VIVUS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other parts of this Quarterly Report on Form 10-Q contain
"forward looking" statements that involve risks and uncertainties. These
statements typically may be identified by the use of forward-looking words or
phrases such as "may," "believe," "expect," "forecast," "intend," "anticipate,"
"predict," "should," "plan," "likely," "opportunity," "estimated," and
"potential," the negative use of these words or other similar words. All
forward-looking statements included in this document are based on our current
expectations, and we assume no obligation to update any such forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for such forward-looking statements. In order to comply with the
terms of the safe harbor, we note that a variety of factors could cause actual
results and experiences to differ materially from the anticipated results or
other expectations expressed in such forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development, and
results of our business include but are not limited to:

Risks and uncertainties related to our business:

· our ability to address our liquidity and capital resource needs, including the

remaining outstanding balance of $170.2 million of 4.50% Convertible Senior

Notes (the "Convertible Notes") which must be addressed within the 30-day grace

period beginning May 1, 2020;

· the widespread domestic and global impact of the COVID-19 pandemic on our

business, results of operations, customers, suppliers and other counterparties,

and employees;

· our history of losses and variable quarterly results;

· our ability to continue as a going concern;

· the volatility and liquidity of the financial markets;

· our expected future revenues, operations and expenditures;

· our ability to effectively manage expenses;

· risks related to our ability to protect our intellectual property and

litigation in which we are involved or may become involved;

· uncertainties of government or third-party payor reimbursement;

· our reliance on sole-source suppliers, third parties and our collaborative

partners;

· our ability to successfully develop or acquire a proprietary formulation of

tacrolimus;

· risks related to the failure to obtain or retain federal or state-controlled

substances registrations and noncompliance with Drug Enforcement Administration

("DEA") or state-controlled substances regulations;

· risks related to the failure to obtain FDA or foreign authority clearances or

approvals and noncompliance with FDA or foreign authority regulations;

· our ability to demonstrate through clinical testing the quality, safety, and

efficacy of our current and future investigational drug candidates or approved

products;

· the timing of initiation and completion of clinical trials and submissions to

U.S. and foreign authorities;

· compliance with post-marketing regulatory standards, post-marketing obligations

or pharmacovigilance rules is not maintained;

· our ability to execute on our business strategy to enhance enterprise and

long-term stockholder value;

· our ability to identify and acquire cash flow generating assets and

opportunities;

· our ability to successfully navigate recent changes to our Board of Directors

and the senior management team;

· other factors that are described from time to time in our periodic filings with

the Securities and Exchange Commission (the "SEC") including those set forth in

    this filing as "Part II. Item 1A. Risk Factors;"


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Risks and uncertainties related to Qsymia® (phentermine and topiramate extended release):

· our, or our current or potential partners', ability to successfully

commercialize Qsymia including risks and uncertainties related to expansion to

direct to patient distribution, the broadening of payor reimbursement, the

    expansion of Qsymia's primary care presence, and the outcomes of our
    discussions with pharmaceutical companies and our strategic and
    franchise-specific pathways for Qsymia;

· our ability to sell through the Qsymia retail pharmacy network and the Qsymia

Advantage program;

· the impact of promotional programs for Qsymia on our net product revenue and

operating results in future periods;

· our ability to ensure that the entire supply chain for Qsymia timely,

efficiently and consistently delivers Qsymia to our customers and partners;

 ·  our ability to accurately forecast Qsymia demand;

· our ability to maintain the relationship with the sole manufacture for Qsymia;

· our, or our current or potential partners', ability to successfully seek, gain

and maintain approval for Qsymia in territories outside the U.S.;

· our dialogue with certain Concerned Member States (as defined below) in Europe

relating to the pending decentralized Marketing Authorization Application, the

timing and scope of the assessment by such Concerned Member State health

authorities of our Marketing Authorization Application, and ultimately the

decision of such Concerned Member State health authorities on whether to grant

Marketing Authorization for Qsymia in such EU countries;

· the timing of and costs associated with the initiation and completion of the

post-approval clinical studies required as part of the approval of Qsymia by

the U.S. Food and Drug Administration ("FDA");

· the response from FDA to any data and/or information relating to post-approval

clinical studies required for Qsymia;

· our ability to work with FDA to significantly reduce or remove the requirements

of the clinical post-approval cardiovascular outcomes trial ("CVOT");

· the impact of the indicated uses and contraindications contained in the Qsymia

label and the Risk Evaluation and Mitigation Strategy ("REMS") requirements;

· the impact of any possible future requirement to provide additional clinical

data or further analysis of previously submitted clinical trial data;

Risks and uncertainties related to PANCREAZE (pancrelipase):

· risks and uncertainties related to the timing, strategy, tactics and success of

the marketing and sales of PANCREAZE;

· our ability to successfully maintain and increase market share against current

competing products and potential competitors that may develop alternative

formulations of the drug;

