The FDA has proposed two changes to Ventrus Biosciences' Phase 3 trial design for their drug iferanserin cream for hemorrhoids. First, they proposed modifying the primary endpoint. Second, they now propose adding a third treatment arm involving application of the cream for 7 days followed by a placebo for 7 days. This reduces the overall treatment duration. The analyst believes these changes could improve the likelihood of success in the trials and increase the commercial potential of iferanserin cream by making it suitable for shorter-term treatment of less severe hemorrhoid cases. They therefore increase their price target for Ventrus stock from $12 to $25 per share.

1. Ventrus Biosciences Inc (VTUS)
®
RAISING TARGET PRICE Michael J Higgins
212-430-1784
mhiggins@rodm.com
LIFE SCIENCES
May 3, 2011 Market Outperform / Aggressive Risk
FDA’s agrees on iferanserin's endpoints; Raises our price target from $12 to $25.
MARKET DATA 5/2/2011 Like a blowout Super Bowl, the FDA may not want to stick around
Price $17.00 for the second half. After the close yesterday, Ventrus announced that
Exchange NASDAQ the FDA determined that a seven day treatment arm should be included
Target Price $25.00 in the previous plans to dose the company’s novel 0.5% iferanserin
52 Wk Hi - Low $17.51 - $5.75 cream for fourteen days in a placebo-controlled Phase 3 trial. Given that
Market Cap(MM) $122.2 the iferanserin cream has shown statistical efficacy in three days, it
EV(MM) $109.5 appears that the FDA would like to see if this intra-anal cream can work
Shares Out (MM) 7.2 when dosed for seven days instead of fourteen days. Similar to the
Avg. Daily Vol 46,032 FDA’s proposal earlier this year, we see this proposal as one which
Short Interest 33,210
improves the value of this program. Specifically, if the seven day arm
BALANCE SHEET METRICS becomes the recommended labeling it not only increases iferanserin’s
Cash (MM) $14.6
pricing power but gathers increased revenues from the patients that
LTD (MM) $0.0 keep applying the intra-anal cream for more than seven days. To be
Debt/Capital NA clear, we expect the company will price the product for its clinical benefit,
Cash/Share $2.16 not based on a pre-determined CGS ratio.
Book Value(MM) NA
Book Value/Share $1.72
No change to “game time”… results are expected in less than 12
EARNINGS DATA ($) months. We recall that when the S-1 was filed in late 2010 that
FY - Dec 2010A 2011E 2012E management had mentioned an increase in clinical site requests for
Q1 (Mar) -- (0.36) -- inclusion in the iferanserin Phase 3 trial. Investors should recall that
Q2 (Jun) -- (0.47) -- there are roughly four million physician visits annually for hemorrhoid
Q3 (Sep) -- (0.42) -- therapy despite no FDA approved product… which translates to pent-up
Q4 (Dec) -- (0.44) -- physicians and patient demand. Therefore, we believe management will
Full Year EPS (2.13) (1.69) (1.88) have little trouble opening up more sites to accommodate the 50%
Revenue (MM) 0.0 0.0 0.0 increase in the number of patients to enroll in this third arm. We estimate
the cost at $2 to $3 million more, with cash running into Q212 instead of
VALUATION METRICS Q312. While Ventrus is conservative with their capital (burning <$1
Price/Earnings NM NM NM million per month in 2011), we believe investors are primarily focused on
EV/Revenue the value for Ventrus’ clinical stage assets, including their revenue
Y/Y EPS Growth 108.8% NM 11.2% potential and the clinical/regulatory risk in reaching the market. While the
fourteen day arm is more likely to demonstrate a clinical benefit over the
INDICES seven day arm, we believe management will only need to take the
DJIA 12,807.4 fourteen day arm forward to the confirmatory Phase 3 trial (scheduled to
SP-500 1,361.2 start 2H12), which keeps the remaining $20 million budget untouched
NASDAQ 2,404.2 and on track.
NBI 1,124.0
1 Year Price History
We maintain our Market Outperform rating and increase our Price
18 Target from $12 to $25. As noted in our initiation report, we had
15
12 attributed a 40% discount rate in reaching our price target to account for
9
6
the “first to NDA” assets that supported our price target. With the FDA
Q3 Q1 Q2
3 agreeing to “the definition of the primary and secondary endpoints that
2011
0.25 had been proposed and with the basic design elements of the study”,
0.2
0.15
0.1
along with the improved risk profile from these two proposed trial design
0.05
0
changes, we believe it is appropriate to reduce the risk in the company
Created by BlueMatrix
reaching our financial projections from 40% to 35%. We continue to
model a 22.5% royalty rate on iferanserin and diltiazem sales. On
estimated 2017 royalty revenues of $90 million producing a diluted EPS
forecast of $4.27 we place a PE of 35x to account for the growth rate
during that period to reach our $25.00 price target.
For definitions and the distribution of analyst ratings, and other disclosures, please refer to pages 9 - 10 of this report.

