First Manhattan Co. Releases Case for Full Board Change at Vivus
Details Path to Creating Value at Vivus
Presentation Available at http://www.ourmaterials.com/VVUS/
NEW YORK -- May 07, 2013
First Manhattan Co. (“First Manhattan” or “FMC”), an owner-operated investment
advisory firm and the beneficial holder of approximately 9.7 percent of the
outstanding shares of VIVUS, Inc. (“Vivus”) (NASDAQ: VVUS), today filed a
presentation with the Securities and Exchange Commission (the “SEC”) entitled
“VIVUS – Why Change is Needed Now.” FMC will use the presentation in meetings
with Vivus shareholders in advance of Vivus’ Annual Meeting of Stockholders,
which Vivus has scheduled for July 15, 2013.
The presentation details FMC’s case that the upside potential of Qsymia,
Vivus’ obesity drug, is enormous, but Vivus’ Board and management have
repeatedly failed to successfully execute Qsymia’s launch. As a result, Vivus
shareholders have lost approximately 60 percent of the value of their
investment in Vivus since Qsymia received FDA approval in July, 2012.
On May 1, 2013, FMC filed a preliminary proxy statement with the SEC in which
it nominated six highly qualified directors for election to Vivus’ Board.
FMC’s nominees offer the experience, ability and independence from management
needed to unlock the enormous potential value at Vivus. The FMC nominees have
deep expertise in pharmaceutical commercialization, regulatory affairs,
public-company finance, and extensive turnaround experience. Each nominee is
fully committed to fixing the fundamental problems at Vivus, reversing the
failed Qsymia launch, and examining all options to enhance value for Vivus
The investor presentation also outlines the strategies FMC's Board nominees
are expected to implement to enable Qsymia to reach its full potential.
Key points in the presentation include:
*First Manhattan believes the Vivus Board is underqualified, overpaid and
is enriching itself at the expense of shareholders. The current Board’s
annual cash retainer of $101,400 for each Vivus Board member exceeds the
cash retainer for non-employee directors at four of the five largest US
companies by market capitalization, including Apple, Walmart, and Google.
It is approximately triple the average cash retainer at the most
comparable companies, Orexigen (OREX) and Arena (ARNA), and more than
double the median of a peer group selected by Vivus. In January 2013, with
less than one year of cash remaining on the balance sheet, the Board
refused to slash its own excessive cash pay. The current Board is composed
of members with strong ties to a CEO who has served since 1991, the year
Vivus was founded. First Manhattan believes this Board lacks the
independence, judgment and necessary skills to commercialize Qsymia. In
fact, the Board increased management bonuses by 86% in 2012, the year of
Qsymia’s launch failure. In that same year, Board members sold $25M of
their own stock and options. The Board’s lack of confidence in their own
plan to fix the Qsymia launch is further underscored by the fact that they
failed to buy a single share since the Qsymia launch debacle.
*First Manhattan further believes that the Vivus Board has excessive
management representation, lacks transparency and is a poor steward of
shareholders’ capital. Until FMC’s recent push for change, management
controlled one-third of the Vivus Board. This level of management
representation is triple the median of Vivus’ self-selected peer group.
The Board and management lack transparency and block access to information
that is typically provided to investors including weekly/monthly
prescription data and limitations on the ability to issue debt in the
future. The Board has presided over the failed launch of Qsymia which
resulted in a near 60% decrease in shareholder value since FDA approval of
Qsymia in 2012. During this time, the Board has blessed an increase of
SG&A to a last reported quarterly run-rate of over $50M, while failing to
achieve profitability and simultaneously increasing management bonuses as
*First Manhattan’s Board nominees have been carefully chosen for their
skills and experience in new product launches, US and EU regulatory
affairs, commercial partnerships, and, turnarounds of distressed
companies. Each nominee strongly supports accountability, alignment with
shareholders’ interests and a dramatic cut in Board compensation. They
will bring to the Vivus Board the independence from management and sound
judgment that we believe has been lacking and that is essential to turn
around the Company.
*The nominees’ interests are aligned with those of Vivus’ shareholders.
First Manhattan and its nominees have been buying Vivus stock at a time
when Vivus’ current Board members have not bought a single share. The
nominees have committed to purchase additional stock upon election and to
implement the best standards of Corporate Governance.