· our ability to expand payor coverage for PANCREAZE;

· our ability to accurately forecast PANCREAZE demand;

· our ability to maintain the relationship with the sole manufacturer for

PANCREAZE;

· our ability to maintain a satisfactory level of PANCREAZE inventory;

· the ability of our partners to maintain regulatory approvals to manufacture and

adequately supply our products to meet demand;

Risks and uncertainties related to STENDRA® (avanafil) or SPEDRA™ (avanafil):

· our ability to manage the supply chain for STENDRA/SPEDRA for our current or

potential commercial collaborators;

· our partner's ability to find a new distribution partner or model for STENDRA

    in the United States, Canada, South America and India;


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· risks and uncertainties related to the timing, strategy, tactics and success of

the launches and commercialization of STENDRA/SPEDRA by our current or

potential collaborators;

· our ability to successfully complete, on acceptable terms and on a timely

basis, avanafil partnering discussions for territories under our license with

Mitsubishi Tanabe Pharma Corporation in which we do not have a commercial

collaboration partner;

· Sanofi Chimie's ability to manufacture the avanafil active pharmaceutical

ingredient and Sanofi Winthrop Industrie's ability to manufacture avanafil

tablets; and

· the ability of our partners to maintain regulatory approvals to manufacture and

adequately supply our products to meet demand or to comply with the terms of

their agreements with us.

When we refer to "we," "our," "us," the "Company" or "VIVUS" in this document,
we mean the current Delaware corporation, or VIVUS, Inc., and its California
predecessor, as well as all of our consolidated subsidiaries.

All percentage amounts and ratios were calculated using the underlying data in
thousands. Operating results for the three months ended March  31, 2020 are not
necessarily indicative of the results that may be expected for the full fiscal
year or any future period.

You should read the following management's discussion and analysis of our
financial condition and results of operations in conjunction with our audited
consolidated financial statements and related notes thereto included as part of
our Annual Report on Form 10-K for the year ended December 31, 2019, as filed
with the SEC on March 3, 2020 and other disclosures (including the disclosures
under "Part II. Item 1A. Risk Factors") included in this Quarterly Report on
Form 10-Q. Our unaudited condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles and
are presented in U.S. dollars.

OVERVIEW

VIVUS is a specialty pharmaceutical company with three approved therapies and
one product candidate in clinical development. Qsymia® (phentermine and
topiramate extended release) is approved by FDA for chronic weight management.
PANCREAZE®/PANCREASE® MT (pancrelipase) is indicated for the treatment of
exocrine pancreatic insufficiency ("EPI") due to cystic fibrosis or other
conditions. STENDRA® (avanafil) is approved by FDA for erectile dysfunction
("ED") and by the EC under the trade name SPEDRA, for the treatment of ED in the
EU. VI-0106 (tacrolimus) is in clinical development and is being studied in
patients with pulmonary arterial hypertension ("PAH").

Business Strategy

In April 2018, we added John Amos as our new Chief Executive Officer and a
member of the VIVUS Board of Directors. With the addition of Mr. Amos, we
announced a turnaround plan of building a portfolio of cash flow generating
assets to leverage our expertise in commercializing specialty pharmaceutical
assets. In June 2018, we completed the first acquisition under this strategy as
we acquired all product rights for PANCREAZE (pancrelipase) in the United States
and PANCREASE MT in Canada for $135.0 million in cash from Janssen
Pharmaceuticals. PANCREAZE/PANCREASE MT is a prescription medicine used to treat
people who cannot digest food normally because their pancreas does not make
enough enzymes due to cystic fibrosis or other conditions. We are supporting
PANCREAZE in the U.S. market by leveraging our existing commercial
infrastructure and 10 sales representatives in the U.S. focused on
gastro-intestinal and cystic fibrosis physicians.

In June of 2018, we issued $110.0 million of 10.375% 2024 Notes ("2024 Notes")
with affiliates of Athyrium Capital Management ("Athyrium"). Concurrent with the
issuance of the 2024 Notes, we issued warrants to purchase 0.3 million shares of
our common stock to the note holders. Additionally, concurrent with the issuance
of the 2024 Notes, we repurchased Convertible Notes held by Athyrium, with a
face value of $60.0 million, at a discount to par plus accrued interest. In
October 2018, we settled a purchase of approximately $8.6 million outstanding
principal amount of our Convertible Notes for approximately $7.1 million plus
accrued interest. In September 2019, we repurchased $48.6 million aggregate
principal amount of our 2024 Notes plus prepayment premiums of an aggregate of
$6.4 million.

On April 3, 2020, the Company completed a registered direct offering of
7,218,750 shares of the Company's common stock at a purchase price of $1.60 per
share for net proceeds of $10.5 million, after deducting the placement agent's
fees and other offering expenses payable by the Company.