2. Ventrus Biosciences Inc May 3, 2011
FDA has offered two notable proposals this year.
The current management team has been dutifully meeting with the FDA regarding the Phase 3 trial
design in anticipation of starting the first Phase 3 trial around mid-­year 2011. Since the beginning of the
th
year, the company has offered clarity regarding the ongoing discussions with the FDA. On March 18 the
company reported that the FDA has proposed a change in the definition of the Primary endpoint. From
nsecutive days, the FDA proposed the endpoints noted
in Exhibit 1. Using the 121 patient Phase 2/3 study conducted in Germany on Grade I to III patients by the
original sponsor, the chance that the upcoming Phase 3 trials would succeed increased, as the p-­value
changed from p<0.01 to p<0.0001 as the primary endpoints changed. Yesterday, the company
announced that the FDA has proposed adding a third arm to the trial, one which includes patients being
dosed for seven days with active drug and seven days with a placebo cream (see Exhibit 1 again). While
there is no German data to leverage for insights into how this design change could impact the outcome of
the upcoming Phase 3 trials, we can speculate that lower dosing can translate to lower efficacy. Given the
p-­value of 0.0001 for the 14 day endpoint (57% versus 20%, almost a 3x difference) and the greater
separation of the curves at day seven than at day 14, we believe Ventrus has breathing room to reach
this primary endpoint at seven days (see Exhibits 4, 5 & 6). As outlined in our February initiation report we
believe the safety profile of this acute dosed, topical 5HT-­3 cream with low bioavailability will be excellent.
e should be low.
Exhibit 1
Primary: Proportion of patients with cessation of bleeding by the end of Day 7 that persists for the remainder of the
treatment period (through Day 14);; and
Key Secondary: Proportion of patients with cessation of pain and/or itching by the end of Day 7 that persists for the
remainder of the treatment period (through Day 14).
Arm 1: placebo ointment twice daily intra-­anally for 2 weeks;;
Arm 2: Iferanserin ointment twice daily for 2 weeks;; and
Arm 3: Iferanserin ointment twice daily for 1 week followed by placebo ointment twice daily for 1 week
Sources: Ventrus Biosciences, Inc and Rodman & Renshaw estimates.
During the development stage, pricing is elastic
We expect Ventrus will price iferanserin cream based on the outcome of the course of therapy and will in
no way be impacted by which study duration will move ahead into the second Phase 3 trial. So, if the one
week arm is equally or more effective than the two week arm we expect the one week arm to get clinical
and regulatory green light to move ahead. This would not cut our pricing assumptions in half. On the
contrary, a shorter treatment that demonstrates some residual improvement with continued dosing could
cause us to add a row in our models to account for those patients taking more than one week of dosing.
For example, if results suggest that one week dosing is the preferred regimen yet a third of patients
appear to benefit from another week, or two, we would increase our revenue estimates by a third or two-­
thirds.
th
This trial design change reminds us of the March 18 announcement in which the clinical
endpoints added value to VTUS. Here, the one week arm not only offers higher annual revenues for the
one-­time upfront cost of a 200 patient 14 day arm but we would expect the one week dosing would
rin cream. As noted in Exhibit 2, we expect
hemorrhoid patients that are more sensitive to compliance factors than the more severe patients. Seven
day therapy not only reduces any safety risk, but the efficacy drop may be overcome by the increased
should be scoring in the years ahead.
RODMAN & RENSHAW EQUITY RESEARCH 2

3. Ventrus Biosciences Inc May 3, 2011
Exhibit 2: Peak iferanserin revenue estimate
F our G rades of hem orrhoids I II III IV T o ta l
E s tim ated s hare of 4.2 m illion, by G rade 40% 30% 20% 10% na
E s tim ated perc ent on iferans erin, by G rade 15% 40% 80% 90% 43%
N um ber on iferans erin (in m illions ) 0.252 0.504 0.672 0.378 1.806
A t $300/y ear, projec ted iferans erin revenues $76 $151 $202 $113 $542
Source: Rodman & Renshaw estimates
We believe the company and the FDA need to agree on the statistical methods underpinning the relative
value of the
inclusion of the third arm in a placebo controlled trial directs the company towards a pre-­specified
statistical method. From our understanding, this can be determined before the clinical trial data is
-­
recruited sites with the news that they can include more patients in the trial, we believe the company will
meet with the FDA to gain some clarity on this new issue, a determination of the statistical methods to
measure efficacy in this new, three-­arm trial. We summarize our opinion of the value of this SPA in the
next section.
At this stage we believe it is important to remind ourselves and investors that we might be taking
et cap is just north of $100 million with enough cash to
2012, the value of the company
mean that it shows an efficacy advantage over the placebo cream with no real safety concerns. We
believe larger partners are likely to come running and generate a bidding war, regardless of the SPA or
potential need to repeat this first Phase 3
pharma is interested (and we believe several GI-­ will take a deep dive in 12
months), they would have little difficulty in embarking on a $50+ million trial program to confirm
keeping our feet on the floor and recognizing the bird in the hand, we believe the ongoing back-­and-­forth
meetings with the FDA ha currently planned pivotal trial
design.
Key, material iferanserin events
We look forward to the peer-­reviewed publication of the German study and further details of the
bioavailability of iferanserin. We believe the low systemic absorption and wide inter-­patient variability will
claiming
bioequivalency to the reference listed drug. Regardless of the outcome of the battle between ViroPharma
suggestive that there will continue to difficulty for ANDA filers to gain approval without running clinical
trials. And finally, we look forward to the start of the first Phase 3 iferanserin trial this summer.
RODMAN & RENSHAW EQUITY RESEARCH 3

