First Manhattan Co., an investment management firm, in a letter to VIVUS, Inc. (NASDAQ:VVUS) shareholders, justified why its nine nominee directors should be elected.
The investment advisory firm castigated VIVUS, Inc. (NASDAQ:VVUS)’s board for having limited knowledge of finance. It also charged the company of ‘hemorrhaging cash’ and with a ‘poor commercial launch for the best obesity drug ever developed’.
First Manhattan Co, with a 9.9 percent stake in the company, has been the most active critic, claiming the company’s management lacked experience to launch a major drug.
Negligible Stock Ownership
In its letter to the drug development company’s shareholders, First Manhattan Co. criticized the existing board for having negligible stock ownership, while the investment management firm owns 12 million shares in VIVUS, Inc. (NASDAQ:VVUS).
While criticizing the existing board for not boasting any single public company CFO, First Manhattan Co, indicated in its letter that its slate includes two highly accomplished public company CFOs, Jon Biro and Herm Rosenman, both of whom have confronted tough situations and turned companies around.
The investment management firm in its letter highlighted VIVUS, Inc. (NASDAQ:VVUS) as the only company among its obesity peers that is going it alone, without a commercial partner. As a result of this poor decision, the drug development company is outgunned in money, people, and expertise.
Qsymia Pulled Vivus Into Loss
Once touted as a promising therapy to fight a U.S. obesity epidemic, doctors have been slow to pick it up given the troubled past of obesity drugs. Qsymia’s side effects include heart risks and the possibility of babies being born with oral clefts when taken by women during pregnancy.
Last month, VIVUS, Inc. (NASDAQ:VVUS) reported net losses of 53 cents per share on $4.1 million in revenue from sales of its weight loss drug Qsymia for the first quarter. That’s compared to losses of 20 cents per share in the same quarter a year ago.
First Manhattan Co’s letter further notes VIVUS, Inc. (NASDAQ:VVUS) has failed on Qsymia in Europe. The existing management’s tactic of pursuing a decentralized procedure for EU approval would be a commercial graveyard. The letter suggested that the shareholders now have an option to fix this failure during the upcoming 2013 annual meeting.
In its letter to the shareholders, First Manhattan Co. indicated its slate is composed of highly experienced candidates and requested the shareholders to rescue VIVUS, Inc. (NASDAQ:VVUS) from its commercially inept CEO and sitting board’s failure to act in the best interest of shareholders.