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As of March 31, 2020, we had a total of $240.7 million of outstanding debt,
$181.8 million of which was due on May 1, 2020. We do not currently have
sufficient cash and/or credit facilities in place to pay the debt due May 1,
2020. On April 29, 2020, we entered into an agreement with IEH Biopharma LLC
("IEH Biopharma"), which holds a principal amount of approximately $170.2
million of our Convertible Notes with a maturity date of May 1, 2020. Under the
terms of the agreement, we paid IEH Biopharma $3.8 million in accrued and unpaid
interest on the Convertible Notes and IEH Biopharma granted us a 30-day grace
period (if not terminated sooner pursuant to the terms of the agreement),
beginning May 1, for payment of the principal amount of the Convertible Notes
during which the two parties will work exclusively to attempt to restructure the
outstanding principal amount of the Convertible Notes. As part of the agreement,
we paid $7.5 million to settle the remaining $11.3 million in principal and
$253,000 in accrued and unpaid interest held by other holders.

We are actively pursuing funding or a restructuring of our debt, which may come
through public or private debt or equity financings, collaborations or other
available financing sources. It is substantially uncertain whether any such
funding or restructuring will be available on acceptable terms, if at all. If
additional funds are raised by issuing equity securities, substantial dilution
to existing stockholders may result. As a result of this uncertainly, we believe
that a strategic transaction that restructures or refinances our debt may be
necessary in order for us to service our existing indebtedness. We may need to
seek relief under the U.S. Bankruptcy Code or otherwise complete a restructuring
transaction to address our liquidity needs. If we seek bankruptcy relief, our
common stockholders could receive little or no consideration for their
interests. In addition, unsecured creditors would likely realize recoveries
significantly less than the principal amount of their claims and, possibly, no
recovery at all.

Alternatively, we will not be able to continue our operations at our current
level and may be required to relinquish rights to certain of our technologies,
product candidates or products that we would otherwise seek to develop on our
own. We might also be required to delay, reduce the scope of or eliminate one or
more of our commercialization or development programs or obtain funds through
collaborations with others that are on unfavorable terms or restructure VIVUS in
other ways that may not be favorable.

Our independent registered public accounting firm's audit report on our
consolidated financial statements as of and for the year ended December 31, 2019
included in our Annual Report on Form 10-K includes an explanatory paragraph
stating that there is substantial doubt about our ability to continue as a going
concern. If we cannot continue as a viable entity, our security holders may lose
some or all of their investment in our Company. Even if adequate funds become
available, we may need to raise additional funds in the near future to finance
operations and pursue development and commercial opportunities.

The COVID-19 pandemic may result in significant adverse impacts to our business.
Although the full impact of the pandemic on our revenue, financial condition and
results of operations for the remainder of the fiscal year remains uncertain and
difficult to predict, the spread of the virus and public health measures being
undertaken to reduce such transmission are and will likely continue to create
significant disruptions with respect to consumer demand, healthcare providers
and healthcare facilities and the reliability of our supply chain. The severity
of the impact of the COVID-19 pandemic on our business will depend on a number
of factors, including, but not limited to, the duration and severity of the
pandemic and the extent and severity of the impact on the Company's customers,
all of which are uncertain and cannot be predicted. Our future results of
operations and liquidity could be adversely impacted by factors including, but
not limited to, delays in payments of outstanding receivable amounts beyond
normal payment terms, supply chain disruptions and uncertain demand.

Commercial Products

Qsymia

FDA approved Qsymia in July 2012 as an adjunct to a reduced calorie diet and
increased physical activity for chronic weight management in adult obese or
overweight patients in the presence of at least one weight related comorbidity,
such as hypertension, type 2 diabetes mellitus or high cholesterol, or
dyslipidemia. Qsymia incorporates a proprietary formulation combining low doses
of the active ingredients from two approved drugs, phentermine and topiramate.
Although the exact mechanism of action is unknown, Qsymia is believed to
suppress appetite and increase satiety, or the feeling of being full, the two
main mechanisms that impact eating behavior.

We commercialize Qsymia in the U.S. through a specialty sales force who promote
Qsymia to physicians. Our sales efforts are focused on maintaining a commercial
presence with high volume prescribers of anti-obesity products. Our marketing
efforts have focused on rolling out unique programs to encourage targeted
prescribers to

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gain more experience with Qsymia with their obese or overweight patient
population. In 2019, we introduced the Qsymia Advantage program to reach more of
our intended patient population. The Qsymia Advantage program includes patient
education resources and access to a home delivery in addition to new pricing.

We continue to invest in digital media in order to amplify our messaging to
information-seeking consumers. The digital messaging encourages those consumers
most likely to take action to speak with their physicians about obesity
treatment options. We believe our enhanced digital strategies deliver clear and
compelling communications to potential patients. We utilize a patient savings
plan to further drive Qsymia brand preference at the point of prescription and
to encourage long-term use of the brand.

