Vivus Inc. (VVUS) said its Qnexa experimental weight-loss drug showed strong results in two large-stage studies, setting the company up to file for market approval in the potential multibillion-dollar market.

The trials, which included about 3,750 patients studied over 56 weeks, sent Vivus shares up 59% as the data exceeded all of the Food and Drug Administration's requirements for obesity treatments and had a clean side-effect profile. Vivus will use the data, along with a positive trial reported in March, to file for marketing approval by year-end and seek a partnership to sell the drug in late-2010 at the earliest.

"We will immediately begin discussions with global pharmaceutical companies," Leland Wilson, chief executive of Vivus, said on a conference call.

Shares of Vivus hit their highest levels in more than 10 years, recently up $4.07 to $10.98.

Obesity is an enormous market with few widely used treatments on the market. JMP securities recently projected Qnexa's annual sales would hit $1.5 billion by 2015.

The news from Vivus is also pushing up VVUS's competitors in the race to bring a new therapy to market: Arena Pharmaceuticals Inc. (ARNA) is up 5% to $4.83, and Orexigen Therapeutics Inc. (OREX) is up 4% to $8.49.

Although comparing the results of different clinical trials is difficult, J.P. Morgan analyst Cory Kasimov noted that Vivus's data compares "quite favorably" to its competitors.

"[The data] exceeded our already high expectations and significantly differentiated Qnexa from the competition," Kasimov wrote in a note to clients.

Under FDA guidelines for clinical trials of obesity treatments, one of two goals must be met. A trial must show that at least 35% of the drug group lost at least 5% of body weight, but that group must be double the percentage of patients with similar weight loss on the placebo. Alternatively, a study can show that patients had an average weight loss that was at least five percentage points higher than the placebo group's loss.

Unlike its competitors, Vivus met both requirements, a strong result, and did so in both trials. The Equip study showed an average weight loss 14.7%, or 37 pounds, and the Conquer study showed a loss of 13.2% of body weight, or 30 pounds.

Qnexa is a combination of phentermine and topiramate, sold as Topamax by Johnson & Johnson (JNJ).

Although the dosages used in Qnexa are significantly lower than the approved uses of its components, observers have been watching for side effects as Topiramate's label includes warnings about psychiatric side effects including suicidal behavior.

Patients in both trials were regularly monitored for suicide risk, with more than 38,000 assessments, but there was no signal found at all, the company said.

The most commonly reported side effects in both trials were dry mouth, tingling, constipation, altered taste and insomnia. There was no pattern of serious adverse events in patients using the drug.

The company highlighted that more people completed the study in the drug treatment arms, than those taking a placebo, a demonstration of its lack of side effects.

The studies also showed improvements in such risk measures as blood pressure, lipid levels and type 2 diabetes.

Vivus is in a three-way race with Arena and Orexigen to develop a new obesity treatment. Orexigen reported the successful outcome of three major Phase III trials of its drug Contrave in July, sending its stock up more than 50%.

Arena is planning to disclose results of a late-stage trial of lorcaserin by the end of the month. In March, it reported the success of an earlier trial, but results disappointed some on Wall Street as the average patient lost 5.8% of body weight, or 12.7 pounds, compared to 2.2%, or 4.7 pounds, for the placebo group over 12 months.

The potential side effects of obesity drugs have made large pharma companies cautious because of past disasters like the former Wyeth (WYE) drugs, part of the notorious fen-phen combination, which were linked to heart-valve damage and led to billions in lawsuit settlements.

-Thomas Gryta; Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com