4 Reasons To Buy Ventrus Biosciences

| About: Assembly Biosciences, (ASMB)

Ventrus Biosciences (VTUS) is a specialty pharmaceutical company focused on the late-stage clinical development of gastrointestinal products in areas of unmet need, specifically hemorrhoids, anal fissures, and fecal incontinence.

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I see at least 4 reasons to buy the stock

1. Promising pipeline

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Iferanserin ointment (VEN 309)

For the topical treatment of symptomatic hemorrhoids

Hemorrhoids, which are characterized by the inflammation and swelling of veins around the anus or lower rectum, can cause bleeding, itching, pain and difficulty defecating. Based on a report by the National Institute of Diabetes and Digestive Kidney Diseases, the company estimates that symptomatic hemorrhoids currently affect approximately 12.5 million adults in the U.S. Despite such a high prevalence, the company is not aware of any FDA-approved prescription drugs for the treatment of hemorrhoids in the U.S. Iferanserin has highly selective, antagonistic activity against peripheral 5-HT2A receptors involved in clotting and the contraction of arteries and veins, two events believed to be associated with hemorrhoid formation. By limiting 5-HT2A receptor activity, VEN 309 improves the flow of blood out of the dilated veins that comprise the hemorrhoid, thereby reducing bleeding, itchiness and pain. The company believes that the potential for side effects is likely to be limited because iferanserin is topically applied and iferanserin does not enter the brain to affect 5HT2 CNS receptors at the exposures seen with topical application. In five of seven clinical trials, iferanserin ointment significantly improved and in many cases eliminated the pain, bleeding and itching versus placebo ointment with no serious adverse effects judged to be related to inferanserin. As a result, the company believes VEN 309 to be more effective and/or less invasive than currently available conventional hemorrhoid topical therapies and more attractive than surgical procedures, which are the only currently validated treatment options.

Diltiazem cream (VEN 307)

A topical treatment for the relief of pain associated with anal fissures.

Anal fissures are small tears or cuts in the skin that lines the anus. They can be extremely painful, cause bleeding and often require surgery, which itself can have unsatisfactory outcomes. The company estimates that there are currently up to 4.3 million cases in the U.S. At present, the company is not aware of any FDA-approved drugs for the treatment of pain associated with anal fissures. Diltiazem cream, however, is currently used as the preferred treatment by many gastroenterologists across the U.S. in a version that must be specially mixed, or compounded, for each patient in the pharmacy. When applied topically for the treatment of anal fissures, diltiazem, a drug that has been used for decades for hypertension and angina, dilates the blood vessels supplying the region, reduces anal sphincter tone, and thereby substantially decreases pain. In the majority of multiple clinical trials conducted against placebo or topical nitroglycerin, another commonly used but not FDA-approved treatment, topical nitroglycerin, diltiazem cream significantly reduced the pain associated with anal fissures. Applied topically in the company's proprietary formulation, diltiazem yields lower blood levels, at less than one-tenth the amount of the lowest dose used for cardiovascular treatment and yet has a considerably greater effect on sphincter tone than diltiazem taken orally. If VEN 307 is approved, the company believes they have the potential to capture immediate market share due to the familiarity of gastroenterologists with the current use of diltiazem to treat anal fissures, and its ease of prescription as a pre-formulated FDA-approved product, with no need for compounding necessary at the pharmacy. The company has licensed the exclusive North American rights to VEN 307 for the topical treatment of anal fissures from S.L.A. Pharma AG, who began a Phase III clinical trial in the E.U. in November 2010.

Phenylephrine gel (VEN 308)

For the treatment of fecal incontinence associated with ileal pouch anal anastomosis, or IPAA, an FDA orphan indication.

Ileal pouch anal anastomosis is a surgical procedure used as part of a colectomy, which is a treatment for patients with ulcerative colitis. Fecal incontinence resulting from dysfunctional sphincter tone is a common consequence of this procedure. The company estimates that approximately seven million people currently suffer from fecal incontinence. The company is not aware of any FDA-approved drugs for fecal incontinence. Currently, there are few options available to treat this disorder. Phenylephrine has been used by millions of patients as a common ingredient of cough and cold medications. Topical phenylephrine significantly (and in some patients, dramatically) improved patient bowel control. In multiple clinical trials with patients suffering from IPAA associated fecal incontinence. Applied topically, phenylephrine gel increases anal sphincter tone, thereby improving fecal incontinence in patients where sphincter tone is the major cause of their symptoms (such as in the case of post-IPAA surgery). The company has licensed the exclusive North American rights for VEN 308 as a topical treatment for fecal incontinence from S.L.A Pharma.

2. Phase III data expected in late June or early July 2012

In April, Ventrus announced completion of patient enrollment and randomization in its Phase III, randomized, double-blind, placebo-controlled clinical trial of iferanserin (VEN 309) in patients with grade 1-3 hemorrhoids. Consistent with the protocol for this trial, 604 patients have been randomized to one of three twice daily treatment groups: 7 days of active treatment followed by 7 days of placebo, 14 days of active treatment, or 14 days of placebo treatment. Data from the study are anticipated to be available in late June or early July 2012.

3. Enough cash to last until at least until third quarter of 2013.

Ventrus ended the first quarter of 2012 with $31.1 million in cash and cash equivalents and no debt. The company believes that their existing cash and cash equivalents at March 31, 2012, will be sufficient to enable them to fund their projected operating expenses and capital expenditure requirements into the third quarter of 2013. The company filed a prospectus to sell 948,378 shares of common stock at May 17th.

4. Two new analyst recommendations

05-Apr-12 Initiated Cantor Fitzgerald Buy $29
04-Apr-12 Initiated William Blair Outperform -

Cantor Fitzgerald and William Blair initiated with buy recommendations.


I believe the current price is a good entry point for the stock. The nearest catalyst will be the Phase III data expected in late June or early July. I believe this stock could see a price of $15 after positive Phase III data.

Disclosure: I am long VTUS.

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