In September 2017, we entered into a license and commercialization agreement
(the "Alvogen License Agreement") and a commercial supply agreement (the
"Alvogen Supply Agreement") with Alvogen Malta Operations (ROW) Ltd ("Alvogen").
Under the terms of the Alvogen License Agreement, Alvogen is solely responsible
for obtaining and maintaining regulatory approvals for all sales and marketing
activities for Qsymia in South Korea. We received an upfront payment of $2.5
million in September 2017, a payment of $2.5 million in September 2019 upon
achieving marketing authorization and $2.0 million in the first quarter of 2020
upon commercial launch. We are eligible to receive additional payments upon
Alvogen reaching a sales milestone. Additionally, we receive royalties on
Alvogen's Qsymia net sales in South Korea. Under the Alvogen Supply Agreement,
we will supply product to Alvogen on an exclusive basis.

In October 2019, we announced that European regulatory agencies in Sweden,
Denmark, Finland, Iceland, Norway, and Poland (the "Concerned Member States")
have accepted the Marketing Authorization Application (the "MAA") for Qsymia on
a decentralized basis, with Sweden acting as the lead. Under the decentralized
MAA procedure, the regulatory authorities in each of the Concerned Member States
may simultaneously provide Marketing Authorization for use of a product within
those specific countries. Based on the decentralized MAA procedure timelines, we
anticipate the completion of the MAA assessment in the second half of 2020.

In December 2019, we announced the results of a pharmacokinetic and
pharmacodynamic study demonstrating that Qsymia capsules CIV has favorable
pharmacokinetic, efficacy, and safety/tolerability profiles when used for eight
weeks to treat adolescents with obesity. The study was conducted in order to
establish dosing levels for the ongoing Phase 4 post-marketing study of Qsymia
in obese adolescents. The primary objective of the study was to describe the
pharmacokinetic profiles of Qsymia after administration in adolescents with
obesity.

PANCREAZE/PANCREASE MT

In June 2018, we acquired the commercial rights to PANCREAZE and PANCREASE MT in
the U.S. and Canada. Prior to the acquisition, PANCREAZE/PANCREASE MT had been
commercialized by Janssen. In connection with the acquisition of
PANCREAZE/PANCREASE MT, we and Janssen also entered into transition services
agreements pursuant to which Janssen and a Canadian affiliate of Janssen
provided certain transition services to us in the U.S. and Canada as we
transitioned to full control over the PANCREAZE/PANCREASE MT supply chain, which
was completed in the first quarter of 2019. In the first quarter of 2019, we
relaunched PANCREAZE in the U.S. by leveraging our existing commercial
infrastructure and expanding it to include 10 additional contract sales
representatives in the U.S. focused on gastro-intestinal and cystic fibrosis
physicians. We also introduced the PANCREAZE Advantage program, which is
intended to enhance patient access and improve the patient experience with
patient and physician educational materials, a patient support program, and
patient and payment assistance. We transitioned to direct sales in Canada in the
third quarter of 2019. We have also prioritized supply chain improvement,
working capital management and moving PANCREAZE/PANCREASE MT back into the view
of the medical community. In February 2020, FDA approved the supplemental New
Drug Application for an improved formulation of PANCREAZE that extends the shelf
life to 36 months across all PANCREAZE dosages.

Approved in 2010, PANCREAZE/PANCREASE MT is a pancreatic enzyme preparation
consisting of pancrelipase, an extract derived from porcine pancreatic glands,
as well as other enzyme classes, including porcine-derived lipases, proteases
and amylases. PANCREAZE/PANCREASE MT is specifically indicated for the treatment
of exocrine pancreatic insufficiency ("EPI"). EPI is a condition that results
from a deficiency in the production and/or secretion of pancreatic enzymes. It
is associated with cystic fibrosis, chronic pancreatitis, pancreatic cancer and
other conditions, and affects approximately 85 percent of cystic fibrosis
patients. There is no cure for EPI and pancreatic enzyme replacement therapy is
the primary treatment for the condition.

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STENDRA/SPEDRA

STENDRA is an oral phosphodiesterase type 5 ("PDE5") inhibitor that we have licensed from Mitsubishi Tanabe Pharma Corporation ("MTPC"). FDA approved STENDRA in April 2012 for the treatment of ED in the United States. In June 2013, the EC adopted a decision granting marketing authorization for SPEDRA, the approved trade name for avanafil in the EU, for the treatment of ED in the EU.

The Menarini Group, through its subsidiary Berlin Chemie AG ("Menarini"), is our
exclusive licensee for the commercialization and promotion of SPEDRA for the
treatment of ED in over 40 countries, including the EU Member States. In
addition, Menarini licensed rights directly from MTPC to commercialize avanafil
in certain Asian territories. We receive royalties from Menarini based on SPEDRA
net sales and are entitled to receive future milestone payments based on certain
net sales targets. Menarini will also reimburse us for payments made to cover
various obligations to MTPC during the term of the Menarini License Agreement.
Menarini obtains SPEDRA exclusively from us.

