Markets

Why VIVUS, Inc. Is Today's Best Biotech Stock

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of VIVUS , a biopharmaceutical company focused on developing drugs to treat obesity, diabetes, and sexual health, rocketed higher by as much as 18% after the company announced the supplemental new drug approval by the Food and Drug Administration for erectile dysfunction drug Stendra.

So what: Developed by Auxilium Pharmaceuticals and VIVUS, Stendra was originally approved in 2012. Today's sNDA allows Stendra to be taken as early as 15 minutes prior to sexual activity with or without food, and with moderate alcohol consumption. Relative to the placebo in studies, Stendra helped men achieve an erection in as quickly as 15 minutes, making it a fast-acting erectile dysfunction option. Prior ED medications required patients to take a drug at a minimum of 30 minutes prior to sexual activity, which implies that the improved reaction time of the drug could make it a popular choice by physicians and patients.

Auxilium has exclusive marketing rights to Stendra within the U.S. and Canada, while VIVUS owns the worldwide development and commercial rights for Stendra, with the exception of select Asian countries.

Now what: Obviously, seeing the FDA expand Stendra's label is good news for VIVUS, as it could help expand the company's revenue potential. On the other hand, it's also worth keeping in mind that the ED market is highly competitive (a number of other ED drugs are in clinical development), so it's not as if Stendra/Spedra (as it's known overseas) is going to have the market all to itself.

We also can't have a discussion of VIVUS without discussing the massive disappointment that weight control management drug Qsymia has been. Though Qsymia offered intriguing weight-loss percentages in clinical trials relative to Arena Pharmaceuticals ' Belviq and Orexigen Therapeutics ' Contrave, both Belviq and Contrave arguably have a more favorable safety profile relative to Qsymia -- and both physicians and patients appear to be shying away from Qsymia; there were just $11 million in Qsymia product sales last quarter. Having been on pharmacy shelves for two years and originally boasting a peak sales potential north of $1 billion, Qsymia has largely been a disappointment.

As of now, VIVUS appears to be nothing more than a highly speculative investment. Though it has $104 million in net cash, VIVUS' clinical studies and marketing costs for Qsymia are expected to cause it to burn around $100 million annually through 2015. That is enough reason for me to stay far away from this stock for the time being.

Stendra may offer plenty of potential for VIVUS, but it could ultimately be left in the dust by this revolutionary new technology!

The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns, you will need The Motley Fool's new free report on the dream team responsible for this game-changing blockbuster. CLICK HERE NOW .

The article Why VIVUS, Inc. Is Today's Best Biotech Stock originally appeared on Fool.com.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy .

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ARNA VVUS

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More