Bloomberg News

Vivus Settles Proxy Fight Giving First Manhattan Board Seats (1)

July 19, 2013

A Vivus Inc. (VVUS:US) dissident investor, First Manhattan Co., will gain the majority of the drugmaker’s board seats and its choice for chief executive officer after the two sides agreed to end a fight for control of the company.

The agreement expands the board to 11 from nine, giving First Manhattan six directors and Vivus four, the parties said yesterday in a joint statement. Tony Zook, a former AstraZeneca Plc (AZN) executive backed by First Manhattan, will replace Chief Executive Officer Leland Wilson and take the 11th board seat, Mountain View, California-based Vivus and First Manhattan said.

First Manhattan, Vivus’s largest shareholder (VVUS:US) with 9.9 percent of the outstanding stock, had criticized the company for failing to find a partner to help sell the obesity drug Qsymia. The medicine was approved by the U.S. Food and Drug Administration in July 2012 and generated $4.1 million in the first quarter. It disappointed investors with initial sales, missing analysts’ estimates in each of the last three quarters, according to data compiled by Bloomberg.

“This result reduces uncertainty on current opportunities and provides hope for operational optimization,” Charles Duncan, an analyst with Piper Jaffray, wrote in a note today.

Vivus fell 8.3 percent to $13.67 at 4 p.m. The shares have lost 47 percent (VVUS:US) in the past year.

Meeting Adjourned

The two sides had been trying to reach a settlement for days. First Manhattan said earlier this week it had enough votes to win the proxy fight. Vivus’s scheduled annual meeting was convened yesterday to adjourn the meeting to a date to be announced, though no later than 30 days from July 15, at the company’s headquarters, according to the statement.

“Qsymia has the potential to improve the quality of life for millions of people,” Zook said in the statement. “I look forward to working with the new board” to enable the medicine to reach the people who can benefit from it most, he said.

While at London-based AstraZeneca, Zook helped market therapies including Nexium, Crestor and Symbicort. The medicines drew more than $13 billion in sales last year.

“Vivus needs a large pharma partner in order to maximize Qsymia’s potential,” Simos Simeonidis, an analyst with Cowen & Co., said July 17 in a research note. He predicted First Manhattan would win all the board seats if the votes were counted, calling it “one of the ugliest biotech proxy fights in recent memory.”

To contact the reporters on this story: Meg Tirrell in New York at mtirrell@bloomberg.net; Beth Jinks in New York at bjinks1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • VVUS
    (VIVUS Inc)
    • $4.79 USD
    • -0.13
    • -2.71%
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