Headline: (UPDATE) Shares Of Vivus Drop After CS Boston Issues Downgrade
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NEW YORK -(Dow Jones)- Shares of medical device company Vivus Inc.
dropped Wednesday after a downgrade from CS First Boston.
The downgrade comes a day after drug company Pfizer Inc. said its
impotence drug, the first oral treatment for the condition, would get a
speedy review at the Food and Drug Administration.
Vivus, based in Menlo Park, Calif., makes a male impotence product
called MUSE. The product combines an easy-to-use plastic applicator that
inserts the generic drug alprostadil, an already proven medication. The
product has advantages over painful injections or implants.
But Pfizer has touted its drug, Viagra, as a "breakthrough" and said
it helped improve erections in roughly 80% of those who tried it,
according to assessments from both patients and their partners, the
company has said.
At the close, shares of Vivus (VVUS) were down $3.938, or 12%, at
$28.563 on volume of 5 million. Average daily volume is 1.2 million.
CS First Boston lowered its investment rating on Vivus to "hold" from
"buy." No details were available regarding the downgrade.
Despite the competition, Dain Bosworth's Parice Halbert told
Wednesday's Wall Street Journal California edition that she isn't overly
concerned. She said history shows that drug introductions by major
pharmaceutical houses usually expand the market due to the increase in
overall awareness spurred by their massive marketing. What's more, she
added, MUSE has an advantage in that it is absorbed directly by body
tissue as opposed to being swallowed and having to work through the
digestive system. That approach, she says, has already proved effective
even with severe cases of impotence.
One bull even foresees Vivus soaring nearly fourfold from its current
stock price of around $32.50 by the end of 1998. Other analysts, while
more cautious, still think the stock will increase about 38% in the next
12 months.
MUSE already has momentum to build on. Since its introduction nine
months ago, sales have streaked to more than $100 million. Urologists,
other medical specialists and patients are starting to "flock to the
MUSE solution," said Halbert, who rates the stock a "strong buy." Her
12-month price target is $45.
Moreover, the company is weeks away from making its first big
marketing push. The company is launching a consumer-awareness campaign
about impotence, co-sponsored by the American Foundation for Urologic
Disease. The series of radio, television and print ads, slated to begin
next month, will feature TV star Gavin MacLeod as the spokesman. About
15 million Americans are estimated to have the condition.
Vivus has plans to take MUSE beyond the U.S. The company said it is
in talks to open a new MUSE factory in Ireland. And analysts said Vivus
is on the verge of getting approval for the treatment from British
regulators.
Vivus has already lined up agreements with Astra of Sweden to sell
MUSE throughout Europe, Australia, New Zealand and Central and South
America. Janssen Pharmaceutica International of Switzerland, a
subsidiary of Johnson & Johnson, will market the product in China, the
Pacific Rim (except Japan), Canada and Mexico.
Copyright (c) 1997 Dow Jones & Company, Inc.
All Rights Reserved.
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