Vivus Announces Partner For Avanafil

Jul. 9.13 | About: Vivus, Inc. (VVUS)

Vivus (NASDAQ:VVUS) has announced that it has entered into a License and Commercialization Agreement and a Supply Agreement with Menarini and its wholly-owned subsidiary Berlin-Cheme AGBERLIN-CHEMIE to commercialize and promote its erectile dysfunction drug Spedra in dozens of European countries as well as Australia and New Zealand. The drug received U.S. approval last spring and just recently gained a green light in Europe.

The deal brings a much needed cash infusion to Vivus in the form of upfront payments and also encompasses milestone and royalty payments. Vivus will receive up front payments of about $21 million. Overall, in the first year Vivus should see a cash infusion of some $51 million (including the $21 million). In addition, Menarini will reimburse Vivus for payments made to cover certain obligations to Mitsubishi-Tanabe Pharma Company. Other milestone payments could bring the value of the deal up to $102 million plus royalties.

Avanafil will be marketed as Spedra outside the U.S., while stateside the drug is called Stendra. Avanafil is a fast acting erectile dysfunction drug that is reported to work in about 15 minutes. Vivus holds the world-wide commercialization rights to the drug and is currently discussing possible U.S. partnerships.

This is positive news for Vivus that comes at a critical time. The existing Board and management is coming under fire from 9.9% stakeholder First Manhattan in regard to the very modest launch of the anti-obesity drug Qsymia. First Manhattan is seeking to replace the Board and CEO at the shareholder meeting on July 15th.

Commercializing of Avanafil gives Vivus a revenue stream above and beyond what it already had. Qsymia revenue was about $2 million in its first quarter and $4 million in the quarter ended March 31st. I am anticipating revenue to be running toward $6.5 million for the quarter that just ended. The company has some trials to run on Qsymia that will be quite expensive and needs the ability to generate revenues at a higher level than we are currently seeing. A commercial launch of Avanafil should help that situation. A partnership in the U.S. on Stendra could be even richer than the European deal. Stay Tuned.

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