VIVUS, Inc. (VVUS) Shares Up Marginally Post Sanofi Deal

VIVUS Inc.’s (VVUS) shares gained 6% after the company announced that it has inked a licensing and commercialization deal with Sanofi (SNY) for its erectile dysfunction (ED) drug, Stendra (EU trade name: Spedra). However, the share price fell in the following trading sessions. Overall, the shares are up a marginal 0.4% since the announcement.

As per the terms of the deal, Sanofi will undertake the responsibility of obtaining regulatory approval and commercializing the drug in Africa, the Middle East, Turkey, and the Commonwealth of Independent States (CIS) including Russia. In exchange, VIVUS will be eligible to receive upfront payments, regulatory and sales milestone payments of up to $61 million from Sanofi. VIVUS will also receive tiered royalties on net sales of Stendra.

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The Sanofi agreement marks the third deal for Stendra. Earlier, VIVUS had collaborated for the drug with privately-held Italian pharmaceutical company, Menarini (40 European countries, Australia and New Zealand) and Auxilium Pharmaceuticals, Inc. (AUXL). Auxilium possesses the rights to Stendra in the U.S. and Canada.

Our Take

We are positive on the deal with Sanofi, which is in-line with the company’s strategy of finding suitable commercialization partners for Stendra.

VIVUS is also looking for a partner for its obesity drug, Qsymia, which was launched in the U.S. in Sep 2012. We are concerned about the slower-than-expected ramp up in Qsymia sales. Additionally, the competitive nature of the obesity market given the presence of Arena Pharmaceuticals, Inc.’s (ARNA) Belviq among others also keeps us concerned.

The successful commercialization of Qsymia is crucial for the financial performance of VIVUS as it can drive the company to profitability.

VIVUS, a biopharmaceutical company, currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Auxilium carrying a Zacks Rank #2 (Buy).

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