First Manhattan, an investor with about a 10% stake in Vivus (VVUS), has now taken the step of increasing its slate of Board nominations with the addition of a 9th nominee. Essentially, expressing disappointment in the current management and Board of Directors, First Manhattan is seeking to gain control of Vivus through a cherry picked Board of Directors.
The sparring match between First Manhattan and current management has been going on for months with each side seeming to take turns in a game of chess as the time-clock for the annual meeting winds down.
First Manhattan raises some pretty compelling points. Sales of anti-obesity drug Qsymia have been less than stellar, and even 7 months later have not gained the type of traction many investors had hoped for. Meanwhile, current management recently got the REMS restriction using only mail order pharmacies lifted by the FDA and can now distribute the drug through certified retail pharmacies. Current management has indicated that this will be a big factor in increasing sales. As yet, current management has not offered its most recent sales figures. This could put a lot of question marks in the minds of investors.
At the annual meeting investors will be voting on the Board of Directors slate. For some, the fact that changes are needed may be enough of a catalyst to vote for the First Manhattan slate. However, caution is always warranted, and is it really a good idea to deliver control to an outside investor that has not yet taken the steps to move to actual control? As a 10% shareholder there is no doubt that First Manhattan has a lot at stake, but the financial institution is well shy of a 50% stake.
Making the story more interesting is the fact that competitor Arena (ARNA), with its marketing partner Eisai (ESALY.PK), is staged to launch its own anti-obesity drug, Belviq (with fewer restrictions) on June 7th. Should sales of Belviq outpace Vivus' Qsymia by a wide margin the drama between Vivus and First Manhattan may reach a boiling point.
What we want to watch for:
- Any sales figures from Vivus on Qsymia that demonstrate traction
- Early sales channel checks from Arena's Belviq and how those results compare to the Vivus track with Qsymia
- Any news regarding increased insurance coverage
- The timing of the annual meeting
- Any response from Vivus to the latest move by First Manhattan
In many ways it may seem that Vivus and First Manhattan are not being aggressive with each other. Make no mistake, the moves being made are strong ones. Just because we have not seen a virtual shouting match does not mean that the stakes are not high. Stay Tuned.
Additional disclosure: I have no position in Vivus.