UPDATE 1-Vivus vote delayed as company talks with shareholder-sources

Thu Jul 18, 2013 1:36pm EDT

By Jessica Toonkel

NEW YORK, July 18 (Reuters) - Obesity drugmaker Vivus Inc has delayed its board election, which was scheduled for Thursday morning, as it negotiates with shareholder First Manhattan Co, according to two sources familiar with the situation.

The meeting, which was originally scheduled for 8 a.m. PDT, has been delayed two hours, but might be postponed further if settlement talks continue, said the sources, who wished to remain anonymous because they are not permitted to speak to the media.

A settlement between the two parties is expected shortly, said one of the sources.

A First Manhattan spokesman declined to comment. Vivus declined to comment.

First Manhattan, which is Vivus' largest shareholder and owns 9.9 percent of shares outstanding, is pushing to replace all nine members of Vivus' board, a small drugmaker which has failed to capitalize on the first new diet pill to reach the U.S. market in over a decade. Some analysts have called it the ugliest proxy fight yet in biotech, a field rife with activism from the likes of Carl Icahn and others.

FMC has accused the company of bungling the marketing of its Qsymia drug and of failing to install a management team with extensive commercial drug launch experience.

Earlier this month, FMC took the unusual step of announcing that Tony Zook, a former senior executive at pharmaceutical company AstraZeneca, would be installed as the new Vivus CEO should it prevail in gaining control of the board.

Just over the past few days the proxy battle has gotten particularly ugly, with each side accusing the other of illegal or unethical practices.

In a research report Wednesday, Cowen and Co analyst Simos Simeonidis predicted an outright victory for First Manhattan in shareholder balloting.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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