The MUSE that roared...........
I thought this was worth reprinting
Impotence.
The word itself is an accusation of weakness and infirmity.. And even in this “Springer-Montel-Oprahfied” tell-all society, impotence is a problem that has remained secret, and until recently, untreated, except with surgical implants, vacuum devices, and needle injections.
Vivus (NASDAQ - VVUS) received FDA approval in November 1996 to market MUSE for the treatment of impotence. MUSE is a matchstick-sized plastic applicator through which a small dose of the medication Alprostadil is inserted about one inch into the male urethra. In clinical trials about 40% of all men with severe impotence (no erections for three months) had erections sufficient for intercourse using MUSE. The most common side effect was local irritation which increased with the size of the dose.
Vivus began distribution of MUSE in January 1997. In 1997 they sold over eight million MUSE units and received $129 million in product revenues. In all of 1997 the company did not initiate any significant marketing efforts, except for professional education, directed mostly to urologists. The challenge in 1997 was to produce enough MUSE to keep up with the demand. When the company began to build out a 90,000 sq. ft manufacturing and testing facility in New Jersey, it moved a whole production line from the previous leased facility. Due to this transition the amount of usable production fell, and, on December 10, 1997 so did the stock, to it's current trading range of $8 to $15 a share. EPS for 1997 was $1.03 per share. During 1st qtr, 1998 the company purchased 23 million dollars worth of its own stock on the open market.
The FDA has yet to approve the new facility, (but expected in 2nd qtr, 1998) and so, when MUSE was approved for sale in the UK, the shipments had to come from the limited production of the old facility. This dropped gross margins as well as total sales and VVUS produced a loss of $(0.07) per share for 1st qtr 1998. A loss is expected for 2nd qtr as well. MUSE is now approved for sale in the United Kingdom, Argentina, Brazil, South Korea, Switzerland and Sweden. Janssen and Astra are the overseas sales forces.
So much for the facts.....
What everyone really wants to know is, how does MUSE match up against Viagra, the little blue diamond oral pill from Pfizer (NYSE- PFE) approved in March, 1998?
From the studies on effectiveness, it is difficult to say. The trials of Viagra included many men with minimal Erectile Dysfunction (ED, the new term for impotence). In the major study the average man was able to have intercourse “a few times” in the preceding months. The end-point of the Viagra studies was more of an “improvement in erections” such that the FDA officially approved Viagra as an “erection enhancer” rather than a treatment for complete impotence. In the arm of the study where Viagra is quoted as being 80% effective, sugar pills were 50% effective in the same group of men. This is a disorder with a large placebo (sugar pill) response. Even in the MUSE trials with men who had “no erections for several months”, there was a 20% response to placebo, and in the men who had any response to the drug, 65% were able to acheive intercourse at home. So on the effectiveness score, it is hard to say because studies of matched populations were not done. Certainly both drugs are more effective than placebo and the more severe the physical disorder the less effective both are. Since both medicines work on the blood flow they are both more effective in nerve disorders (i.e. spinal cord injuries) than blood vessel problems.
In the side effect arena, there is a significant difference. Alprostadil (MUSE) is nearly completely broken down by local tissue or in the first pass through the lung before it can ever get into the systemic circulation. So local side effects prevail, i.e. irritation on administration or prolonged erections. Only one death associated with MUSE was reported in 1997, and this was in a patient who had used it safely over 100 times prior to his death.
Sildenafil (Viagra) is a systemic drug which is designed to be specific to receptors in the penis. These same receptors exist in the retina of the eye, (causing blue-green vision in a small number of users), and similar receptors are present throughout the body. That is why the concomitant use of nitrates (for blood vessel dilation and the treatment of angina) and Viagra is dangerous and contraindicated. Whether or not the six recent deaths reported are nitrate-Viagra interactions is yet unknown, but the company did reiterate the danger of using these drugs together after the deaths were reported. Also, Viagra is broken down by enzymes in the liver which are inhibited by cimetadine (Tagamet), oral anti-fungal drugs, and, surprisingly, grapefruit juice, and red wine. Therefore the combination of these medications or foods with Viagra may increase the incidence of side effects as they increase the serum concentration of Viagra.
The bottom line in the comparison of MUSE and Viagra has yet to be written. Viagra is now in what is known as Phase IV trials. That is where data is collected about the drug after it is released to the general medical treatment community. From a scientific basis, the recent deaths reported in association with Viagra use prove nothing, any good epidemiologist could tell you that. But in the investment community, where millions of dollars in market cap may disappear overnight because a stock failed to meet “whisper” numbers, perception may mean more than fact to a stock price. Even a “Big-Pharma” company stock may rise or fall on the perception about the best horse in its stable. And there is little doubt that the release of Viagra is more than a new drug, it is a social phenomenon. Any drug that receives this much attention on the positive side, will also receive it on the negative side. To me that will create the opportunity for MUSE and Vivus to shine.
Unbridled enthusiasm often turns to irrational fear.
Disclosure: At the date of this writing, May 26, 1998, I hold a short position in PFE and a long position in VVUS.
Zebra 365
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