VIVUS Inc. Q2 2008 Earnings Call Transcript

Aug. 04, 2008 8:16 PM ETVIVUS, Inc. (VVUS)
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VIVUS Inc. (NASDAQ:VVUS) Q2 2008 Earnings Call August 4, 2008 4:30 PM ET

Executives

Tim Morris - VP Finance and CFO

Leland Wilson - President and CEO

Peter Tam - SVP of Product and Corporate Development

Analysts

Cory Kasimov - JPMorgan

Michael King - Rodman & Renshaw

Ken Trbovich - RBC Capital Markets

Ruthanne Roussel - The Robins Group

Ritu Baral - Canaccord

Operator

Welcome to the second quarter 2008 VIVUS earnings call. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for today's call Mr. Tim Morris. Please proceed, sir.

Tim Morris

Thank you. During the course of this conference call, VIVUS may make projections or other forward-looking statements regarding future events or their future financial performance of the company. We wish to caution you that such statements are just predictions and actual events or results may differ materially.

Investors should read the risk factors set forth in the VIVUS Form 10-K for the year-ended December 31, 2007, and periodic reports filed with the Securities and Exchange Commission. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

I would now like to turn the call over to Mr. Leland Wilson, President and CEO of VIVUS.

Leland Wilson

Thank you, Tim, and good afternoon and thank you for joining us. In today's call Peter will the review the results of the OB-2O2 study our 28-week study of Qnexa in diabetic patients. This data was presented at the American diabetes association meeting in San Francisco in early June and a he subset analysis of the cardiovascular risk factors was presented at the Jeffries Healthcare conference in late June.

I will also comment on this data, as-well-as on the recent FDA advisory panel meeting on the need for cardiovascular safety trials for drugs and development for Type 2 diabetes. Tim will review the financial results in upcoming investor presentation and lastly we will take your questions.

Clearly the highlights of the second quarter was the presentation of the results of the OB0202 study, the primary end point of this trial was a reduction in hemoglobin A1c, Subjects on Qnexa achieve the reduction in A1c of 1.2%. Importantly Qnexa patients also achieved an average weight loss of 8% and improvement in their cardiovascular risk factors namely blood pressure, triglycerides and waist circumference.

We believe Qnexa is the first oral diabetic medication to significantly lower blood sugar, weight and cardiovascular risk. To discuss some of the specifics of the trial and the additional data released from the study, I will now turn the call over to Peter Tam.

Peter Tim

Thanks Lee. The OB-202 study was a 28-week randomize double-blind client placebo controlled trial of Qnexa in the glycemic management of obese Type 2 diabetics. The primary end point of the study is improvement of glycemic control, as measured by the reduction of hemoglobin A1c levels. The trial randomized 206 patients in over ten sites in the United States. Study patients at baseline, had a hemoglobin A1c of about 8.6% to 8.7%. And the average PMI was 35. In general, the typical patient in this trial was someone that has been diagnosed with diabetes for more than five years with poorly controlled diabetes, despite being on two or more anti-diabetic medications.

In addition, the majority of patients in this trial had multiple cardiovascular comorbidities, typical of those with metabolic syndrome. Subjects treated with Qnexa had a reduction in HbA1c of 1.2%, compared to a reduction of 0.6% in the placebo group. Further analysis revealed that the placebo group had three times more anti-diabetic medications added during the study, along with increases in the doses of their anti-diabetic medication as compared to those that were treated with Qnexa.

In many respects, this study did not compare Qnexa to just placebo, but rather the study compared the efficacy of Qnexa against the current armamentarium of oral anti-diabetic medication.

Along with significant improvement in glycemic control subjects treated with Qnexa on an intent to treat basis lost 8% of the baseline body weight or 7.7 kilograms, as compared to only 1.2% weight loss in the placebo group.

Fasting plasma glucose levels were reduced rapidly in the Qnexa arm from 175 mg/dL to 142 mg/dl versus a decrease from 174 mg/dL related to 167 mg/dL in that placebo group. It is worth noting that the fasting plasma glucose continues to decline at week-28 for the Qnexa arm in contrast to an apparent increase in plasma glucose in the control group despite the addition of more oral and high diabetic medications.

