Ventrus Struggles to Reassure Street After Loss of Hemorrhoid Drug

7/3/12Follow @arleneweintraub

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asks for more data after it reviews that first trial, the company will be ready, Ellison says. “Ideally we’ll have no more than a half-year delay if the FDA needs to see another study,” he says.

Still, the market opportunity for diltiazem pales in comparison to that of the hemorrhoid treatment. Jason Gerberry, an analyst for Leerink Swann, estimates the drug could be bringing in only about $42 million in annual sales by 2019. That’s why Gerberry dropped his price target on the stock from $24 to $9 in a June 25 report.

One thing Ventrus has going for it is a strong cash position. The company raised $17 million in its IPO, and another $45 million in a secondary offering. “Unlike most situations where the lead program blows up, we have enough cash to take [diltiazem] all the way through approval,” Ellison says. “That’s true even if we don’t file until the second study is completed.”

Ventrus, however, does not have sufficient cash to fully develop its other product, a gel called phenylephrine to treat fecal incontinence associated with certain surgical procedures. The company is in mid-stage trials of the initial formulation, Ellison says, but its scientists are trying to develop a second formulation that would not only improve the dosing, but would also extend the product’s patent beyond its current 2017 expiration date. “That work is very inexpensive,” Ellison says, “but we don’t have the money to launch a clinical trial program.” He says Ventrus will continue to work on improving the drug, and then determine the best path forward for it.

As for the hemorrhoid product, Ellison says Ventrus is doing a lot of analysis to try to figure out why it performed well in mid-stage trials but failed the all-important pivotal study. That work will include parsing out the specific characteristics of the patients to see if there is some sub-set of people who might do well on the drug. “There may be something there, if not for us, than for others” who may want to consider further development, Ellison says.

Investors hoping for a sign that they should get back into Ventrus’s stock will have to wait a few months. Ellison says he’ll be ready to talk about the company’s meeting with the FDA in late September or early October. Only then will it become clear whether Ventrus’s No. 2 drug candidate will be enough to at least partly make up for what might have been. “There were a lot of investors that were in our stock because they were looking at the hemorrhoid opportunity,” Ellison says. “Their reaction to this is understandable.”

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