Drug development firm Vivus said Friday it is turning to Deerfield Management to pump $30 million into the clinical trial of a next-generation compound that aims to compete with Viagra.

Mountain View, California-based Vivus cut a deal with the New York City life sciences investment firm to fund the phase three clinical trial of the erectile dysfunction drug avanafil. Terms of the deal call for Deerfield to funnel $20 million to Vivus within the first 18 monts of the agreement.

In exchange, Deerfield will receive stock, royalties on product sales of MUSE, Vivus' current generation erectile dysfunction treatment, and royalties on sales of avanfil, if that drug passes regulatory muster.

Shares of Vivus edged down $.01, or .2 percent, to $6.18 in Friday afternoon trading on the Nasdaq.

In 2007, sales of phosphodiesterase type 5 inhibitors like Pfizer's Viagra grew 15 percent to more than $3 billion, according to Vivus.

Terms of the deal allow Vivus to buy back the royalty stream within the first three years of the partnership with $25 million.

In a statement, Dr. Howard Furst, a partner at Deerfield, said that the deal was structured to avoid "significant shareholder dilution" for Vivus.

Vivus also is developing Qnexa, a drug in phase three trials for obesity and Luramist, a drug to treat hypoactive sexual desire disorder, which has finished phase two trials.

In 2007, Vivus narrowed its net loss to $2.4 million on revenue of $15 million. That compares to a net loss of $21.6 million on sales of $14.3 mmillion in 2006.