Vivus Inc. (VVUS) recently announced its intention to divest its erectile dysfunction treatment drug, MUSE, to Meda AB for $23.5 million. This transaction would fetch an upfront payment of $22 million and a milestone payment of $1.5 million. Vivus will receive the milestone payment on the basis of future sales of MUSE.
Under the terms of the deal, Meda will take over all the assets pertaining to MUSE, including the drug’s US and ex-US patents, existing inventory and the manufacturing facility in Lakewood, New Jersey. Vivus is expected to retain all liabilities related to the MUSE pre-closing operations.
Vivus expects the transaction to complete by November 15. We are pleased with the company’s plan to divest MUSE as it will help Vivus focus on the commercialization of Qnexa, which is currently under US Food and Drug Administration (FDA) review for the treatment of obesity. The company should also be able to focus on the development of avanafil for erectile dysfunction.
Before this deal, Vivus had an agreement with Meda for the marketing and distribution of MUSE in certain European countries. It used to receive milestone payments from Meda on the sales of MUSE in these markets.
We currently have a Neutral recommendation on Vivus. The company recently reported positive data on Qnexa. However, the drug received a negative recommendation from an FDA advisory panel. We expect investor focus to remain on the FDA’s decision on Qnexa’s approvability, which is expected by October 28.
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