Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Anti-Obesity Products - Getting To The Bottom Line

|Includes: Arena Pharmaceuticals, Inc. (ARNA), NVO, OREX, VVUS

I often hear investors in Vivus touting the revenue line. I understand why they want to do this. Vivus, without a partner, gets all of the revenue while Arena and Orexigen get a portion of the revenue. The problem with that stance and debate is that the revenue of Qsymia is not growing quickly enough and is not offsetting costs.

Getting To The Bottom Line Using Q4 Numbers

VIVUS

  • Vivus reported Qsymia revenue of $13,970,000
  • Vivus reported sales and marketing costs of $8,600,000
  • Vivus reported cost of goods sold at $2,600,000
  • Vivus gets no milestone revenue

The bottom line here is a positive $2,700,000 on scripts sales of 132,000 scripts. This means that the average return per script is about $20.45.

ARENA

  • Arena reported sales revenue of $3,939,000
  • Arena reported recognition of milestones of $2,091,000
  • Arena reported other collaborative revenue of $670,000
  • Arena had no marketing costs
  • Arena reported cost of good sold at $2,461,000

The bottom line here is a positive $4,239,000 on script sales of 157,000 (US and S. Korea). This means that the average return per script is about $27

CONTRAVE

  • Orexigen reported sales revenue of $4,900,000
  • Orexigen does not have a cost of goods sold
  • Orexigen does not have a marketing expense

The bottom line here is a positive $4.900,000 on scripts sales of about 180,000. This means that the average return per script is $27. Orexigen is helped greatly by milestone revenues built into its deal.

If the only thing you want to look at is revenue in this sector then your play should be Saxenda and Novo Nordisk. They sell 3,000 scripts per week at about $1,000 in revenue for each one.

Disclosure: I am/we are long ARNA, OREX, NVO.

Additional disclosure: I have no position in Vivus