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November 18, 2009 Stock Pick: VIVUS, Inc. (VVUS)

Stock Price: $8.57

VIVUS, Inc. is a biopharmaceutical company developing next-generation therapies to address unmet needs in obesity, diabetes and sexual health. The company's lead product in clinical development, Qnexa(TM), has recently completed phase 3 clinical trials for the treatment of obesity. Qnexa is also in phase 2 clinical development for the treatment of type 2 diabetes. In the area of sexual health, VIVUS is in phase 3 development with avanafil, a potentially best-in-class PDE5 inhibitor, and in phase 2 development of Luramist(TM) for the treatment of hypoactive sexual desire disorder (HSDD) in women.

We have been following VVUS and we believe now is the time to release it as a stock pick. We believe VVUS is one of the best biopharmaceutical plays out there right now. We believe VVUS is severely undervalued at a market cap of only around $690.30 million.

Keep in mind that this company has two potentially big selling drugs in Qnexa(TM) and Avanafil. VVUS has also grown revenues the past three years from $17.24 million in 2006 to $54.79 million in 2007 to $102.2 million in 2008.

As of their latest quarterly report on September 30th, 2009, VVUS had $226.91 million in cash, cash equivalents and short-term investments.

Qnexa(TM) has shown positive results for reducing weight in various weight classes compared to placebo. The company will be holding a conference call on Wednesday morning for their other major drug candidate at 8:30 AM ET, 11/18 discussing Avanafil Phase 3 results.

VVUS could become a major play with its pipeline and solid fundamentals. VVUS has a 52-week high of $12.88. We believe VVUS has significant upside potential. VVUS seems to have a dedicated following for a company trading under a $1 billion market cap. We could see a major short squeeze with over 10% of its float short.

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