4. Ventrus Biosciences Inc May 3, 2011
Exhibit 3: Valuation matrix
D isco u n t ra te
20% 25% 30% 35% 40% 45% 50%
15 $21.80 $17.07 $13.49 $10.75 $8.65 $7.00 $5.72
20 $29.07 $22.75 $17.98 $14.34 $11.53 $9.34 $7.62
25 $36.34 $28.44 $22.48 $17.92 $14.41 $11.67 $9.53
M u ltip le
30 $43.60 $34.13 $26.97 $21.51 $17.29 $14.01 $11.43
35 $50.87 $39.82 $31.47 $25.09 $20.17 $16.34 $13.34
40 $58.14 $45.51 $35.97 $28.68 $23.06 $18.68 $15.24
45 $65.41 $51.20 $40.46 $32.26 $25.94 $21.01 $17.15
50 $72.67 $56.89 $44.96 $35.85 $28.82 $23.35 $19.05
Sources: Ventrus Biosciences, Inc and Rodman & Renshaw estimates.
Exhibit 4: Cessation of bleeding
Source: Ventrus Biosciences and Rodman & Renshaw estimates
RODMAN & RENSHAW EQUITY RESEARCH 4

5. Ventrus Biosciences Inc May 3, 2011
Exhibit 5: Cessation of pain
Source: Ventrus Biosciences and Rodman & Renshaw estimates
Exhibit 6: Cessation of itching
Source: Ventrus Biosciences and Rodman & Renshaw estimates
RODMAN & RENSHAW EQUITY RESEARCH 5

6. Ventrus Biosciences Inc May 3, 2011
Exhibit 7: Key events in the development of iferanserin.
11/91 IND filed by investigator
1992 Method of use patent filed by Sam Amer, PhD (former Dir of R&D, BMS)
1/14//94 IND transferred to Sam Amer & Co
7/14/98 Composition of matter patents granted on S-­isomer by Dr. Amer
1998 Licensed Japanese rights to Tsumura & Co.
1998 & 1999 Tsumura & Co conducted pharmacology studies: one single dose in 18 healthy patients and six
receiving the 1% dose for six days (S-­isomer)
2002 & 2003 Sam Amer & Co conducted a non-­pivotal Phase 3 study in Germany
2/28/03 Tsumura returned Japanese rights to Sam Amer after running two Phase 1 and two Phase 2 trials
2003 Novartis in-­licensed the rights, improved the manufacturing process, ran toxicology and metabolite
studies
2005 Novartis returned rights to Sam Amer after the GI franchise was marginalized
2/5/08 Amer and Ventrus held an end-­of-­Phase 2 meeting with FDA
3/17/08 Ventrus in-­licensed exclusive WW rights to topical forms of iferanserin from Sam Amer
6/08 Filed SPA, process not completed due to lack of funding
3/10 Filed new SPA submission;; clarified
May -­ Communication with FDA on SPA filing: definition of PE, how to assess itching, pain & recurrence,
etc
8/23/10
10/28/10 Officially filed SPA submission based on the recent FDA discussions
2/1/11 Completes hiring of Clinical Development staff
3/3/11
6/11 Expected completion of SPA process
st
Q311 Start 1 Phase 3 study
2H11 Start dose-­ranging carcinogenicity program
2H11 First publication of the Phase 2/3 German study
st
Q112 Data from 1 Phase 3 study
1H12 Start carcinogenicity program
Mid-­12 Potentially secure North American marketing partner
2H12 Start drug interaction studies
2H12 Start thorough QT study
nd
2H12 Start 2 Phase 3 study
nd
YE13 Data from 2 study
Mid-­14 Data from carcinogenicity studies
2014 Potential start of life cycle extension products: combinations with steroids, etc.
2H14 File NDA
2H15 FDA approval & launch
8/7/15 -­isomer)
1/23/18 expires (S-­isomer)
2H20 5 year Hatch-­Waxman NCE protection expires
2030 If granted, the dose-­range patent (0.5%) expires
Source: Ventrus Biosciences and Rodman & Renshaw estimates
RODMAN & RENSHAW EQUITY RESEARCH 6