Metuchen Pharmaceuticals LLC ("Metuchen") is our exclusive licensee for the
development, commercialization and promotion of STENDRA in the United States,
Canada, South America and India. Metuchen reimburses us for payments made to
cover royalty and milestone obligations to MTPC, but otherwise owes us no future
royalties. Metuchen obtains STENDRA exclusively from us. On September 30, 2019,
Metuchen provided a written notice of termination of our supply agreement with
them effective September 30, 2021.

We are currently in discussions with potential collaboration partners to develop, market and sell STENDRA/SPEDRA for territories in which we do not currently have a commercial collaboration, including Africa, the Middle East, Turkey, Russia, Mexico and Central America.

Product Development Pipeline and Life Cycle Management

VI-0106 - Pulmonary Arterial Hypertension

PAH is a chronic, life-threatening disease characterized by elevated blood
pressure in the pulmonary arteries, which are the arteries between the heart and
lungs, due to pathologic proliferation of endothelial and vascular smooth muscle
cells in the lining of these blood vessels and excess vasoconstriction.
Pulmonary blood pressure is normally between 8 and 20 mmHg at rest as measured
by right heart catheterization. In patients with PAH, the pressure in the
pulmonary artery is greater than 25 mmHg at rest or 30 mmHg during physical
activity. These high pressures make it difficult for the heart to pump blood
through the lungs to be oxygenated.

The current medical therapies for PAH involve endothelin receptor antagonists,
PDE5 inhibitors, prostacyclin analogues, selective prostaglandin I2 receptor
agonists, and soluble guanylate cyclase stimulators, all of which have been
shown to effectively dilate arterioles in the pulmonary circulation, to reduce
symptoms and improve quality of life. While currently approved products treat
the symptoms of PAH, they do little to address the pathologic cell proliferation
that is the underlying cause of the disease. We believe that tacrolimus can be
used to enhance bone morphogenetic protein receptor type 2 ("BMPR2") signaling.
BMPR2 signaling has been shown to be reduced in PAH patients, and this reduction
in signaling is an important factor leading to cell proliferation within the
pulmonary arteries. By restoring BMPR2 signaling, tacrolimus may therefore
address a fundamental cause of PAH.

The prevalence of PAH varies among specific populations, but it is estimated at
between 15 and 50 cases per million adults. PAH usually develops between the
ages of 20 and 60 but can occur at any age, with a mean age of diagnosis around
45 years. Idiopathic PAH is the most common type, constituting approximately 40%
of the total diagnosed PAH cases, and occurs two to four times more frequently
in females.

On January 6, 2017, we acquired the exclusive, worldwide rights for the
development and commercialization of BMPR2 activators for the treatment of PAH
and related vascular diseases from Selten Pharma, Inc. ("Selten"). Selten
assigned to us its license to a group of patents owned by the Board of Trustees
of the Leland Stanford Junior University ("Stanford") which cover uses of
tacrolimus and ascomycin to treat PAH. We paid Selten an upfront payment of $1.0
million, and we will pay additional milestone payments based on global
development status and future sales milestones, as well as tiered royalty
payments on future sales of these compounds. The total potential milestone
payments are $39.0 million to Selten. We have assumed full responsibility for
the development and commercialization of the licensed compounds for the
treatment of PAH and related vascular diseases.

In October 2017, we held a pre-IND meeting with FDA for VI-0106, our proprietary
formulation of tacrolimus for the treatment of PAH. FDA addressed our questions
related to preclinical, nonclinical and clinical

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data and the planned design of clinical trials of tacrolimus in class 3 and 4
PAH patients, and clarified the requirements needed to file an IND to initiate a
clinical trial in this indication. As discussed with FDA, we currently intend to
design and conduct clinical trials that could qualify for Fast Track and/or
Breakthrough Therapy designation.

Tacrolimus for the treatment of PAH has received Orphan Drug Designation from
FDA in the U.S. and the EU on the basis of a scientific opinion adopted by the
Committee for Orphan Medicinal Products of the European Medicines Agency in the
EU. We are focusing on the development of a proprietary oral formulation of
tacrolimus to be used in a clinical development program and, if approved, for
commercial use. If we are successful in our development efforts, we anticipate
filing an IND with FDA and completing the development of our proprietary
formulation of tacrolimus in the second half of 2020. We are currently seeking
alternatives for financing the development of tacrolimus.

Qsymia for Additional Indications

We are currently considering further development of Qsymia for the treatment of various diseases, including obstructive sleep apnea and nonalcoholic steatohepatitis ("NASH").

