(By Balachander) Brean Murray, Carret & Co. (BMC) initiated shares of Ventrus Biosciences Inc. (NASDAQ:VTUS) with a "Buy" rating and price target of $30, citing "blockbuster potential" for VEN 309, given its proven efficacy, large target market and the lack of competitive prescription hemorrhoid drugs.
The brokerage is of the view that VEN 309 is well positioned to add value to Ventrus in the near term. "Near-term positive data could enable an acquisition of Ventrus or contribute to the likelihood of successful marketing of the product should Ventrus sell it itself," BMC analyst Jonathan Aschoff wrote in a note.
Aschoff said there are more than 20 million units of OTC products for hemorrhoids sold annually, such as Preparation H, from which VEN 309 could take market share. Therefore, with a price of $300 per prescription ($30-$35 co-pay), two prescriptions filled per year, and with about 1.2 million U.S. patients treated annually, VEN 309 could generate close to $1 billion at peak.
Ventrus is focused on developing drugs for gastrointestinal indications. The company's lead drug candidate, VEN 309, has completed several Phase 2 trials in patients with hemorrhoids, and within weeks, Phase 3 data will be released that we believe will support approval, the brokerage noted.
Ventrus' secondary product, VEN 307, has already succeeded in a European Phase 3 trial, and BMC looks forward to the pivotal Phase 3 trial in the U.S. beginning enrollment in 2H12. Aschoff believes that the safety profile of VEN 307, which is very similar to placebo, is a competitive advantage for Ventrus.
The analyst believes that Ventrus is busy enough with its current and future Phase 3 trials for VEN 309 and VEN 307, and that those combined markets are sizeable and occupying enough for VEN 308 to remain on the sidelines for a while.
The stock, which has been trading in the 52-week range of $6.64 to $16.30, added 4.68 percent to trade at $10.51 on Thursday.