The shake-up and uncertainty at Vivus (NASDAQ:VVUS) continues with the sudden announcement that the brand new CEO of the company has resigned just a month into his new position.
Anthony P. Zook had taken on the role of CEO when activist shareholder First Manhattan won a prolonged proxy battle to take control of the company. Zook was heralded by First Manhattan as a great fit for the company, whose big pharma experience could drive the company forward as it re-launched the anti-obesity drug Qsymia. Zook's resignation is effective September 3, 2013, and is reportedly due to recurring issues associated with a previously-diagnosed medical condition.
The Vivus Board of Directors has appointed Seth H. Z. Fischer, a former senior executive at Johnson & Johnson, to serve as its Chief Executive Officer, effective today. Mr. Fischer will also join the VIVUS Board of Directors.
Seth H. Z. Fischer has three decades of healthcare experience in the pharmaceutical and medical device industry. Mr. Fischer served in positions of increasing responsibility with Johnson & Johnson until his retirement in 2012. Most recently, Mr. Fischer served as Company Group Chairman Johnson & Johnson and Worldwide Franchise Chairman, Cordis Corporation from 2008 to 2012, and as Company Group Chairman, North America Pharmaceuticals from 2004 to 2007, which included responsibilities for Ortho-McNeil Pharmaceuticals, Janssen and Scios. Prior to this position, Mr. Fischer served as President of Ortho-McNeil Pharmaceuticals from 2000 to 2004. His operating responsibilities encompassed the commercialization of products in multiple therapeutic categories including Topamax(NYSE:R) for epilepsy and migraine, and products in the analgesic, anti-infective, cardiovascular, neurologic, psychiatric and women's health areas. He is currently a member of the Board of Directors of Trius Therapeutics, Inc. and BioSig Technologies, Inc, and an advisor to MedHab, LLC.
For investors there is a lot to consider. A company that was already facing serious headwinds offered up several "golden parachutes" to outgoing management and lucrative employment deals to the incoming players. Now the executive deal making has yet another chapter.
Much of the hope and valuation of Vivus is pinned to the anti-obesity drug Qsymia. Sales have been modest thus far and competitors are entering the space. Arena (NASDAQ:ARNA) has its drug, Belviq, already on the market and Orexigen (NASDAQ:OREX) has its drug, Contrave, working its way through approvals. Arena's Belviq has seen a more successful launch than Qsymia, but with a lack of insurance participation, sales of both drugs have not reached levels that say "blockbuster".
Under Zook, Vivus was slated to increase sales of Qsymia, find a big pharma partner for the drug, and pursue getting the drug approved in Europe. Qsymia was rejected previously in Europe, and while Vivus did enjoy first to market status in the U.S., it squandered that opportunity. As things stand now it appears that Contrave may have the best shot at being first to market in Europe.
Vivus had "bought" some time for itself with the management and board shake-up, but patience of investors may wear thin with yet another change. The street is looking for performance and numbers, not promises and hope. The "potential" story can only last so long. Last week Qsymia sold about 10,000 prescriptions. It will take a lot more than that to instill investor confidence. Stay tuned.
Disclosure: I am long ARNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I have no position in Orexigen or Vivus