VIVUS Looking to Profit from Obesity and Sexual Dysfunction

by H.S. Ayoub
BioHealthInvestor.com

Unless you have been under a rock, and not under a bed cover, you have probably heard of Pfizer’s (PFE) Viagra and ICOS’s (ICOS) Cialis, the erectile dysfunction blockbuster drugs that have been part of the prime time acts of many comedians. But it is not too late for small investors to jump in on the ground floor for the next line up of blockbuster drugs catering to sexual dysfunction and obesity in both men and women.

VIVUS Inc. (VVUS) is a small biopharmaceutical company focused on the growing need for sexual dysfunction and obesity drugs that have become a regular part of the lives of millions of baby boomers.

Back in 1997, VIVUS was granted marketing approval by the FDA for a novel treatment for erectile dysfunction in men, called MUSE, which is quite an interesting treatment to say the least.

While Viagra and Cialis are oral treatments, MUSE is a pellet smaller than a grain of rice that is administered through the penis! It is thus not surprising that MUSE has not garnered the attention necessary for huge profits.

VIVUS cleverly initiated a clinical program aimed at developing an oral therapy for erectile dysfunction in men, to compete with Viagra and Cialis. Avanafil is currently being readied for phase III clinical trials as an oral treatment for erectile dysfunction.

Previous phase II studies have shown that 84 percent of Avanafil doses resulted in erections, and Avanafil’s 20 minute onset of action was comparable to Sildenafil, the active ingredient in Viagra.

One more very important and potentially lucrative observation was that Avanafil had less effects on blood pressure and heart rate that did Viagra.

But VIVUS is also very aware of the health needs of women. How about Female Sexual Dysfunction, or FSD? Could drugs tailored to FSD be the next round of blockbuster treatments?

According to the American Urological Association about 40 million women in one way or another suffer from FSD in the United States. That could make a very large and lucrative pool of consumers for VIVUS who is tackling the problem with Testosterone MDTS, a transdermal spray that delivers a dose of the hormone through the skin.

Testosterone MDTS is being investigated through late stage clinical trials for the treatment of hypoactive sexual desire disorder (HSDD), a condition in women characterized by low sexual desire.

Just recently VIVUS announced that the FDA had accepted its New Drug Application (NDA) for EvaMist, a transdermal spray treatment for menopause. If accepted for marketability this could at least provide a confidence booster for the spray technology used in Testosterone MDTS.

VIVUS’s true blockbuster potential could rely on Qnexa, a two drug formulation that could potentially supress the apetite and burn fat through a once-a-day tablet! The size of the potential consumer market cannot be over-exaggerated.

Phase II trial results of Qnexa showed an average weight loss of 20 pounds by 24 weeks of treatment. To put this data in perspective, patients taking Sanofi-Aventis’s (SNY) Acomplia lost only about 10 pounds after 52 weeks!

Also, the weight loss did not reach its peak after 24 weeks, which has been shown in studies of other drugs.

VIVUS continues to show lower sales and revenue year after year for the last few years. The company also carries cash of only $26 million and debt of more than $10 million as last reported by Yahoo!Finance. The company burned more than $20 million in cash last fiscal year. For VIVUS to continue the development of its strong pipeline through 2007, and to launch EvaMist following the expected FDA approval, it will eventually need to sell more shares to secure the funding.

If not, then being a small company, with a market cap of less than $200 million and a relatively small cash to debt ratio as compared to many other biotechs, VIVUS could very well end up being acquired by a larger drug company keen on competing with Viagra and Cialis.

2007 looks to be a very promising year for VIVUS either way.

VIVUS is now a BioHealth Investor Stock Pick.

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