells Fargo Securities

Thank you. Good afternoon. Two from me. Seth, could you provide a breakdown a little bit more on Tier 3 versus Tier 3 prior auth? And just secondly assuming FDA’s comfortable with the ACCLAIM protocol, how does your agency can you initiate that study?

Seth Fischer

So, first of all on the Tier 3 versus Tier 3 with prior auth, the great majority is really Tier 3 with prior auth. I mean, we don’t have a lot of Tier 3 without prior auth and that’s one of the reasons that we pick the prior authorization assistance programs in place with physicians. And those seem to be being adopted by many physicians on many fronts. We have multiple programs in that case.

As far as the initiating CVOT, so, we don’t know right now when we will hear from FDA. The last time we spoke to FDA always said they were actively reviewing the resubmission. We are prepared to begin the trial, we would have to obviously work with the different sites to make sure that the study coordinators and everything are prepared to start the trial.

Matthew Andrews – Wells Fargo Securities

But you still have to conduct an investigator meeting to launch the study?

Seth Fischer

Yes, we would have to have an investigator meeting but I think that there is plenty of ways that we could begin the trial as long as everything else is in place. We’ve been in touch with our investigators all along.

Matthew Andrews – Wells Fargo Securities

Thank you.

Operator

Thank you. And our next question comes from Thomas Wei from Jefferies. Your line is open. Please go ahead.

Thomas Wei – Jefferies

Just so that I’m clear about the SG&A expenses. It sounds like you think that that level from the first quarter that’s 18 and some million dollars for Qsymia might be the go forward run rate and the reimbursement assistance that you talked about, is that a new program that would add incrementally to that?

Svai Sanford

To answer to your last question, the program we started rolling out in the first quarter. So, it’s not a new program we would add to that.

Seth Fischer

But the run rate, Thomas it’s a great question. We feel in the first quarter that we expand appropriately. Now I will tell you that with our renewed focus, etcetera, there are things that we’re continuing to learn in the market to better understand what types of programs have the most impact.

We’ve looked heavily at what the ROI of our past programs have been as well as what we think they might be in the future. We also don’t fully comprehend what the inflexion of direct to consumer advertising from the competitive set they have, both now as well as in the future. So, that’s why it’s difficult to predict quarter-over-quarter what our spending may in fact look like.

Thomas Wei – Jefferies

And kind of following on that – on that answer, you talked a little bit in response to your prior question about contingency plans in the event that you do not secure a partnership. When do you think is the right time to pull the trigger on that?

If you can’t get a partner is it after you see what sort of investment and effect these other companies have on the market potentially, is it some other – is it the timing of the ACCLAIM study start, is it something to do with the balance sheet, how should we think about that?

Seth Fischer

So, we’re clearly watching very carefully whether there is an inflexion point. And also the response to promotional spend, great promotional spend as we’re currently seeing in the marketplace. And I think those are things that are going to be important as we predict with or without a partner how we in fact go forward.

CVOT is another important piece of that, although we won’t see a result for CVOT for a couple of years when we get to an interim analysis. So it’s probably more the first factor that you outline Thomas.

Operator

Thank you. (Operator Instructions). And our next question comes from Jason Butler from JMP Securities. Please go ahead.

Jason Butler – JMP Securities

Hi, thanks for taking the questions. Just a quick housekeeping for Svai. Could you just briefly run us through your current interest and debt principal repayment schedule and what that will be for 2014 and 2015? Thanks.

Svai Sanford

So, the convertible as you know, the key point on that it’s 4.5%. So, our annual debt payment or interest payment for that is about $11.25 million per year. And then, for the $15 million debt, we got from PharmaCon, the repayment schedule starts in April this year. And it’s $3 million of quarter. We pay the minimum of $3 million or 25% of our net sales. We do have the option to choose pay higher or not.

Jason Butler – JMP Securities

Okay, great. Thank you very much.

Operator

Thank you. And our next question comes from Bob Ai from WallachBeth. Your line is open. Please go ahead.

Bob Ai – WallachBeth

This is Bob Ai. Can you hear me well?

Seth Fischer

Yes Bob, we can hear you.

Bob Ai – WallachBeth

Okay. Thanks for taking my questions. Can you help us understand the economic value of STENDRA? So, I understand you’ve received a royalty from partners, but you also pay royalty to Mitsubishi.

As my understanding that low level of sales, you don’t really get them much service so you’re basically going to pay – take the pay from one hand and give to the other hand. At what level then the value become maybe two launch begin to separate, does it become much more meaningful to you?

Svai Sanford

So, just to be clear, the royalty that’s all to MTPC, it suffered from the amount of booking. Each of the commercial licensees, the partnership that we have ultimately is responsible for paying MTPC for the portion that was only contracted through us, through MTPC. The royalty payments that we get, is staying along.

Bob Ai – WallachBeth

And can you remind me again what the royalty you take – that you gather along?

Svai Sanford

We do not disclose that amount.

Bob Ai – WallachBeth

Okay, all right. Thank you.

Seth Fischer

Thank you.

Operator

Thank you.

Seth Fischer

Well, thank you everybody for dialing in today. We look forward to a bright future for VIVUS, Qsymia and Avanafil. And we will keep you up-to-date on our overall progress. Thanks for your time today. Bye for now.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes our program. You may all disconnect. And have a wonderful day.

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