V1, its a difficult question, but several very well informed people (doctors and others) have been discussing this topic on the VVUS thread for a few months now. I would look especially at the posts of Zebra, Tuna Albugenea and BigNYK3.
There is a good bit of conflicting info and opinions. I have been following the discussion closely and am most partial to Zebra's posts and position. Below is one of his posts. It is true that many will prefer an oral Viagra to a transurethral MUSE if all things are equal. However, it is not clear that all things are equal. It seems that the VVUS product was tested on subjects who were unable to get any sort of erections, whereas Viagra was only tested on those able to get partial erections. Also there is concern that since Viagra is systemically rather than locally active, there is a much greater chance for side effects, and in fact some visual distortions have already been noted.
Also MUSE just received approval in England and will likely soon be approved for the rest of Europe, greatly enlarging its market. Really, though, it seems that the ED (erectile dysfunction) market is just beginning to be tapped--perhaps as few as 10% of potential patients are seeking treatment due to the embarrassing nature of the problem. Many (myself included) believe that oral treatments like Viagra will vastly enlarge the market. Many will come into their doctors offices seeking Viagra but will find it does not work for them and they will try MUSE. Or they will find that Viagra works much BETTER in combination with MUSE. The point is that the market is so large that there is more than enough room for both Viagra and MUSE. MUSE has already been approved and both its problems and efficacy well documented. Refills continue to increase. Not so with Viagra. Below is a post from Zebra, an MD. GO to his profile and his posts make the bullish case for VVUS. BTW, VVUS had a nice gain today.
>>Excellent comments in today's posts. I agree that at this time, (because of taxes) until January 1st, there is no reason for anyone to buy VVUS, whether they are short or long. However, in the market, there are always people who jump the gun. If I were short and trying to wait to buy in 1998, I'd be sweating bullets on this one. I agree, it is short covering that will start the Jauary rally for VVUS. And I anticipate it to come as soon as daylight Jan 2. Until then the stock may drop lower. But if ever a company was poised for the January effect.....
Let's look at one of the funny math things about a company that is just about to finish it's fourth quarter of real sales after being a money pit R&D company for so long. When you calculate one year trailing earnings, you have to include the 1996 4th quarter loss of (0.29) to come up with a current 12-month earnings of 0.57 per share. i.e nine month earnings of 0.86 to Sep 30, 1997 plus loss of (0.29) for Q4 1996 equals 0.57. If VVUS has eps of ZERO in the fourth quarter 1997, the twelve month trailing earnings will still rise to 0.86 just by eliminating the one quarter of negative earnings in the sum.
Well, product revenues did not disappear. They just went down 25%. And, don't forget, also included in the fourth quarter will be two milestone payments of 2 mm each which add 0.06 to earnings each. so my guess (I did the math in a post long ago) is that earnings will be 0.20 to 0.24 per share for Q4 which gives us a twelve month trailing eps of 1.06 to 1.10 or a P/E of about 9.2. In other words, VVUS can report the expected lower Q4 earnings and still cut it's p/e almost in half upon the announcement. This will then show up all of a sudden on a lot of simple stock screening programs as a real buy.
So meanwhile I'll hang tight and look for the story to unfold. I agree, the analysts were offended by the CC and this is now a show-me stock. I think it will do it, and do it in the next 30 days.
Zebra
P.S. About the demand: I am still getting new inquiries from established patients who have not brought this up before, partly from embarrassment but partly because they had never heard that there was an effective treatment with no needles, until the talk about Viagra started a month or two ago. You just cannot overestimate the fear factor of needles for many men. The demand will be there, VVUS just has to have the product.
Zebra <<
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