1:00pm (EST)

Vivus (VVUS, $8.40, up $0.32) is back in the spotlight but this time it’s not for news concerning its diet drug, Qnexa.  We have mentioned the battle between Vivus and others to be the first company to get a diet pill approved but Vivus also has plans to get into the erectile dysfunction (ED) market.

The company announced positive results from a pivotal phase 3 clinical trial for Avanafil which helps with erectile dysfunction.  The study met all primary endpoints and indicated that successful intercourse was achieved as early as 15 minutes.  

We have been mentioning Vivus since early 2008 when shares were near $5 and we have maintained Vivus is the best speculative play on the obesity market.  Since then, we have also been bringing you regular updates on their good wood drug, Avanafil, and have said that they have a stronger pipeline than Arena Pharmaceuticals (ARNA, $1.29, up $0.01) and Orexigen Therapeutics (OREX, $2.96, up $0.02) – the other two players trying to gain approval for a diet drug.

While Pfizer (PFE, $21.07, down $0.07), which hit a 52-week high yesterday, remains the 800-pound gorilla in the ED space, Vivus should find a niche with its fast-acting action pill.  The market for erectile dysfunction grew nearly 5% in 2009 and roughly 7% in 2010 to over $5 billion in sales so there is room for Vivus to make some decent profits if the drug does hit the market. 

Vivus has a market cap of only $665 million and we doubt Avanafil will be a billion dollar a year drug for them.  However, Qnexa could easily be a billion dollar a year drug which makes Vivus a great acquisition candidate while shares are cheap.  If the company can get through the FDA’s hurdles for their diet drug, then Vivus will easily trade to the upper teens on any positive developments.     

Vivus is a current trade in both our Weekly Wrap and Daily publications.

As far as the market, the action is favoring the bulls today who have a slight lead as we head into the second half of trading.  The Dow is up 37 points to 12,516 while the S&P is higher by 7 points to 1,336.  The Nasdaq is showing a 19 point pop and is at 2,802. 

The bulls are looking to take back key support levels so the close should be interesting.  We will be back in the morning with a full update.  Subscribers, check the Members Area for the current trades comments.  Also, we have added a possible earnings trade or two for you to look at today although we will probably stay on the sidelines. 

Special Notice:  We may also release a NEW TRADE for our Weekly Wrap later this afternoon.  We have 3 positions that might get “called away” on Friday for profits ranging from 10%-35% so we are looking to replace them with some new candidates.

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