Vivus ticks the US Stendra box

With a US alliance signed for the erectile dysfunction treatment Stendra this awkward asset is off Vivus’s hands at last, though to suggest that this shows management’s ability to do a big deal on Qsymia is perhaps stretching credibility too far.

The tie-up also provides a neat distraction for Stendra’s licensee, Auxilium Pharmaceuticals, which recently suffered a three-month delay to the FDA action date for approving its collagen buster Xiaflex in Peyronie’s disease. Vivus’s battered shares rose 9% on Friday; expectations were low, and $30m up front is clearly better than nothing.

The deal confirms that Stendra is not about to become a huge product, but then the market already knew this. Try as Vivus might to make the case for its faster onset of action versus Pfizer’s Viagra and Lilly’s Cialis, this does not get around the economic problem: current erectile dysfunction drugs’ patents have started to expire, and the pricing pressure on a newcomer will be severe.

Moreover, there is a fourth drug – Bayer’s Levitra – that also boasts an onset of action in line with Stendra, and this punches a hole straight through Vivus’s argument of an efficacy advantage. Levitra is by far the worst-selling of the trio of marketed PDE5 inhibitors.

Still, Stendra does have a chance to become a niche product, and this is what the modest terms of the Auxilium deal suggest.

The $30m up front is in line with the €16m ($22m) for which Menarini picked up Europe rights in July (Menarini rides to Vivus’s aid, July 9, 2013). Vivus cites the possibility of the product thus generating $95m of clean profit within a year – additionally comprising €23m from Menarini for initial launches and $15m from Auxilium for US approval for the fast-action claim on the basis of the TA-501 trial.

This might all be small change to Vivus, but it is better than nothing for a drug that the group was never going to launch itself. US and EU approvals had been granted well over a year ago, and with the deals now in place launches should start in January 2014 as inventory is built up.

The erectile dysfunction drug will be promoted by Auxilium’s 150-strong sales force targeting urologists and other specialists. In addition to Xiaflex, which Auxilium already sells for Dupuytren’s contracture, the group has a range of testosterone replacements and sexual health products. Xiaflex now faces a US PDUFA date of December 6 for the additional use of Peyronie’s disease.

Leerink Swann analysts were quick to point to how the Auxilium deal showed Vivus’s new management’s ability to execute, and said this was “a step in the right direction” for potentially licensing Qsymia, its troubled obesity drug. But Qsymia is a totally different kettle of fish, being a primary care drug requiring a big pharma-style marketing effort.

The next catalyst for Vivus’s investors is an update on Qsymia's reimbursement and direct-to-consumer advertising campaign. With drastically reduced consensus sales forecasts and a share price that during a year of biotech fever is down 51%, Vivus desperately needs to turn Qsymia’s fortunes around.

The only way to do this is for a big company to pull the licensing trigger. The Auxilium deal is nice to have, but it does not alter this fact.

To contact the writer of this story email Jacob Plieth in London at [email protected] or follow @JacobEPVantage on Twitter