Qnexa patients also had significant improvement in cardiovascular risk factors including systolic and diastolic blood pressure, triglyceride levels and waist circumference. Qnexa treatment group had a study completion rate of 85%, as compared to 72% in the placebo arm.

Importantly, study discontinuation due to adverse event was only 3% in the Qnexa group versus 4% in the placebo group demonstrating the Qnexa in the six-month double-blind study was well tolerated by patients.

In addition to improvements in metabolic and cardiovascular parameters, Qnexa subjects also reported significant improvement in quality of life including physical function, public distress and self-esteem.

Glycemic control with Qnexa is measured by a reduction in HbA1c level, is at least on par with existing oral diabetic medication. But unlike other diabetic therapies that either weight neutral or weight gaining, subject in Qnexa group are able to loose, on average 8% of the body weight on an intent-to-treat basis during treatment.

Qnexa was well tolerated with no treatments related serious adverse events. The most common treatment related adverse events were nausea, paresthesias, constipation, dry mouth and dizziness.

These were the results reported at the American Diabetes Association meeting. Subsequent to the meeting, we performed an analysis of subject in the OB-202 study that has higher cardiovascular risk factors at baseline.

The analysis population was comprised of subjects with the elevated baseline risk factors, that were in the upper quartile of the overall study population. This subset analysis show that subjects with higher cardiovascular risk factors at baseline has significantly greater improvement on Qnexa compared to Placebo.

Specifically these higher-risks subjects treated with Qnexa have there systolic blood pressure reduced by 11.2 millimeter of mercury from a baseline mean of 138 millimeter of mercury, as compared to a reduction of 1.9 millimeters of mercury from a baseline mean of mean of 140 millimeters of mercury in the placebo group.

Similarly, diastolic blood pressure was reduced by 7.9 millimeters of mercury from a baseline mean of 83.5 millimeters of mercury in the Qnexa group, versus a reduction of 3.3 millimeters of mercury from our baseline mean of 86.3 millimeters of mercury in the placebo group.

Current target blood pressure goal for diabetic patients with hypertension of less then 130 over 80. Higher risk subjects with elevated triglyceride levels have baseline that were treated with Qnexa experienced a reduction of 86.9 mg/dL or 32% from the baseline as compared to a reduction of 25.3 mg/dL or 8.7% in the Placebo group.

Fasting plasma glucose in higher risk population was reduced by 85.2 mg/dL or 35% from baseline in the Qnexa group as compared to a reduction of 17% in the placebo group.

This subside analyses show the impact of Qnexa on those patients that stand to benefit the most from the treatment.

Elevated blood pressure, fasting glucose and triglyceride levels put this patients at greater risk of adverse cardiovascular events such as stroke, mild cardio, infarction and death. Treatment of these diabetic patients with Qnexa resulted in significant improvement in blood pressure and triglycerides, in addition to weigh loss and improved glycemic control.

Based on this multiple cardio metabolic benefits observed, we believe this profile will set Qnexa apart from other diabetic and obesity agents that are currently available, including those that are in late stage developments.

As you know subjects who complete at the OB-202 study were allowed to enroll in a double-blind, placebo-controlled extension study, DM-230. The extension study will continue to monitor HbA1c levels, body weight and other metabolic endpoints, over the six months period. Data from this extension study should be available by the end of 2008.

On the regulatory front, our plan is to meet with the FDA later this year to discuss the details of Phase 3 development program for diabetes. Qnexa for obesity, as you know, all of the Phase 3 trials are fully enroll and are progressing as planned. Data from the OB-301 study should be available by the end of 2008 and data from the OB-302 and 303 the one year studies by mid-2009.

For Luramist, our Testosterone metered Dose Transdermal spray for the Hypoactive Sexual Desire Disorder in women, we continue our search for a corporate partner. Given the recent regulatory clarity we obtain from the FDA, we are advancing discussions with potential partners on this front.

