Vivus Inc. is raising $21.25 million in a public offering to fund clinical trials for four product candidates in sexual dysfunction.

The Mountain View, Calif.-based company agreed to sell 6.25 million shares of common stock at $3.40 per share, while granting underwriters a 30-day option to purchase an additional 937,500 shares. New York-based SG Cowen & Co. LLC is acting as the lead manager for the proposed offering, with Wachovia Capital Markets LLC, of Baltimore, acting as co-manager.

When announcing its intended public offering last month, the company anticipated selling 7.5 million shares of stock. If underwriters exercise the overallotment option, the company would sell a total of 7.2 million shares. With overallotments, Vivus could generate gross proceeds totaling $24.4 million

The company's shares (NASDAQ:VVUS) lost 51 cents Thursday - about 13.8 percent - to close at $3.20. When contacted by BioWorld Today, Vivus declined comment due to SEC-imposed quite-period rules.

Vivus, which focuses on products to restore sexual function in men and women, has one marketed product, Muse, for erectile dysfunction, as well as four products in late-stage clinical trials: two aimed at female sexual dysfunction, one for menopause and one for erectile dysfunction.

A topical alprostadil product, Alista is in Phase III development in female sexual arousal disorder. The product is designed to improve sexual function by increasing blood flow to the genital tissues. Vivus began enrolling patients in September, specifically seeking women who have had hysterectomies, and hopes to complete enrollment sometime this year.

The company reported results of a Phase II trial in premenopausal women last year that demonstrated the product's safety and efficacy. Data presented at the annual meeting of the International Society for the Study of Women's Sexual Health in Atlanta showed that treatment with Alista significantly increased the number of successful and satisfactory sexual events by 48 percent over placebo (p<0.021) in the 25 women who completed at least six doses each of Alista and placebo.

Vivus said a second product, a spray version of testosterone delivered using its MDTS system, completed Phase II development in hypoactive sexual desire disorder, or low sexual desire in women. The company reported in February that data from the 28-week, 261-patient study showed that MDTS significantly increased the number of satisfactory sexual events, compared to placebo.

The MDTS technology was licensed from Acrux Ltd., of Melbourne, Australia, which previously had conducted Phase I studies demonstrating the product's ability to deliver testosterone with the MDTS system, providing sustained delivery over a 24-hour period.

Vivus initiated in December a Phase III trial of Evamist to treat vasomotor symptoms associated with menopause. The study will enroll up to 500 patients and seek to determine whether Evamist, a low-dose estrogen-only treatment designed as a transdermal spray, can reduce the frequency and severity of vasomotor symptoms. Vivus said it hopes to complete trial enrollment in 2005.

The company anticipates announcing results this year for a Phase II trial of its erectile dysfunction product, avanafil, an orally administered PDE5 inhibitor. The 298-patient study was designed to evaluate safety and efficacy and different dosage levels, while helping researchers determine dosing parameters for a Phase III trial. Previous studies have reported that avanafil demonstrated a rapid onset of action, as well as a half-life of 60 to 90 minutes.

Vivus reported a net loss of $887,000, or 2 cents per share, for the quarter ended Dec. 31. The company recorded a net loss of about $19.6 million for the year. Vivus attributed the loss to higher costs associated with clinical trials, as well as declining sales for its transurethrally administered Muse product due to an increasingly competitive market following the approval of several PDE5 inhibitors during the past several years, including Viagra (Pfizer Inc.), Cialis (Lilly ICOS LLC) and Levitra (Bayer AG, GlaxoSmithKline plc).

Fourth-quarter revenues totaled $10.1 million, and full-year revenues for 2004 were $19.6 million. Vivus said in its quarterly report that it anticipates further decline in Muse sales for 2005.

As of Dec. 31, the company had about $29.8 million in cash, cash equivalents and marketable securities.