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations
are based upon our unaudited condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the U.S. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues, expenses and related disclosures. On an ongoing basis, we evaluate our
estimates, including those related to available-for-sale securities, research
and development expenses, income taxes, inventories, revenues, including
revenues from multiple-element arrangements, contingencies and litigation and
share-based compensation. We base our estimates on historical experience,
information received from third parties and on various market specific and other
relevant assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ significantly from these estimates under
different assumptions or conditions.

Our significant accounting policies are more fully described in Note 1 to our
audited consolidated financial statements and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Critical Accounting
Policies and Estimates" contained in our Annual Report on Form 10-K for the year
ended December 31, 2019 as filed with the SEC on March 3, 2020. There have been
no changes to our significant accounting policies since our Annual Report on
Form 10-K for the year ended December 31, 2019.



RESULTS OF OPERATIONS

Revenues


                                                  Three Months Ended March 31,         Increase/
(in thousands, except for percentages)               2020               2019           (Decrease)
Qsymia-Net product revenue                      $         8,914    $         8,423            6 %
PANCREAZE/PANCREASE MT - Net product revenue              5,783              5,074           14 %
License and milestone revenue                             2,000                  -          N/A
Supply revenue                                            1,823              1,604           14 %
Qsymia royalty revenue                                      564                  -          N/A
STENDRA/SPEDRA royalty revenue                              547                475           15 %
PANCREASE MT royalty revenue                                  -                570        (100) %
Total revenue                                   $        19,631    $        16,146           22 %




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Net product revenue

Shipments and prescriptions for net product revenue consisted of the following:


                                        Three Months Ended March 31,       Increase/
(in thousands, except for percentages)     2020               2019        

(Decrease)

Qsymia units shipped                              79                 77         3 %
Qsymia prescriptions dispensed                    83                 82         1 %
PANCREAZE/PANCREASE MT units shipped              33                 26     

27 %

Units shipped represent our direct shipments into the sales channel or to end
customers through a direct-to-patient specialty pharmacy.  We are uncertain
about the impacts that COVID-19 will have on our future product revenue,
including its general impact on the economy and on the ability of patients to
access pharmacies, retail outlets and healthcare providers.

License and milestone revenue

License and milestone revenue for the three months ended March  31, 2020 related
to contractual payments due to us upon Alvogen commencing commercialization of
Qsymia in South Korea. License and milestone revenues are dependent on the
timing of entering into new collaborations and the timing of our collaborators
meeting or being reasonably certain of meeting certain milestone events. As a
result, we anticipate that our license and milestone revenue will fluctuate
materially between periods.

Supply revenue

We supply Qsymia and STENDRA/SPEDRA to our collaboration partners on a cost-plus
basis. The variations in supply revenue are a result of the timing of orders
placed by our partners and may or may not reflect end user demand. The timing of
purchases by our commercialization partners will be affected by, among other
items, their minimum purchase commitments, end user demand, and distributor
inventory levels. As a result, supply revenue has and will continue to fluctuate
materially between reporting periods.

Royalty revenue

We record royalty revenue related to sales of STENDRA/SPEDRA, Qsymia in South
Korea and, in 2019, Canadian sales of PANCREASE MT based on reports provided by
our partners. Upon taking over operations for Canadian sales for PANCREASE MT,
including ownership of the Canadian inventory in the third quarter of 2019, net
sales of PANCREASE MT began to be recorded as net product revenue with costs
recorded as cost of goods sold. We expect STENDRA/SPEDRA royalty revenue for the
next quarters to remain relatively consistent with current levels. We expect
Qsymia royalty revenue to vary on a quarterly basis due to the recent launch. We
are uncertain about the impacts that COVID-19 will have on our future
STENDRA/SPEDRA and Qsymia royalty revenue, including its general impact on the
economy and on the ability of patients to access pharmacies, retail outlets and
healthcare providers.

Cost of goods sold


                                                                                          Three Months Ended March 31,
                                                                  2020                                                                    2019
(In thousands, except percentages)    Qsymia        PANCREAZE       STENDRA/ SPEDRA          Total            Qsymia        PANCREAZE       STENDRA/ SPEDRA          Total
Net product revenue                $ 8,914         $ 5,783         $         -           $ 14,697          $ 8,423         $ 5,074         $         -           $ 13,497
Supply revenue                           -               -               1,823              1,823                -               -               1,604              1,604
Total product and supply revenue     8,914 100%    $ 5,783 100%    $     1,823   100%    $ 16,520 100%     $ 8,423 100%    $ 5,074 100%    $     1,604   100%    $ 15,101 100%

Cost of goods sold (excluding
amortization)                        1,340  15%    $ 1,602  28%    $    

1,685 92% $ 4,627 28% $ 1,382 16% $ 1,461 29% $ 1,465 91% $ 4,308 29% Amortization of intangible assets 91 1% 3,547 61%

              -     0%       3,638  22%          91   1%      3,547  70%              -     0%    $  3,638  24%
Total cost of goods sold             1,431  16%    $ 5,149  89%    $     1,685    92%    $  8,265  50%     $ 1,473  17%    $ 5,008  99%    $     1,465    91%    $  7,946  53%

