Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Drug Deal Can Only Help VIVUS So Much

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

VIVUS (NASDAQ: VVUS  ) has found an Italian to help it out. The biotech announced Tuesday that Menarini has agreed to market VIVUS' erectile dysfunction drug Spedra in more than 40 European countries plus Australia and New Zealand.

The Italian pharma is paying VIVUS about $21 million upfront and another $30 million -- at current exchange rates -- within the first year of the launch. VIVUS is also due undisclosed royalties and potentially another $102 million at current exchange rates in milestones and other payments over the life of the agreement.

Menarini has more of the men's sexual health spectrum covered since it also sells Priligy, a treatment for premature ejaculation. The ability for the company to promote more than one drug to doctors shouldn't be underestimated. Having multiple drugs can help a sales rep get in the door and increases efficiency, which should result in higher profits.

Small key to unlocking value
No doubt, potential sales of Spedra outside the U.S. are important. First-quarter sales of Pfizer's (NYSE: PFE  ) Viagra outside the U.S. were 47% of total Viagra sales. In the first quarter, Eli Lilly (NYSE: LLY  ) actually sold more of its erectile dysfunction drug Cialis outside of the U.S. than inside it.

But Menarini has its work cut out for it. While Spedra is arguably a better drug than Viagra and Cialis because of its earlier onset, Menarini will have to compete with generic versions of Viagra, which Teva Pharmaceuticals recently launched in Europe.

VIVUS also has to find a partner inside the U.S., which might be a little more challenging. Pfizer and Eli Lilly are clearly out as are Bayer and GlaxoSmithKline, which co-market the less-popular Levitra. That doesn't leave too many large pharmas to partner with, and I'm not sure there's a specialty pharma in the U.S. like Menarini that has a large enough primary care physician sales force.

Less important long term
The upfront cash from Menarini and hopefully a marketing partner in the U.S., where it will go by Stendra, will help keep the company afloat. But the VIVUS' long-term success ultimately has a lot more to do with its obesity drug Qsymia than how well its partner for Spedra/Stendra is able to market the drug.

VIVUS should really consider following its model for Spendra and find a marketing partner for Qsymia, perhaps rolling it into a deal for the U.S. rights to Stendra. It's true that the company would have to give up quite a bit of upside, but a partner could potentially make up for that through increasing sales by giving Qsymia substantially more promotion than VIVUS' tiny sale force is able to muster.

VIVUS isn't the only one that should be thinking long term; you should be, too. The Motley Fool has a free report "3 Stocks That Will Help You Retire Rich" that not only shares stocks that could help you build long-term wealth, but also winning strategies that every investor should know. Click here to grab your free copy today.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2531002, ~/Articles/ArticleHandler.aspx, 9/30/2016 3:08:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,336.98 193.53 1.07%
S&P 500 2,172.87 21.74 1.01%
NASD 5,320.75 51.59 0.98%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 2:49 PM
VVUS $1.14 Up +0.01 +0.88%
VIVUS CAPS Rating: **
GSK $43.13 Up +0.23 +0.54%
GlaxoSmithKline CAPS Rating: ***
LLY $80.46 Up +0.72 +0.90%
Eli Lilly and Co. CAPS Rating: ***
PFE $33.96 Up +0.64 +1.92%
Pfizer CAPS Rating: ****
TEVA $46.13 Down -0.16 -0.35%
Teva Pharmaceutica… CAPS Rating: ****