By Bill Berkrot
June 25 First Manhattan Company (FMC) stepped up
the pressure in its proxy fight with obesity drug maker Vivus
Inc, saying it was in advanced discussions with
potential chief executive candidates to replace the current CEO
should it prevail in gaining control of the Vivus board.
In a filing with U.S. securities regulators, FMC said it had
gone as far as hiring recruiters with experience in the
pharmaceutical industry to identify top CEO candidates.
"We are encouraged by the quality of those candidates and
their level of interest," First Manhattan, Vivus' largest
shareholder with nearly 10 percent of outstanding shares, said
on Tuesday in a news release and the filing.
"We believe a new board independent of an entrenched CEO
will attract the best talent to Vivus to lead the company
forward," the FMC statement said.
FMC has put forth a slate of six candidates that it hopes
will win seats on the Vivus board at the shareholder meeting
next month, and said it was taking steps to make a leadership
change immediately should it prevail.
"We are in advanced discussions with several senior
executives to step in as CEO on day one," FMC said.
Sam Colin, senior managing director at FMC and a Vivus board
nominee, said its proposed slate of directors has received
support from other Vivus shareholders, but declined to name
them. "We've got a great board and our message is clearly
resonating," Colin said in a telephone interview.
Vivus said FMC is advocating ideas for its diet drug Qsymia
and company strategy that are no different from what its own
management team is already doing.
"We strongly believe that FMC does not have the expertise to
launch a new product in a new category and they continue to
demonstrate that they have no understanding of the costs
associated with such a process," Vivus CEO Leland Wilson said in
an emailed statement.
FMC has been highly critical of Vivus management, saying it
had thoroughly botched the launch of the potential blockbuster
obesity pill. It has said Vivus made a critical error by not
moving prior to Qsymia's approval to replace longtime CEO Wilson
with a top executive with extensive commercial experience in
launching new medicines.
FMC has also accused Vivus management of dropping the ball
in trying to get the diet drug approved in Europe. "Vivus' board
appears to have written off Europe," the FMC filing said.
"It was amateur hour. They really executed quite poorly,"
Colin said of Vivus' EU efforts. "It's really inexcusable given
the value that Europe represents."
FMC said it hired a European regulatory consultant to
address the issue in addition to including two director
candidates with EU regulatory experience - John Kastelein and
Qsymia has had minuscule sales since its launch and the
Vivus share price is half of what it was around the heady times
of the September U.S. approval of one of the first new diet
drugs in decades.
Colin said Vivus' underwhelming performance had little to do
with the quality of Qsymia as a product. "The drug is great," he
said. "It's because of the very poor judgment of the management
and the board."
Vivus shares closed down 3.5 percent at $12.57 on Nasdaq.
The Vivus shareholder meeting is scheduled for July 15.