VIVUS Inc. (NASDAQ: VVUS) is going to have to explain how its diet pill Qsymia had lower prescription volumes sequentially. If you just look at the revenue number, it looks massively higher at $36.7 million versus the $11.4 million expected. The problem is that the revenue figure includes some outside items besides Qsymia sales. These items brought on a narrower net loss of -$0.15 per share, versus a Thomson Reuters consensus of -$0.37 per share.

The stock traded higher on the financial results after the close, but there could easily be an issue to take with a decline in the number of Qsymia dieting pills for the treatment of obesity. The price per prescription rose on a quarterly basis, but is growth really supposed to be from higher pricing rather than more prescriptions? As a reminder, Qsymia is really the only obesity pill approved on the market of its kind. The CEO’s comments (below) are not exactly warm and fuzzy.

In the quarter, net product revenue was $9.1 million from sales of Qsymia. This compares to $7.7 million in Qsymia sales in the fourth quarter of 2013 (sequential) and compares to $4.1 million for the first quarter of 2013 (year over year).

There were approximately 121,000 Qsymia prescriptions dispensed in the first quarter of 2014. This is down from 124,000 Qsymia prescriptions in the fourth quarter of 2013, after the last quarter grew 14% from the third quarter of 2013. As a reminder, the company said during its last quarter earnings that its Qsymia sales were impacted negatively by the holidays in November and December.

Maybe the news-pop is because the average prescription price is rising. That was $75.20 without considering rounding issues versus $62.10 without rounding errors, per quarter that is.

As far as the “other” items in revenues, total net revenue in the first quarter of $36.7 million includes $19.4 million in license and milestone revenue, another $7.4 million in supply revenue, and $0.8 million in royalty revenue under agreements tied to STENDRA and SPEDRA.

Cash, cash equivalents and available-for-sale securities (collectively cash) totaled $316.2 million at March 31, 2014, compared to $343.3 million at December 31, 2013. CEO Seth Fischer said,

“Physicians’ leading concerns with the obesity category are reimbursement/coverage, historical issues regarding safety, and the amount of time and skill required to have a successful discussion with a patient about obesity. We continue to make progress in educating providers, payors, and patients that the disease of obesity requires proactive treatment with a safe and effective agent that is clinically proven to deliver meaningful weight loss. We believe in the long-term prospects for this market as we efficiently deploy our resources to make Qsymia the drug of choice for patients that are obese or overweight with weight-related medical conditions.”

In short, it really sounds like Fischer is offering up an excuse as to why Qsymia unit sales are not growing in the number of prescriptions. Vivus did not try to blame the weather this time around, but we will be looking to see if the typical Qsymia customer (or patient) quote in the conference was something like the following:

“Boy, it is snowing hard in January and February, so maybe I will stay in rather than go get diet pills. Maybe I will order a pizza instead.”

On last look, VIVUS shares were up 5% in the after-hours session at $5.45. The stock had been as high as $5.64. It seems like the after-hours buyers focused on the financial figures, but lower Qsymia unit sales should be a real concern when you consider that the prior growth of 14% sequentially was low and was blamed on the holidays. If the blame here is on weather, we will be taking a more direct point to management.

One additional issue that may be keeping shares higher is short covering. On last look, VIVUS had a short interest of over 34.9 million shares – a record over the last 12 month period.

As a reminder, we removed VIVUS from our list of nine stocks that could double in 2014. This was after the last quarter’s numbers were disappointing on Qsymia. A sequential decline is far worse to us than a lower growth target.

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