Does VIVUS Need This Cash From The Stock Offering? (VVUS, OREX, ARNA)

VIVUS, Inc. (NASDAQ: VVUS) is in the news this morning after entering into an agreements with a select group of institutional investors to sell 6,889,098 shares of its common stock.  Rather than this being a public secondary offing, it is a registered direct offering.

The investors are buying shares at $6.65 per share, a handy discount to the $7.28 closing price on Tuesday.  The gross proceeds raised will come to about $45.8 million.  The shares were covered under an existing shelf filing with the SEC.

VIVUS also identified the institutions as funds “managed by QVT Financial LP” as the lead investors, but the company noted that two other existing investors also are part of the placement.

The use the proceeds from this sale are earmarked for general corporate purposes.

Orexigen Therapeutics, Inc. (NASDAQ: OREX) and Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) are the most closely tied companies to VIVUS as far as Wall Street is concerned due to the obesity drug class.  These companies should be watching closely to see how the impact on VIVUS stock is.

VIVUS closed at $7.28 with a $596 million market cap on Tuesday and the 52-week range is $5.25 to $11.48.  As of June 30, VIVUS had a cash balance of more than $120 million and no long-term debt on its balance sheet.

JON C. OGG