For avanafil, early in the second quarter, we announced a $30 million funding collaboration with Deerfield. This $30 million will allow us to accelerate to development of avanafil, our oral PDE5 inhibitor for the treatment of male erectile dysfunction.

Since the announcement, we have accelerated our efforts to move this compound in to Phase 3 clinical testing. Specifically, we have ordered Phase 3 materials from our partner, who is now Mitsubishi Tanabe and have completed 3 Phase 3 GMP inspections at that facility in Japan. This material is expected to be delivered in the fall of 2008.

As you will recall, we previously obtained special protocol assessment for our Phase 3 protocol for avanafil. We have received proposals from a number of CROs for the pivotal Phase 3 studies. We plan to select the CRO for the Phase 3 study by the fourth quarter of this year.

These are four late stage program we have in our pipeline. I will now turn the call over to Tim.

Tim Morris

Thanks Peter. For the second quarter, product revenues are $4.2 million from the sale of MUSE were consistent with the second quarter last year and the $21 million in license revenue from the recognition of the deferred revenue from the K-V transaction was as expected.

Expenses of $22.6 million were higher than the second quarter last year mainly due to the spending on the Qnexa Phase 3 obesity clinical study.

For the first half of the year, product revenues at $5.8 million from the sale of MUSE, again were consistent with the same period last year and the $42 million in license revenue from the K-V transaction was as expected.

Total expenses at $53 million were higher than the first half of last year, again mainly due to the spending of the Phase 3 Qnexa studies for obesity.

If you like some additional information on the financial results, please refer to the press release for the exact numbers for the quarter in the first half of 2008.

VIVUS had cash, cash equivalents and available for sale securities of $155.1 million at the end of June. This includes the moneys received from the Deerfield transaction in April. This compares to a $179 million that we had on the balance sheet at the end of December.

Cash used in operations for the first half of the year was $33.9 million. We expect to end the year somewhere between $90 million and $100 million of cash.

On the Investor Relations front I am pleased to report that we have had a very successful event for both investors and analysts at the ADA meeting, following the scientific release of the OB-202 data. We continued to meet with investors and analysts and share the data from this study. And as our market cap increases we are seeing more opportunities to present to bigger funds and investors outside of your traditional healthcare specialists.

Future IR presentations include presentations at the Canaccord Adams Global Growth Conference in Boston in August 14th, the presentation of the Nobel Financial Capital Markets Conference in Las Vegas on August 18th, participation in the Piper Jaffray Investor Bus Tour in Mountain View on August 21st, presentation at the BioCentury News Makers Conference in New York on September 4th, and participation and presentation in the UBS Global Life Science Conferences in New York, in the week of September 26th.

With that, I will turn the call back to Lee for some final comments.

Leland Wilson

Thanks Tim. Before we open the call to questions, I would like to comment on the recent FDA Advisory Panel meeting held to discuss the need for cardiovascular studies for drugs in development for diabetes.

The end result of the two days of presentation, discussions and deliberations was that the advisory panel recommended that some type of cardiovascular risk assessment be performed on drugs and development for diabetes. The timing, size and duration of these studies remains a topic of debate and we do not know even if the FDA will officially adopt the panel's recommendation.

Regardless of the official outcome, we believe the panel meeting and the emphasis placed on cardiovascular impact of diabetic drugs is a huge positive for Qnexa.

Qnexa has already demonstrated significant improvements in cardiovascular risk factors in both our Phase 2 obesity trial, and most recently in our OB-202 trial in diabetic patients.

Importantly, we are now also seeing thought leaders shifting their focus from independently treating the various symptoms of diabetes, such as HbA1c blood pressure and lipids to treating the singular cause of the disease and that's excess body fat. As one of the advisory panel members pointed out, obesity is the common soil from which insulin-resistance, diabetes dyslipidemia, and hypertension leading eventually to cardiovascular morbidity or mortality.