                                   $ 7,483  84%    $   634  11%    $       138     8%    $  8,255  50%     $ 6,950  83%    $    66   1%    $       139     9%    $  7,155  47%


Cost of goods sold for Qsymia includes the inventory costs of API, third party
contract manufacturing and packaging and distribution costs, royalties, cargo
insurance, freight, shipping, handling and storage costs, and

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overhead costs of the employees involved with production. Cost of goods sold for
PANCREAZE includes third party contract manufacturing costs, amortization of the
PANCREAZE license, service fees, royalties, insurance, and overhead costs. Cost
of goods sold for STENDRA/SPEDRA shipped to our commercialization partners
includes the inventory costs of API and tableting. Fluctuations in the cost of
goods sold as a percentage of net product and supply revenue over the periods
was primarily due to the sales mix among Qsymia, STENDRA/SPEDRA and PANCREAZE.

Selling, general and administrative expense

                                                Three Months Ended March 31,          Increase/
(In thousands, except percentages)                2020                 2019          (Decrease)
Selling and marketing                       $           4,233     $         4,534        (7) %
General and administrative                              6,727               5,284         27 %
Total selling, general and administrative
expenses                                    $          10,960     $         

9,818 12 %

The decrease in selling and marketing expenses in the three months ended March
31, 2020 compared to the same period in 2019 was primarily due to the
stabilization of our sales force and recurring promotional activities for Qsymia
and PANCREAZE/PANREASE MT. Selling and marketing expenses are expected generally
to remain stable in future quarters, exclusive of any currently-uncertain
changes in order to address changing market conditions due to COVID-19.

The increase in general and administrative expenses in the three months ended
March 31, 2020 compared to the same period in 2019 was primarily due to
professional fees related to our refinancing efforts. We expect general and
administrative expenses to be higher in the second quarter of 2020 due to fees
associated with our refinancing and restructuring efforts and to fluctuate
significantly on a quarterly basis in future quarters.

Research and development expense

                                             Three Months Ended March 31,          Increase/
Drug Indication/Description                    2020                 2019           (Decrease)
(In thousands, except percentages)
Qsymia                                   $          1,061     $            692           53 %
STENDRA/SPEDRA                                         65                   41           59 %
PANCREAZE/PANCREASE MT                                426                  642         (34) %
VI-0106                                                67                   25          168 %
Share-based compensation                               33                   55         (40) %
Overhead costs*                                       793               

1,014 (22) % Total research and development expenses $ 2,445 $ 2,469 (1) %

--------------------------------------------------------------------------------

*Overhead costs include compensation and related expenses, consulting, legal and other professional services fees relating to research and development activities, which we do not allocate to specific projects.

The decrease in total research and development expenses in the three months
ended March 31, 2020 as compared to the same period in 2019 was primarily due to
completion of enrollment for Qsymia adolescent safety and efficacy study and the
completion of the PANCREAZE longer shelf life formulation. We expect research
and development expenses to remain stable over the remaining months of 2020 for
OB-403 as we monitor patient activity as well as work on the remaining PANCREAZE
post-marketing requirements.

Interest expense and other expense, net

Interest expense and other expense, net for the three months ended March  31,
2020 and 2019 was $3.2 million and $3.9 million, respectively. The decrease is
due to the decrease in the principal amounts due to repurchases of our 2024
Notes in 2019. We anticipate that interest expense in future quarters could
fluctuate significantly depending on possible refinancing or restructuring
activities in the second quarter of 2020.

Benefit from income taxes

The benefit from income taxes for the three months ended March 31, 2020 and 2019
was $45,000 and $8,000, respectively.  Income taxes for both of the periods are
primarily comprised of state taxes during the period.

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We periodically evaluate the realizability of our net deferred tax assets based
on all available evidence, both positive and negative. The realization of net
deferred tax assets is dependent on our ability to generate sufficient future
taxable income during periods prior to the expiration of tax attributes to fully
utilize these assets. We weighed both positive and negative evidence and
determined that there is a continued need for a full valuation allowance on our
deferred tax assets in the U.S. as of March 31, 2020. Should there be a change
in our ability to recover our deferred tax assets, we would recognize a benefit
to our tax provision in the period in which we determine that it is more likely
than not that we will recover its deferred tax assets.

LIQUIDITY AND CAPITAL RESOURCES

Cash. Cash, cash equivalents and available for sale securities totaled $32.9
million at March 31, 2020, as compared to $32.6 million at December 31, 2019.
The increase was primarily due to positive cash flows from operations.

