Checking for Signs of Life at Vivus

Led by new chief executive Seth Fischer, Vivus (VVUS-$9.18) is walking a new path with its erectile dysfunction (ED) drug Stendra (avanafil), choosing to outsource promotion via licensing deals: in July 2013, VIVUS announced an exclusive pact worth up to $121 million (plus royalties) with the Italian pharmaceutical group Menarini to commercialize avanafil in Europe; Auxilium Pharma (AUXL), which already markets a portfolio of ED treatments, including testosterone and Xiaflex (recently approved for Peyronie’s disease – painful curvature of the penis caused by plaque buildup), inked a marketing deal worth up to $300 million to Vivus (plus royalties) for rights to Stendra in the U.S. and Canada.  

With ED afflicting up to 30 million men in this country alone, management opines that there remains significant commercial opportunity for Stendra to stake claim to a double-digit share of the $2.9 billion U.S. market. Unfortunately, peak sales estimates of $400 million - $500 million in 2016 (one-year prior to expiration of Cialis’ first key patent), could prove too optimistic.

Notwithstanding marketing claims, after adjusting for proper dosage, no one agent in the class has been shown to be more efficacious or safer than the others. How, therefore, are Vivus’s marketing partners going to surmount reimbursement challenges when therapeutic substitutions -- generic versions of Viagra -- are available at less than $2.00 per pill in most industrialized countries (save the U.S.)? Further, Auxilium has only about 150 sales representatives to sell the drug here at home.  

Read more at YCharts: New ED Drugs: Analysis of Vivus’s Prospects

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.