Vivus Inc. (VVUS) - unfinished battle for Qnexa

Vivus surged on Friday despite FDA's issuance of a complete response letter (CRL) to the company's experimental obesity drug, Qnexa.

The reasons for the substantial spike in Vivus' share price are the following:

1) Vivus' follow-up data package, ready to be submitted in 6 weeks (no lengthy additional trials needed)

2) FDA's seemingly 'neutral' stance on the possibility of approving a new diet pill (based on their response to Arena's angry investors)

3) Renewed investor confidence/interest after Arena's failure to obtain FDA's approval (potentially 'larger' market share for Vivus)

4) Qnexa's impressive efficacy in inducing weight loss (12-15% compared to placebo)

5) Qnexa's additional efficacy in diabetes
6) Qnexa's relatively mild side effects (non-tumor associated, unlike Arena's Lorcaserin)

Based on their interpretation of the CRL, JP Morgan upgraded VVUS from neutral to overweight and shifted the price target up from $13 to $16.