VIVUS Peters Out on MUSE for Erectile Dysfunction (VVUS, PFE, LLY)

October 4, 2010 · Filed Under erectile dysfunction, Financial, M&A 

When you hear the term ‘erectile dysfunction’ tied to the world of drugs and pharmaceuticals, chances are that the drugs that come to mind are VIAGRA and CIALIS.  After all, Pfizer Inc. (NYSE: PFE) and Eli Lilly & Co. (NYSE: LLY) have spent billions combined and had untold efforts getting those ED drugs to be your first choice.  VIAGRA broke records, then came ‘the weekender’ in Cialis.

But there is a second tier of ED treatments that never really caught on in the same manner.  VIVUS, Inc. (NASDAQ: VVUS) has had its MUSE treatment on the market since 1997 and it has decided to sell off MUSE.

The company has entered into an asset purchase agreement with Meda for MUSE where Meda will acquire the MUSE assets (including the United States and foreign MUSE patents, existing inventory and the manufacturing facility located in Lakewood, New Jersey).  Existing VIVUS employees that are MUSE dedicated are expected to join Meda and VIVUS will retain all of the liabilities associated with the pre-closing operations of the MUSE business.

VIVUS has already been business partners with Meda in Europe for MUSE since 2000, so it seems a natural fit here on the surface.  VIVUS now plans to focus its efforts on the commercialization of QNEXA as a treatment against obesity and the development of avanafil for erectile dysfunction.

The terms of the deal call for an acquisition price of up to $23.5 million.  the deal terms are for a cash payment of $22 million and VIVUS is eligible to receive a one-time milestone payment of $1.5 million based on future sales of MUSE.

MUSE has been on the market since 1997 as the first minimally invasive therapy for erectile dysfunction approved by the FDA. The drug is delivered locally to the erectile tissues and was meant to minimize chances of systemic interactions with other drugs or diseases.

VIVUS still has Qnexa and avanafil for erectile dysfunction under development stages today.  Shareholders seem to not care about the transaction.  VIVUS shares are down 0.45% at $6.55 in light volume trading.

JON C. OGG

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