July 17 (Bloomberg) -- Vivus Inc., the drugmaker battling its largest shareholder for control of the company, said the dissident investor rejected a settlement offer that included four of nine board seats and the chief executive officer’s retirement. First Manhattan Co. countered with its own offer.
Vivus proposed equal representation on its board to First Manhattan, with each side getting four seats and an independent investor representative getting the ninth, the Mountain View, California-based company said today in a statement. Leland Wilson offered to resign from the board and retire as CEO when the company hired a successor.
First Manhattan today said it has offered to include five incumbent directors, including Wilson, on a reconstituted board. The new board would be divided equally between First Manhattan nominees and Vivus directors, plus First Manhattan’s proposed CEO, Tony Zook, said Sam Colin, senior managing director at First Manhattan, in a separate statement.
“We’re just a day or so away” from learning the results “of one of the ugliest biotech proxy fights in recent memory,” Simos Simeonidis, an analyst with Cowen & Co., said today in a research note.
Vivus’s annual meeting is scheduled for tomorrow, after the obesity-drug maker instituted a delay of three days while saying First Manhattan made false and misleading comments about a proxy adviser recommendation.
“It is our desire to end this closely contested proxy battle without handing the company over to Mr. Colin ahead of the vote,” Wilson said today in the Vivus statement. “We believe our proposal, which included my stepping down as CEO of Vivus, was extremely fair and balanced.”
Yesterday, First Manhattan, which owns 9.9 percent of Vivus’s outstanding shares, sued the company over the delay and claimed it had enough votes on the eve of the meeting to win the proxy fight.
“We remain committed to doing what is best for the company and its shareholders, and to realizing value at Vivus,” Colin said in today’s statement.
Vivus rose 1.1 percent to $14.56 at 4 p.m. New York time. The shares have gained 8.5 percent this year.
First Manhattan has criticized Vivus’s strategy for selling the obesity drug Qsymia, approved in July 2012 by the Food and Drug Administration and drawing $4.1 million in revenue in the first quarter. Vivus shares lost more than half their value in the 12 months ended in June, and rebounded 14 percent in the two weeks through yesterday as investors speculated the dissidents may gain ground.
“We expect the final results to reflect a clear win for the First Manhattan Co. side and predict that the top nine vote getters will all be from the FMC slate,” Simeonidis wrote. “Qsymia is a very efficacious weight loss agent, but selling a large, primary care market drug with 150 sales reps in the U.S. makes no sense whatsoever.”
Vivus has said it’s in discussions with large pharmaceutical companies about a partnership to improve sales of the drug. First Manhattan has questioned why the company didn’t pursue such an arrangement earlier.
“We expect tomorrow’s outcome to lead to very significant changes to the company strategic direction, which we believe will end up benefiting the drug and eventually the stock,” Simeonidis wrote. “We expect the majority of the current board and all of the current senior management to be gone on Thursday or soon thereafter, including CEO, President, CFO and Chief Commercial Officer.”
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