As Peter explained, results of the OB-202 study demonstrated significant reduction in A1c, weight and improvement in cardiovascular risk factors. We are exploring the possibility of moving Qnexa into Phase 3 for diabetes. We have requested an end of Phase 3 meeting with the FDA to discuss the results of the OB-202 study and to outline our plans for Phase 3. We expect that meeting to occur sometime in the early fall. Pending the outcome of that meeting, we will formalize our plans for Qnexa and diabetes. We look forward to providing you an update on our future plans.

With that I would like to open the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from the line of Cory Kasimov from JPMorgan. Please proceed.

Tim Morris

Cory are you there?

Operator

Please unmute your line Mr. Kasimov.

Tim Morris

Operator, we can come back. Cory are you there?

Cory Kasimov - JPMorgan

Yeah, can you hear me?

Tim Morris

Yeah, go ahead Corey.

Leland Wilson

I got you now.

Cory Kasimov - JPMorgan

Hi sorry, I got to put you in on the speaker phone, I am having some problems with the handset here, sorry about that. Thanks for taking the question. First question I have for you, could you just give us your reactions to the recent UK registry study of Topamax. Whether in epileptic patients or whether or not you all surprised by this, given what is in label, and also if could remind us what pregnancy precautions are built into the Phase 3 program for Qnexa?

Leland Wilson

Yeah, Corey, we were not surprised by the UK registry because of the label, what's already mentioned in the Topamax label and we expect that additional registries will provide data probably similar to what was found in the UK registry.

With the regard to the precautions, the pregnancy precautions we have put in place for the Phase 3 program, we are actually requiring two methods of contraception for patients of child-bearing potential to consistently comply with that recommendation, throughout the study.

We are also implementing pregnancy test every month, each time they come in for a study visit. So we are monitoring that very closely.

Cory Kasimov - JPMorgan

Okay, great, thanks. And then with regards to the diabetes program, you guys answered to lot of my questions with your prepared remarks. But I wanted kind of get some of your follow up thoughts, following the promising data at ADA as well, as the FDA panel meeting you discussed.

And realizing that you have your end of Phase 2 meeting coming up in the next couple of months, if all goes well there, can you talk a little bit about potential timing of launching a phase III program and how that may relate to strategic options you have. Whether or not, you would take the same route, or if you are just going to wait for the obesity data, before you partner Qnexa for any indication or I would assume it probably be difficult to disassociate obesity from diabetes with a product like this. So would be a partner for all of it. Can you just discuss the strategic options there?

Leland Wilson

Sure. Well we are as you know Cory we are very excited the potential of Qnexa in treatment of diabetes. And because we think is, I think Peter and I have tried to mention in our prepared remarks that this can change the landscape for all diabetic patients who were treated, that is treating the cause rather than the symptoms of the backside and in addition have some impact on long-term morbidity and mortality.

But having said that, life is changing very quickly at the FDA, we have been successful in getting the FDA to eliminate the need for showing HbA1c reduction independent of weight loss and I think VIVUS has a significant role in making that happen.

The second one is that our 202 study was a kind of a pioneering study in how studies are done in diabetes and that is, we were taking all comers per se. That is historically, companies have frankly gamed the system a little bit and tried to select patients, which had few other diabetic complications, those that are around few other medications, and frankly those that have not had diabetes for very long. In our study, we call them an all-comer patient study and they were much like what we see what we think, will be coming into doctor's offices once the drug is approved.

So, it is kind of moving away from a bucket kind of system that the FDA had implemented previously for approval of diabetes drugs to the one where we have an all-comers program. So, that is the second major change that the FDA has made.

Then clearly, the other topic of conversation going on at the FDA now is the recent FDA Advisory Panel meeting talking about the need for cardiovascular outcomes. For those of who are not familiar with what the issue there is, it has been long thought that if you control HbA1c, that you improve the cardiovascular outcomes of these patients. In fact, that is probably not the case. There may only be a very minor help in preventing cardiovascular outcomes.

