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VIVUS Inc. (VVUS) is on the upswing today, after the company reported positive results from a late-stage trial of its treatment for erectile dysfunction. Not only does avanifil result in a surprisingly high "magnitude of success in the first 15 minutes," but the treatment was also well-tolerated. The company noted that "there were no drug-related serious adverse events in the study," and added that there were low rates of common side effects, including headache and flushing.
VIVUS is entering a crowded market with its erectile dysfunction drug, with heavyweights such as Viagra and Cialis boasting substantial market share. However, "Knowing that avanafil can be effective within 15 minutes should create an attractive position in the PDE5 market," asserted Charles Bowden, M.D., who serves as senior director of clinical development.
Right out of the gate this morning, VVUS surged roughly 7% on the heels of this news. As a result, the stock gapped above short-term pressure in the $10.50 neighborhood. Going forward, this region could potentially switch roles to act as support.
If short sellers are spooked by the company's positive drug trials, it could translate to a substantial short-covering rally. The number of shares sold short ballooned by nearly 20% during the past month, and now accounts for 20.3% of the equity's float -- or 5.40 times VVUS' average daily trading volume.
Elizabeth Harrow is a senior equities analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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Reader Comments (Page 1 of 1)
1-24-2010 @ 3:56PM
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