Business and Significant Accounting Policies	3 Months Ended
Mar. 31, 2020
BASIS OF PRESENTATION
Business and Significant Accounting Policies	1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES VIVUS is a specialty pharmaceutical company with three approved therapies (Qsymia®, PANCREAZE®/PANCREASE® MT and STENDRA®/SPEDRA™) and one product candidate in active clinical development (VI-0106). Qsymia (phentermine and topiramate extended release) is approved by the U.S. Food and Drug Administration (“FDA”) for chronic weight management. PANCREAZE/PANCREASE MT (pancrelipase) is indicated for the treatment of exocrine pancreatic insufficiency due to cystic fibrosis or other conditions. STENDRA (avanafil) is approved by FDA for erectile dysfunction (“ED”), and by the European Commission (“EC”) under the trade name SPEDRA, for the treatment of ED. The Company commercializes Qsymia and PANCREAZE in the U.S. through a specialty sales force supported by an internal commercial team. The Company licenses the commercial rights to STENDRA/SPEDRA in the U.S., EU and other countries. VI-0106 (tacrolimus) is in active clinical development and is being studied in patients with pulmonary arterial hypertension (“PAH”). When reference is made to the “Company” or “VIVUS” in these footnotes, it refers to the Delaware corporation, or VIVUS, Inc., and, unless the context otherwise requires, its California predecessor, as well as all of its consolidated subsidiaries. Liquidity and Ability to Continue as a Going Concern At March 31, 2020, the Company’s accumulated deficit was approximately $917.2 million and its cash and cash equivalents were $32.9 million. As of March 31, 2020, the Company had a total of $240.7 million in debt, $181.8 million of which is due May 1, 2020. See Note 13 for additional information regarding the Company’s debt. The Company does not currently have sufficient cash and/or credit facilities in place to pay the debt due May 1, 2020. On April 29, 2020, the Company entered into an agreement with IEH Biopharma LLC (“IEH Biopharma”), which holds a principal amount of approximately $170.2 million of the Company’s 4.50% Convertible Senior Notes due May 1, 2020 (the “Convertible Notes”). Under the terms of the agreement, the Company paid IEH Biopharma $3.8 million in accrued and unpaid interest on the Convertible Notes and IEH Biopharma granted the Company 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, the Company 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. The Company is actively pursuing funding or a restructuring of its outstanding debt, which may come through public or private debt or equity financings, collaborations, sale of assets 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, the Company believes that a strategic transaction that restructures or refinances its debt may be necessary in order for us to service the existing indebtedness. The Company may need to seek relief under the U.S. Bankruptcy Code or otherwise complete a restructuring transaction to address its liquidity needs. If the Company seeks bankruptcy relief, the Company’s 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, the Company will not be able to continue its operations at its current level and may be required to relinquish rights to certain of its technologies, product candidates or products that the Company would otherwise seek to develop on its own. The Company might also be required to delay, reduce the scope of or eliminate one or more of its commercialization or development programs or obtain funds through collaborations with others that are on unfavorable terms or restructure the Company in other ways that may not be favorable. The Company’s independent registered public accounting firm’s audit report on the Company’s consolidated financial statements as of and for the year ended December 31, 2019 included in the Annual Report on Form 10-K includes an explanatory paragraph stating that there is substantial doubt about the Company’s ability to continue as a going concern. If the Company cannot continue as a viable entity, its security holders may lose some or all of their investment in the Company. Even if adequate funds become available, the Company may need to raise additional funds in the near future to finance operations and pursue development and commercial opportunities. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company’s coming debt maturities as well as its negative cash flow from operations and accumulated deficit raise substantial doubt about its ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The COVID-19 pandemic may result in significant adverse impacts to the Company’s business. Although the full impact of the pandemic on the Company’s 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 have created and will likely continue to create significant disruptions with respect to consumer demand, healthcare providers and healthcare facilities and the reliability of the Company’s supply chain. The severity of the impact of the COVID-19 pandemic on the Company’s 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. The Company’s 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. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020. Management has evaluated all events and transactions that occurred after March 31, 2020 through the date these unaudited condensed consolidated financial statements were filed. Note 17 details all events and transactions during this period that require recognition or disclosure in these unaudited condensed consolidated financial statements. The condensed consolidated balance sheet data as of December 31, 2019 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed on March 3, 2020 and as amended on April 29, 2020 with the Securities and Exchange Commission (“SEC”). Certain amounts have been reclassified to conform to current year presentation. The unaudited condensed consolidated financial statements include the accounts of VIVUS, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, the Company evaluates its estimates, including critical accounting policies or estimates related to available-for-sale securities, debt instruments, research and development expenses, income taxes, inventories, revenues, contingencies and litigation and share-based compensation. The Company bases its estimates on historical experience, information received from third parties and on various market specific and other relevant assumptions that it believes 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 could differ significantly from those estimates under different assumptions or conditions. Significant Accounting Policies There have been no changes to the Company’s significant accounting policies since the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Recent Accounting Pronouncement Adopted In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which adds disclosure requirements to Topic 820 for the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted this standard effective January 1, 2020. The adoption did not have a material impact on its consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments, which requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model, referred to as the current expected credit loss (CECL) model. Under this model, entities will estimate credit losses over the entire contractual term of the instrument. The standard is effective for the Company beginning January 1, 2023. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