So, how important is HbA1c control, if these patients almost universally died from cardiovascular risk? And the answer is that it is not probably, not all that much. The bigger question becomes one of, how do you control cardiovascular risk? And so, now the Agency and the Advisory Panel are very interested in morbidity and mortality studies for helping these patients live longer and healthier. So, this is a change that is going on.

Now, I say all of this as a prelude to our end of Phase 2 meeting, which is I think it is going to be a wonderful discussion with the agency, about how drugs for the treatment of diabetes are going to be managed going forward. And so, I think we are right here on the forefront of helping to write the story about how these drugs can go through development.

Now to your question specifically, when do we think we will be able to try to get into a Phase 3 program? I would say just in general terms, as quickly as we can after the Advisory Panel. So hopefully, we will have all the manufactured products that we will need for starting those studies. We will have the protocols obviously for the FDA to review at the end of Phase 2 meeting. And it will depend a lot upon the comments that they have as to what should actually be done.

So, I will not give you a specific date, but we are going to try to move aggressively as we possibly can to get an idea of the requirements as to how we start.

Now, the question then finally as to what is our partnering strategy. I agree Cory, that obesity and diabetes are the same disease to a great degree. And so you are not going to be able to separate this out onto two different partnering deals and so we look forward to the end o the diabetes Phase 3 program for a partnering effort from our standpoint.

Cory Kasimov - JPMorgan

Okay, that was great. Thanks for that explanation. And then my lastly, just a financial housekeeping question for Tim. As from an R&D standpoint the run rate there, you had a pretty sharp drop in 2Q from 1Q. Is that a good run rate going forward and if it is, it looks like you would come in pretty well below your guidance for the year. Can you talk about how are thinking the expense going out second half of 2008?

Tim Morris

Yeah, I would not get too hung up on quarter-to-quarter fluctuation there.

Cory Kasimov - JPMorgan

What will drive R&D then? I mean if the Phase 3 obesity program is entirely enrolled and if diabetes does not start till the very end of this year at the earliest, is there anything else that would kick-start R&D?

Tim Morris

There should be some monies is in there for avanafil, second half.

Cory Kasimov - JPMorgan

Okay, thank you.

Leland Wilson

Sure.

Operator

Your next question comes from the line of Michael King from Rodman & Renshaw. Please proceed.

Michael King - Rodman & Renshaw LLC.

Thanks for taking my question. Lee, you talked most of this in your answer to Cory's question. But, in terms of diabetes, could you contemplate given what we think are the benefits of weight loss, could you consider the outcomes of that study as part of the either Phase 3 or Phase 4 commitments? If so, what would that look like? Would that be some kind of a composite endpoint or would it just be, an all-clause mortality endpoint or do you not know until you talk to the FDA?

Leland Wilson

Well obviously, I think all of us that are closely involved with VIVUS are excited about the opportunity that is frankly being presented to us and that is in the form of a morbidity/mortality study. The question of how that could fit into a Phase 3 program is one that we can only answer after we have discussions with the FDA.

Just based upon my view of the Agency and the fact that they would very much like to have someone start a morbidity/mortality study relatively soon, because the Advisory Panel is interested, and if you watch the Advisory Panel, you saw people at the FDA said they were interested in trying to nail down some cardiovascular outcomes. So, I think the negotiation part here is really in our favor to frankly begin a morbidity/mortality study.

And then, those studies need to run at least five years. So, clearly a question becomes of when we want approval for diabetes long before that five years is up and I think the negotiation position that we are in now is quite strong to have a Data Safety Monitoring Board report out any safety issues that may be going on at both NDA submission and at the time of NDA approval for diabetes. I think that would be appropriate. And then, clearly about three years after the launch then it would be very nice timing for the results of a morbidity/mortality.

And Mike, if you will bear with me, I know you know this, but for others who are not really in tune with this, a positive outcome on a morbidity/mortality study has immense potential for this drug. And that is, it could move it to first-line therapy, over generics in my opinion in many cases. Because the problem is well known now and that is why we are having these Advisory Panel meetings and cardiovascular outcomes acceptance, is that treating HbA1c by itself is not doing these patients much good. It may help their microvascular issues but it certainly does not have their macrovascular issues, and those are the ones that are causing the deaths, et cetera.