*The nominees have a plan to generate better results for Vivus’
shareholders. The nominees are already planning for a Day One full
strategic and operational review during which all options to increase
shareholder value will be considered. If elected, the nominees will focus
on rationalizing expenses in order to fully realign the company’s efforts
toward maximizing Qsymia’s potential; this includes successfully forming a
commercial partnership, fixing Vivus’ commercial team, and executing a
Eurocentric approach to EU approval for Qsymia.
Time is running out. Vivus has less than one year of cash on its balance sheet
while management engages in profligate spending and revenues are minimal.
Vivus’ shareholders must choose between (i) “more of the same” – a Board
composed of members with strong ties to the longstanding CEO, who have
overseen the failed launch of Qsymia, an approximate 60% loss of shareholder
value since Qsymia’s FDA approval, and have shown zero conviction in their own
plan to rescue the launch; OR (ii) a fully reconstituted Board whose members
have the experience, ability, and independence from management to turnaround
Qsymia’s launch and unlock the enormous potential value at Vivus.
The investor presentation can be found at the following link:
About First Manhattan Co.
First Manhattan Co. (“FMC”) was founded in 1964 and remains an owner-operated
investment advisory firm. FMC is registered with the U.S. Securities and
Exchange Commission as an investment adviser and as a broker-dealer, and is a
member of the Financial Industry Regulatory Authority (FINRA).
FMC provides professional investment management services primarily to high net
worth individuals as well as to partnerships, trusts, retirement accounts,
pension plans and institutional clients. The firm currently manages in excess
of $14 billion.
Additional Information and Where to Find It
FIRST MANHATTAN CO., FIRST HEALTH, L.P., FIRST HEALTH LIMITED, FIRST HEALTH
ASSOCIATES, L.P., FIRST BIOMED MANAGEMENT ASSOCIATES, LLC, FIRST BIOMED, L.P.
AND FIRST BIOMED PORTFOLIO, L.P. (COLLECTIVELY, “FIRST MANHATTAN”) INTEND TO
FILE WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) A DEFINITIVE
PROXY STATEMENT AND ACCOMPANYING PROXY CARD TO BE USED TO SOLICIT PROXIES FROM
THE STOCKHOLDERS OF VIVUS, INC. (THE "COMPANY") IN CONNECTION WITH THE
COMPANY'S 2013 ANNUAL MEETING OF STOCKHOLDERS. ALL STOCKHOLDERS OF THE COMPANY
ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED
TO THE SOLICITATION OF PROXIES BY FIRST MANHATTAN, MICHAEL JAMES ASTRUE, JON
C. BIRO, JOHANNES J.P. KASTELEIN, SAMUEL F. COLIN, DAVID YORK NORTON, HERMAN
ROSENMAN, ROLF BASS AND MELVIN L. KEATING (COLLECTIVELY, THE "PARTICIPANTS")
FROM THE STOCKHOLDERS OF THE COMPANY, WHEN THEY BECOME AVAILABLE, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED
TO THE PARTICIPANTS. WHEN COMPLETED, THE DEFINITIVE PROXY STATEMENT AND FORM
OF PROXY WILL BE FURNISHED TO SOME OR ALL OF THE STOCKHOLDERS OF THE COMPANY
AND WILL, ALONG WITH OTHER RELEVANT DOCUMENTS, BE AVAILABLE AT NO CHARGE ON
THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, COPIES OF THE
DEFINITIVE PROXY STATEMENT AND ACCOMPANYING PROXY CARD (WHEN AVAILABLE) MAY BE
OBTAINED WITHOUT CHARGE UPON REQUEST BY CONTACTING MACKENZIE PARTNERS, INC. AT
(800) 322-2885 (TOLL-FREE) OR (212) 929-5500 (COLLECT).
INFORMATION ABOUT THE PARTICIPANTS AND A DESCRIPTION OF THEIR DIRECT OR
INDIRECT INTERESTS BY SECURITY HOLDINGS IS CONTAINED IN THE PRELIMINARY PROXY
STATEMENT ON SCHEDULE 14A FILED BY FIRST MANHATTAN WITH THE SEC ON MAY 1,
2013. THIS DOCUMENT CAN BE OBTAINED FREE OF CHARGE FROM THE SOURCES INDICATED
The Abernathy MacGregor Group
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