4 Reasons To Buy Ventrus Biosciences - Update

| About: Assembly Biosciences, (ASMB)

I wrote the article titled "4 Reasons To Buy Ventrus Biosciences" on May 21st. On June 25 Ventrus Biosciences (VTUS) reported that its Phase 3, randomized, double-blind, placebo-controlled clinical trial of iferanserin (VEN 309) in patients with hemorrhoidal disease did not meet its endpoints.

While the company intends to analyze the totality of its Phase 3 data further, it believes that current resources would be better allocated toward the planned completion of its VEN 307 (diltiazem cream) development program in anal fissures and the beginning of further development of VEN 308 (topical phenylephrine) in fecal incontinence. Consequently, Ventrus has no immediate plans to continue development of VEN 309, resulting in a reduction in expenses.

With the planned elimination of all VEN 309-related expenses the company believes it is sufficiently capitalized to take VEN 307 through a second Phase 3 study and to approval. The second pivotal Phase 3 trial of VEN 307 in anal fissures is expected to begin in the fourth quarter of 2012 and Ventrus is expected to report data on this trial at late 2013 according to conference call.

Cantor Fitzgerald downgraded Ventrus Biosciences from Buy to Hold with a price target of $5.50 (from $30.00) on June 25th.

Analyst, Irina Rivkind, said,

"Ventrus announced that its pivotal Phase III trial in 603 hemorrhoid patients failed to meet both primary and secondary endpoints. We previously viewed this drug as the key value driver for the company. Management believes that it has sufficient cash to take its second Phase III drug in anal fissures (VEN-307) all the way through to NDA approval and will also start early formulation work in its fecal incontinence drug (VEN-308). We believe that the company will need additional dilutive financing along the way, especially if it plans to build a commercial infrastructure in 2015."

Rivkind said that the company's remaining assets are relatively small. Overall, the Phase III compound for anal fissures (topical diltiazem dosed TID) could reach $75M/year. The alternative is a sale of the company as a potential exit strategy.


I believe the stock could trade at $8-$10 range in the best case scenario after VEN-307 approval sometime in 2014. I do not expect any major near term catalysts from the company before late 2013.

Disclosure: I am long VTUS.