Okay. So, they are interested in doing that. And if we could actually show like, I really believe that we can, a reduction in mortality and morbidity, we could potentially move to first-line therapy. And that would be an immense advantage over anybody else in the marketplace.

So, I am very interested, and I am very excited about it. I think, this is the right way to treat diabetes going forward. And if we have that opportunity to get that data, it would save literally hundreds and hundreds of millions of dollars in the marketing effort by a partner to try to convince people that the drug should be closer to first-line therapy. I hope that answer to your question.

Mike King - Rodman & Renshaw

Yes, thanks for the additional color. Do you have any idea of the size of that study in terms of numbers of patients or the costs that you might have to incur for that?

Leland Wilson

Yes, we are working through that with the clinical research organizations as we speak, just to get a handle on that. I would say we are in the neighborhood of between 5000 and 10,000 patients and five years on study.

Mike King - Rodman & Renshaw

Terrific, thanks so much.

Leland Wilson

You bet.

Operator

Your next question comes from the line of Ken Trbovich from RBC Capital Markets. Please proceed.

Ken Trbovich - RBC Capital Markets

Thanks for taking the question. I guess I wanted to step back, Lee, earlier you mentioned that you would potentially look to partner at the end of the Phase 3 studies for diabetes. I wanted to clarify. Did you mean obesity or diabetes in that response?

Leland Wilson

My personal view is that you cannot separate this drug going to market between obesity and diabetes. Because eventually, the reason to treat obese patients is largely diabetes and other cardiovascular outcomes that obese patients have. And so I think where we talk about today about obesity and diabetes as being fairly separate, I think within five years after the market launch it will be pretty much part and parcel of one disease.

So I think it is in our best interests to take this through the Phase 3 development program for diabetes, which we think will be in the neighborhood of, certainly within one year of the approval of the obesity endpoint.

Ken Trbovich - RBC Capital Markets

Okay. And so, the question then is, this end of Phase 2 meeting and obviously the initiation of the trials become a critical factor in determining when you might partner the product.

If there is a gap between completion of the obesity studies and completion of the diabetes study, would it be your intention to hold off on the application or apply and then hold off on the launch of the product until you have got a partner? What is the commercial end of the strategy here?

Leland Wilson

It looks as a nice luxury position in which to be. And clearly, if we have an NDA approval for obesity, we will be in heavy negotiations and discussions about licensing and partnering, et cetera. So it will be opportunistic at that time forward.

Ken Trbovich - RBC Capital Markets

Okay. And from the standpoint of diabetes, I know for the obesity studies you managed to sign up Medpace and have a $50 million contract for the efficacy portions of those studies and obviously the safety portion I guess on the Phase 3 program there. Would you anticipate that the Phase 3 efficacy and the initial registration trials would be a separate contract and separate agreement as it relates to the outcome study that you just described earlier?

Leland Wilson

Yes, I think I understand your question correctly. I tend to look at them in a couple of different ways. One, the morbidity/mortality outcome study is a separate entity, and I look at the diabetes program outside of that, as a separate entity from the obesity program.

Ken Trbovich - RBC Capital Markets

And do you think the diabetes efficacy study would be similar in terms of costs to the obesity program you have got in place now?

Leland Wilson

Well, we are going to be talking to the FDA. We think we have some creative ideas as to how to do a morbidity/mortality study in a very cost-effective way. And Ken as you know, we have pioneered that with the testosterone program. And so, we are going to have to work with the FDA in this division to see if they buy in with the program. But I am optimistic that they will. So, I will withhold comment. I think it is fair to say that the diabetes program is going to cost at least as much as the obesity program.

Ken Trbovich - RBC Capital Markets

Okay. When you say that, that is inclusive of the morbidity/mortality?

Leland Wilson

Yes.