VIVUS is a specialty pharmaceutical company with three approved therapies (Qsymia®, PANCREAZE®/PANCREASE® MT and STENDRA®/SPEDRA™) and one product candidate in active clinical development (VI-0106). Qsymia (phentermine and topiramate extended release) is approved by the U.S. Food and Drug Administration (“FDA”) for chronic weight management. PANCREAZE/PANCREASE MT (pancrelipase) is indicated for the treatment of exocrine pancreatic insufficiency due to cystic fibrosis or other conditions. STENDRA (avanafil) is approved by FDA for erectile dysfunction (“ED”), and by the European Commission (“EC”) under the trade name SPEDRA, for the treatment of ED. The Company commercializes Qsymia and PANCREAZE in the U.S. through a specialty sales force supported by an internal commercial team. The Company licenses the commercial rights to STENDRA/SPEDRA in the U.S., EU and other countries. VI-0106 (tacrolimus) is in active clinical development and is being studied in patients with pulmonary arterial hypertension (“PAH”).

When reference is made to the “Company” or “VIVUS” in these footnotes, it refers to the Delaware corporation, or VIVUS, Inc., and, unless the context otherwise requires, its California predecessor, as well as all of its consolidated subsidiaries.

Liquidity and Ability to Continue as a Going Concern

At March 31, 2020, the Company’s accumulated deficit was approximately $917.2 million and its cash and cash equivalents were $32.9 million. As of March 31, 2020, the Company had a total of $240.7 million in debt, $181.8 million of which is due May 1, 2020. See Note 13 for additional information regarding the Company’s debt.

The Company does not currently have sufficient cash and/or credit facilities in place to pay the debt due May 1, 2020. On April 29, 2020, the Company entered into an agreement with IEH Biopharma LLC (“IEH Biopharma”), which holds a principal amount of approximately $170.2 million of the Company’s 4.50% Convertible Senior Notes due May 1, 2020 (the “Convertible Notes”). Under the terms of the agreement, the Company paid IEH Biopharma $3.8 million in accrued and unpaid interest on the Convertible Notes and IEH Biopharma granted the Company 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, the Company 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.

The Company is actively pursuing funding or a restructuring of its outstanding debt, which may come through public or private debt or equity financings, collaborations, sale of assets 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, the Company believes that a strategic transaction that restructures or refinances its debt may be necessary in order for us to service the existing indebtedness. The Company may need to seek relief under the U.S. Bankruptcy Code or otherwise complete a restructuring transaction to address its liquidity needs. If the Company seeks bankruptcy relief, the Company’s 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, the Company will not be able to continue its operations at its current level and may be required to relinquish rights to certain of its technologies, product candidates or products that the Company would otherwise seek to develop on its own. The Company might also be required to delay, reduce the scope of or eliminate one or more of its commercialization or development programs or obtain funds through collaborations with others that are on unfavorable terms or restructure the Company in other ways that may not be favorable.

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

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

The COVID-19 pandemic may result in significant adverse impacts to the Company’s business. Although the full impact of the pandemic on the Company’s 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 have created and will likely continue to create significant disruptions with respect to consumer demand, healthcare providers and healthcare facilities and the reliability of the Company’s supply chain. The severity of the impact of the COVID-19 pandemic on the Company’s 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. The Company’s 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.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020.

Management has evaluated all events and transactions that occurred after March 31, 2020 through the date these unaudited condensed consolidated financial statements were filed. Note 17 details all events and transactions during this period that require recognition or disclosure in these unaudited condensed consolidated financial statements. The condensed consolidated balance sheet data as of December 31, 2019 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed on March 3, 2020 and as amended on April 29, 2020 with the Securities and Exchange Commission (“SEC”). Certain amounts have been reclassified to conform to current year presentation. The unaudited condensed consolidated financial statements include the accounts of VIVUS, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, the Company evaluates its estimates, including critical accounting policies or estimates related to available-for-sale securities, debt instruments, research and development expenses, income taxes, inventories, revenues, contingencies and litigation and share-based compensation. The Company bases its estimates on historical experience, information received from third parties and on various market specific and other relevant assumptions that it believes 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 could differ significantly from those estimates under different assumptions or conditions.

Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies since the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Recent Accounting Pronouncement Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which adds disclosure requirements to Topic 820 for the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company adopted this standard effective January 1, 2020. The adoption did not have a material impact on its consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments, which requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model, referred to as the current expected credit loss (CECL) model. Under this model, entities will estimate credit losses over the entire contractual term of the instrument. The standard is effective for the Company beginning January 1, 2023. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.