Our investment policy has the primary investment objectives of preservation of
principal; however, there may be times when certain of the securities in our
portfolio will fall below the credit ratings required in the policy. If those
securities are downgraded or impaired, we would experience realized or
unrealized losses in the value of our portfolio, which would have an adverse
effect on our results of operations, liquidity and financial condition. From
time to time, the Company may also invest its cash to retire or purchase its
outstanding debt, make asset acquisitions, conduct research and development or
expand the Company. Investment securities are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated with
certain investment securities and the level of uncertainty related to changes in
the value of investment securities, it is possible that changes in these risk
factors in the near term could have an adverse material impact on our results of
operations or stockholders' deficit. Our cash and cash equivalents as of March
31, 2020 and December 31, 2019 consisted of cash deposits and money market
funds.

Accounts Receivable.    We extend credit to our customers for product sales
resulting in accounts receivable. Customer accounts are monitored for past due
amounts. Past due accounts receivable, determined to be uncollectible, are
written off against the allowance for doubtful accounts. Allowances for doubtful
accounts are estimated based upon past due amounts, historical losses and
existing economic factors, and are adjusted periodically. Historically, we have
had no significant uncollectable accounts receivable. We offer cash discounts to
our customers, generally 2% of the sales price as an incentive for prompt
payment. Accounts receivable (net of allowance for cash discounts) at March 31,
2020, was $24.7 million, compared to $22.3 million at December 31, 2019.

Summary Cash Flows


                                          Three Months Ended March 31,
                                           2020                2019
           Cash provided by (used for):           (in thousands)
           Operating activities         $       114      $         (6,940)
           Investing activities                   -                  (450)
           Financing activities                (52)                      -


Operating Activities.    For the three months ended March 31, 2020, cash
provided by operating activities resulted from our net loss as adjusted for
non-cash items, in addition to increases in accounts payable and accrued and
other liabilities, partially offset by increases in accounts receivable and
inventories. For the three months ended March 31, 2019, cash used for operating
activities resulted from our net loss as adjusted for non-cash items, including
the decrease in deferred revenue, partially offset by decreases in accounts
receivable and inventories and a decrease in accounts payable.

Investing Activities.    Cash used for investing activities for the three months
ended March 31, 2019 resulted primarily from the net purchases from sales and
maturities of our investment securities.

Financing Activities. Cash used by financing activities for the three months ended March 31, 2020 consisted of principal payments on financing leases.

We do not currently have sufficient cash and/or credit facilities in place to
pay the debt due May 1, 2020. On April 29, 2020, we entered into an agreement
with IEH Biopharma LLC, which holds a principal amount of approximately $170.2
million of our Convertible Notes with a maturity date of May 1, 2020. Under the
terms of the agreement, we paid IEH Biopharma $3.8 million in accrued and unpaid
interest on the Convertible Notes and IEH

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Biopharma granted us a 30-day grace period (if not terminated sooner pursuant to
the terms of the agreement), beginning May 1, for payment of the principal
amount of the Convertible Notes during which the two parties will work
exclusively to attempt to restructure the outstanding principal amount of the
Convertible Notes. As part of the agreement, we paid $7.5 million to settle the
remaining $11.3 million in principal and $253,000 in accrued and unpaid interest
held by other holders.

We are actively pursuing funding or a  restructuring of our debt, which may come
through public or private debt or equity financings, collaborations or other
available financing sources. Such funding may not be available on acceptable
terms, or at all. If additional funds are raised by issuing equity securities,
substantial dilution to existing stockholders may result. If adequate funds are
not available, we will not be able to continue our operations at our current
level and may be required to relinquish rights to certain of our technologies,
product candidates or products that we would otherwise seek to develop on our
own. We might also be required to delay, reduce the scope of or eliminate one or
more of our commercialization or development programs or obtain funds through
collaborations with others that are on unfavorable terms or restructure VIVUS in
other ways that may not be favorable. Even if adequate funds become available,
we may need to raise additional funds in the near future to finance operations
and pursue development and commercial opportunities.

Our unaudited condensed consolidated financial statements have been prepared
assuming that we will continue as a going concern. Our coming debt maturities as
well as our negative cash flow from operations and accumulated deficit raise
substantial doubt about our ability to continue as a going concern. Our
unaudited condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet financing arrangements and have
not established any special purpose entities. We have not guaranteed any debt or
commitments of other entities or entered into any options on non-financial
assets.

Commitments and Contingencies

We indemnify our officers and directors for certain events or occurrences
pursuant to indemnification agreements, subject to certain limits. We may be
subject to contingencies that may arise from matters such as product liability
claims, legal proceedings, stockholder suits and tax matters and as such, we are
unable to estimate the potential exposure related to these indemnification
agreements. We have not recognized any liabilities relating to these agreements
as of March 31, 2020.

Contractual Obligations

During the three months ended March 31, 2020, there were no material changes to
our contractual obligations described under Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in Part II, Item 7 of
our Annual Report on Form 10-K for our fiscal year ended December 31, 2019,
filed with the SEC on March 3, 2020, other than the fulfillment of existing
obligations in the ordinary course of business.

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