Another Reason to Get Excited About VIVUS

VIVUS (NAS: VVUS) said Friday that the Food and Drug Administration approved its new erectile-dysfunction drug, Stendra. If ever there was a me-too drug, Stendra is it. The drug targets the same protein, PDE5, as Pfizer's (NYS: PFE) Viagra, Eli Lilly's (NYS: LLY) Cialis, and Levitra from GlaxoSmithKline (NYS: GSK) , Bayer, and Merck (NYS: MRK) .

If the market is large enough, it's reasonable to go after the same indication in a different way. Forest Labs' Bystolic, for instance, was the 19th beta blocker on the market.

Stendra faces two challenges. Obviously, it has to differentiate itself from the other PDE5 drugs. The drug works faster than the other drugs, in as little as 15 minutes, which on the surface, would seem to be a substantial benefit. But 15 minutes still isn't spontaneous; it still requires some planning. For men who don't want to have to worry about when they'll get lucky, there's a daily version of Cialis.

Probably of bigger concern is the impending generic versions of the erectile-dysfunction drugs starting in 2016. That doesn't give Stendra much time to get a foothold before cheap generics will indirectly affect sales.

VIVUS is looking for a marketing partner to help sell the drug. Even with the challenges, Stendra is probably worth something to a large pharma. Marketing drugs to the masses is their thing.

The biotech also has an obesity drug, Qnexa, that's under review with the FDA. Two big-market drugs would make for a good acquisition, as opposed to a licensing deal, but with the Qnexa decision delayed, I doubt any pharma is going to make that move before the FDA decision. A Qnexa approval seems likely, but it isn't guaranteed.

Unless VIVUS wants to delay Stendra's launch in hopes of finding a buyer if Qnexa is approved in July, it'll have to make a licensing deal now. Of course, being a me-too drug, maybe VIVUS will follow in the same footsteps as ICOS, which was taken out by its partner Lilly to gain full rights to Cialis.

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At the time this article was published Fool contributorBrian Orelliholds no position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of GlaxoSmithKline and Pfizer. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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