Class Action Suit Filed Against Vivus, Inc. and Its Officers and Directors Alleging Misrepresentations, False Financial Statements and Insider Trading

Business Wire, Feb 27, 1998

SAN DIEGO--(BUSINESS WIRE)--Feb. 27, 1998--A class action has been commenced in the California Superior Court for San Mateo County on behalf of purchasers of Vivus, Inc. ("Vivus") common stock during the period May 15, 1997 to December 9, 1997 (the "Class Period").

The complaint charges Vivus and certain of its officers and directors with violations of the California Corporations, Civil and Business & Professions Codes. The complaint alleges that during the Class Period, defendants artificially inflated Vivus' stock through the issuance of false and misleading statements about Vivus' business, products, finances and future prospects of the Company. As Vivus' stock was inflated by defendants' misrepresentations and omissions, from $15-3/8 on May 14, 1997 to its Class Period high of $41-7/8 per share in October 1997, Vivus insiders named as defendants sold over 235,000 shares of their own Vivus stock, for over $6.7 million. However, in truth, during the Class Period, Vivus' business was suffering as demand for its only product, Medicated Urethral System for Erection (alprostadil) ("MUSE"), had diminished. Moreover, the Company's prospects were bleak as the efficacy of the product was doubtful at best and competitive products were on the horizon which were more desirable to patients than was the Company's MUSE product.

The complaint further alleges that beginning at least by May 1997, defendants undertook a scheme intended to inflate Vivus' stock price by issuing statements with respect to the purportedly superior nature of MUSE and the resultant anticipated impact on the Company's future earnings. Throughout the summer and fall of 1997, defendants continued to misrepresent the Company's results of operations, the demand for MUSE, and the Company's future prospects by falsely representing that MUSE was a safer and more effective therapy for a majority of men afflicted with erectile dysfunction, reporting inflated revenues of $100 million for the first three quarters of 1997, representing that MUSE would still have a profitable niche in the market despite the introduction of oral treatments, and raising the Company's 1997 and 1998 earnings forecasts to $0.94-$1.08 per share and $1.65-$1.72 per share, respectively, without any reasonable basis and, indeed, knowing that such forecasts could not be met. Finally, before the market opened on December 10, 1997, the Company revealed in a press release that it would not meet fourth quarter revenue goals, missing them by as much as 25%. It blamed the shortfall on problems in moving to its new 90,000 square foot plant. This announcement sent Vivus' stock price down more than 34% to as low as $12-1/2 per share. The stock closed at $13-13/16, down more than 65% from the Class Period high of $41-7/8, and later dropped to less than $10 per share.

Plaintiffs seek to recover damages on behalf of all purchasers of Vivus common stock during the Class Period (the "Class"). They are represented by several law firms, including Milberg Weiss Bershad Hynes & Lerach LLP, who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Milberg Weiss has been actively engaged in commercial litigation, emphasizing securities and antitrust class actions, for more than 20 years. The firm has offices in New York, San Diego, San Francisco and Los Angeles and is active in major litigations pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm to major positions in complex multi-district or consolidated litigations. Milberg Weiss has taken a lead role in numerous important actions on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total approximately $2 billion. Visit the firm's website at http://www.milberg.com.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiffs' counsel, William Lerach, Alan Schulman or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wsl@mwbhl.com.

CONTACT: Milberg Weiss

William Lerach, Alan Schulman or

Darren Robbins, 800/449-4900