VIVUS, Inc. (VVUS) recently announced that it has entered into a license and commercialization in addition to a supply agreement for its erectile dysfunction (ED) drug, Spedra, with privately-held Italian pharmaceutical company, Menarini. Investors reacted positively to the news.
As per the terms of the agreement, Menarini will get the rights to Spedra in more than 40 European countries, apart from Australia and New Zealand. In exchange VIVUS will get an upfront payment of approximately $21 million and approximately $30 million in the first year. VIVUS will also be eligible to receive milestone and other payments of approximately $102 million, depending upon certain pre-specified criteria. Additionally, the company will get royalties on net sales of Spedra from Menarini.
VIVUS and Menarini also entered into a supply agreement for Spedra, according to which VIVUS will supply the product to the latter.
The partnership on Spedra, a phosphodiesterase type 5 (PDE5) inhibitor, will not only boost VIVUS' balance sheet but also go a long way in removing uncertainties related to the drug's launch in those territories.
We remind investors that the European Commission (EC) cleared Spedra, for ED, in the EU in Jun 2013. The approval did not come as a surprise as, in Apr 2013, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) recommended the approval of the drug.
The approval came on the basis of promising data from three phase III trials, REVIVE, REVIVE-Diabetes and REVIVE-RP, and a year-long safety study.
We note that the US Food and Drug Administration (FDA) approved the drug under the trade name Stendra for ED in April last year. VIVUS is looking for a partner in the US to market the drug.
We note that a few days back VIVUS announced encouraging data from a multi-center, placebo-controlled study (TA-501) evaluating the efficacy of Stendra in men suffering from ED.
The study enrolled 440 patients with mi! ld-to-severe ED with or without diabetes. Data from the study revealed that on an average Stendra was effective after 10 minutes and 12 minutes of taking the 200 mg and 100 mg formulation of the drug, respectively.
According to the company, ED therapies recorded combined sales of over $5.5 billion in 2012. The ED market is expected to grow further in the coming years.
Currently approved PDE5 inhibitors including Pfizer Inc.'s (PFE) Viagra and Eli Lilly and Company's (LLY) Cialis are recommended for ingestion one to two hours prior to sexual activity or daily. We believe Stendra's fast action could help the drug gain share once launched.
VIVUS currently carries a Zacks Rank #3 (Hold). Companies that currently look attractive include Santarus, Inc. (SNTS) with a Zacks Rank #1 (Strong Buy).
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