Ken Trbovich - RBC Capital Markets

Okay. And to your point earlier about the testosterone program, if I remember correctly, the idea there was to power the outcome by -- essentially to power the studies by having higher risk patients so you can have higher numbers of events in the studies than you might have in a normal population?

Leland Wilson

That is true. Patient selection is very critical. So if you get those that are going to die too quickly, you will not have enough time to impact them or have major outcomes. So, yes, patient selection is very critical and we are going through a very careful analysis of that now.

Ken Trbovich - RBC Capital Markets

Okay. And then a final question for Tim. I know you alluded to the burn rate guidance and suggested that we need to anticipate Avanafil studies kicking-in, in the back half of this year and contributing to some of that burn. Do you have any burn at all associated with the diabetes program in the guidance thus far for the burn rate for '08?

Tim Morris

Right now, no.

Ken Trbovich - RBC Capital Markets

Okay. Thank you.

Operator

Your next question comes from the line of Ruthanne Roussel from The Robins Group. Please proceed.

Ruthanne Roussel - The Robins Group

Hi everyone. Thanks for taking my call. I am going to return to a question that I asked a few months ago, and see whether there has been any more to visibility into the extent to which you may be able to use the obesity data in the diabetes study, sort of leverage it?

Leland Wilson

Ruthanne, it is a very important question to us and one that we strategize around constantly in our anticipated presentation to the FDA at the end of Phase 2 meeting. It will be dependent clearly upon what the FDA has to say.

But we are going to have what 4500 patients, Peter, that are on Phase 3 program for obesity. Clearly that gives tremendous safety information. We are also going to have diabetic patients in the Phase 3 program, our 303 program allows diabetic patients in. So you are going to have numbers of patients there.

And the question becomes one of whether we need one additional study in diabetes or two and what role does the morbidity and mortality study play in this whole program? So those are the variables, which we are going to be talking to the FDA about within a couple of months.

Ruthanne Roussel - The Robins Group

Okay. And just to clarify, did I correctly understand that Mitsubishi Tanabe has now manufactured all of the product that needs to be manufactured?

Leland Wilson

They are in the process of manufacturing right now.

Ruthanne Roussel - The Robins Group

Okay. Right. Thank you.

Operator

Your next question comes from the line of Adam Cutler from Canaccord. Please proceed.

Ritu Baral - Canaccord

Hello, it is actually Ritu for Adam.

Leland Wilson

Hi, Ritu. You there?

Ritu Baral - Canaccord

Yes. So, switching gears actually to another recent Advisory Committee Meeting, could you guys comment on or recap for us the mood disorder scales that you are using in your Phase 2 and Phase 3 developments?

Peter Tam

Yes Ritu, its Peter. We have not specifically commented on the tools that we are using. I think one thing we have said was, and the FDA is trying to standardize this, is that, we will be using or we are using the Columbia scale for assessing suicidality. We have a standard very well accepted, broadly applied, broadly used by primary care physicians' scale for looking at depression; that is being done. And all those are being evaluated on a visit-by-visit basis. So clearly, we are monitoring that very carefully.

Ritu Baral - Canaccord

And just as a follow-up, will you be going to the FDA with additional data in addition to what you have presented at ADA? Anything from the extension, despite the fact that it is blinded?

Peter Tam

No. Our end of Phase 2 meeting package, we are preparing that. The basis of that will primarily be the OB-202 study, the study results. And the items that we are going to be talking to the FDA about is a similar approach which Lee mentioned, that is going after an all-comers population.

Ritu Baral - Canaccord

Okay. Thank you.

Operator

At this time there are no further questions. I would now like to turn the call back over to Mr. Lee Wilson, CEO, for closing remarks.

Leland Wilson

Okay. Well thanks everybody. Appreciate your support. I think you can see that VIVUS continues to make good progress. I am particularly pleased by the interest in the stock market that we have. It is a very exciting time for us in a very bad marketplace, as you all know. So, this has been particularly rewarding. And so, I appreciate your support and thank you very much.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

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