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Panic Could Cost Investors Lots Of Money With Ventrus Bio

|Includes: Assembly Biosciences, Inc. (ASMB)

I have noticed in my investing career when I have panicked and bought or sold stocks a lot of times it ended up being a mistake. I believe that is the case with Ventrus Biosciences.

In its second Phase III results the company reported the following data:

  • VEN 307 efficacy as expected; placebo effect greater than anticipated, resulting in no significant difference between treatments
  • Data demonstrate an excellent safety profile
  • Company plans to request pre-NDA meeting with FDA to determine next steps

The placebo effect being greater than anticipated caused the stock price to tank and many shareholders exiting. Therein lies the panic!

Lets take a step back and take a closer look at Ventrus Biosciences and the positives it has going for it.

First, its first Phase III result was a success:

In the first pivotal Phase 3 trial, the diltiazem 2% treatment arm demonstrated a statistically significant improvement compared to placebo in the primary endpoint of average of worst anal pain associated with or following defecation. The mean of worst AF-related pain score at baseline was 6.21 for diltiazem 2% and 6.38 for placebo, decreasing to 3.88 (-2.33 difference) and 4.35 (-2.03 difference) respectively (means not adjusted for baseline score).

Second, the data in both studies demonstrated an excellent safety profile. Being in the biotech space for over 7 years as an investor if a stock is unsafe that usually spells disaster with the FDA panel. That is not the case for Ventrus Biosciences' Dilazem cream.

Third, the only product approved for anal fisures is Rectiv and this has limited efficacy along with side effects. Dilazem cream is going into a market with limited choices for physiciains and patients and this should work in its favor.

Fourth,the company plans to request a pre-NDA meeting with the FDA to determine next steps. I believe this point is overlooked, and is a very important one. The FDA may very well allow Ventrus to eligible for the FDA's 505 (b) 2 registration pathway.

Finally, the Baker Brothers have taken a 10% stake in Ventrus Biosciences and this is a very bullish sign. Biotech investors know if you are going to follow smart money the Baker Brothers are at the top of list.

So, draw your own conclusions about Ventrus Biosciences and I will leave you with this. For a stock that is at its all time lows weigh the downside risk with the potential upside profit?

Disclosure: I am long VTUS.