7. Ventrus Biosciences Inc May 3, 2011
RODMAN & RENSHAW EQUITY RESEARCH 7

8. Ventrus Biosciences Inc May 3, 2011
RODMAN & RENSHAW EQUITY RESEARCH 8

9. Ventrus Biosciences Inc May 3, 2011
RODMAN & RENSHAW RATING SYSTEM: Rodman & Renshaw employs a three tier rating system for evaluating both the potential
return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a
RELATIVE basis of other companies in the same sector, as defined by First Call. The price objective is calculated to estimate the potential
movement in price a given equity could achieve given certain targets are met over a defined time horizon. Price objectives are subject to
exogenous factors including industry events and market volatility. The risk assessment evaluates the company specific risk and accounts
for the following factors, maturity of market, maturity of technology, maturity of firm, cash utilization, and valuation considerations.
Potential factors contributing to risk: relatively undefined market, new technologies, immature firm, high cash burn rates, intrinsic value
weighted toward future earnings or events.
RETURN ASSESSMENT
●
Market Outperform (Buy): The common stock of the company is expected to outperform a passive index comprised of all the
common stock of companies within the same sector, as defined by First Call.
●
Market Perform (Hold): The common stock of the company is expected to mimic the performance of a passive index comprised
of all the common stock of companies within the same sector, as defined by First Call.
●
Market Underperform (Sell): The common stock of the company is expected to underperform a passive index comprised of all
the common stock of companies within the same sector, as defined by First Call.
RISK ASSESSMENT
●
Speculative - The common stock risk level is significantly greater than market risk. The stock price of these equities is
exceptionally volatile.
●
Aggressive - The common stock risk level is materially higher than market level risk. The stock price is typically more volatile
than the general market.
●
Moderate - The common stock is moderately risky, or equivalent to stock market risk. The stock price volatility is typically in-line
with movements in the general market.
Rating and Price Target History for: Ventrus Biosciences Inc (VTUS) as of 05-02-2011
02/02/11
I:MO:$12
18
15
12
9
6
3
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2
2009 2010 2011
Created by BlueMatrix
RATING SUMMARY
Distribution of Ratings Table
IB Serv./Past 12 Mos
Rating Count Percent Count Percent
Market Outperform(MO) 143 57.90% 35 24.48%
Market Perform(MP) 45 18.20% 4 8.89%
Market Underperform(MU) 8 3.20% 0 0.00%
Under Review(UR) 51 20.60% 16 31.37%
Total 247 100% 55 100%
RODMAN & RENSHAW EQUITY RESEARCH 9

10. Ventrus Biosciences Inc May 3, 2011
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securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its
affiliates or subsidiaries within the past 12 months.
ADDITIONAL DISCLOSURES
Rodman & Renshaw, LLC. (the "Firm") is a member of FINRA and SIPC and a registered U.S. Broker-Dealer.
ANALYST CERTIFICATION
I, Michael J Higgins, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject
company(ies) and its (their) securities.
None of the research analysts or the research analyst's household has a financial interest in the securities of Ventrus Biosciences Inc
(including, without limitation, any option, right, warrant, future, long or short position).
As of Mar 31 2011 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Ventrus
Biosciences Inc.
Neither the research analyst nor the Firm has any material conflict of interest with Ventrus Biosciences Inc, of which the research analyst
knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific
investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a
substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Ventrus Biosciences Inc for any investment banking services within twelve
months before, but intends to seek compensation from the companies mentioned in this report for investment banking services within
three months, following publication of the research report.
Neither the research analyst nor any member of the research analyst's household nor the Firm serves as an officer, director or advisory
board member of Ventrus Biosciences Inc.
The Firm does make a market in Ventrus Biosciences Inc securities as of the date of this research report.
Any opinions expressed herein are statements of our judgment as of the date of publication and are subject to change without notice.
Reproduction without written permission is prohibited. The closing prices of securities mentioned in this report are as of May 02 2011.
Additional information is available to clients upon written request. For complete research report on Ventrus Biosciences Inc, please call
(212) 356-0500.
Readers are advised that this analysis report is issued solely for informational purposes and is not to be construed as an offer to sell or
the solicitation of an offer to buy. The information contained herein is based on sources which we believe to be reliable but is not
guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Past performance
is no guarantee of future results.
RODMAN & RENSHAW EQUITY RESEARCH 10