First Manhattan Co. (“FMC”), an owner-managed and operated investment advisory firm and the owner of approximately 9.9 percent of the outstanding shares of VIVUS, Inc. (“Vivus”) (NASDAQ: VVUS), today announced that two leading proxy advisory firms, Institutional Shareholder Services Inc. ("ISS") and Egan Jones Proxy Services (“Egan Jones”) have recommended that Vivus stockholders vote for the election of FMC director nominees to the Vivus board of directors. Egan Jones recommends that stockholders vote for all nine of FMC’s nominees on the WHITE proxy card. ISS recommends a vote for three of FMC’s nominees on the WHITE proxy card. ISS recommends that stockholders do not vote Vivus’ gold proxy card.
In their reports both ISS and Egan Jones acknowledge the need for change at Vivus and recognize the value that FMC’s nominees will bring:
- “The dissidents have also presented a strong slate of nominees, many of whom would significantly enhance the board’s ability to address these issues.” 1
- “The dissidents' nominees appear highly qualified and we recommend a vote "FOR" this Proposal on the WHITE proxy card provided by the dissidents.” 2
- “Given that results have been wildly incommensurate with either expectations or expense, the opacity of the rapidly increasing SG&A expense, and the ongoing lack of a meaningful partner and clear path to successful commercialization, the dissidents have made a compelling case that the board would benefit from some increased oversight of the recently remodeled launch as well as a greater investor perspective and focus on the board.” 1
- “We are convinced that election of the dissidents's slate of nominees to the Company’s board of directors would work to the benefit of the shareholders, based upon the caliber of their experience and credentials.” 2
- “The dissidents have made a compelling case that a change in the composition of the board is necessary, and have proposed a slate that includes several nominees—Denner, Astrue, and Norton—who appear to have the valuable commercial launch experience and investor perspective necessary to ensure appropriate board [oversight] during this critical phase of Qsymia’s commercialization. As such, we recommend that shareholders vote FOR dissident nominees Denner, Astrue, and Norton on the WHITE CARD.” 1
- “We believe that under the current board and management, Qsymia’s (and therefore the Company's) potential has not been realized and that a change in the Company's leadership should lead to unlocking the potential value of Qsymia and also lead to increases shareholder value.” 2
- “Our belief that the dissidents make a compelling argument that their plans will improve the Company’s financial performance, the Company's status in the biopharmaceutical industry, and lead to increases in shareholder value.” 2
ISS and Egan Jones agree with FMC’s criticisms of Vivus’ management and sitting board:
- “…[Qsymia] was launched nearly a year ago, and is now a wasting asset in market without a partner to help commercialize it.” 1
- “…the rapidly rising SG&A costs without corresponding revenue to support that level of spending are concerning, particularly as the company prepares to ratchet up spending even further with its retail launch in July and a direct-to-consumer advertising campaign.” 1
- “[Vivus’] steps to date, however, have not translated into a meaningful level of sales [of Qsymia], nor is it clear—particularly looking at the size of the sales force, and the size of the physician group they will target, and the lack of a partner who could help accelerate sales quickly in a launch—that management has used its prep time well.” 1
First Manhattan believes that recent comments by Glass Lewis, a third proxy advisory firm, are a strong recognition of the need for change at Vivus. Glass Lewis states that Vivus’ significant stock price underperformance is a reasonable cause for shareholder concern. In addition, Glass Lewis states that Vivus’ initial stand-alone commercialization plan for Qsymia is ill advised and that it is unclear whether Vivus’ sudden shift to seeking a commercial partner would not have occurred without pressure from First Manhattan. First Manhattan believes that Glass Lewis’ recommendation of a withhold vote for two of Vivus’ nominees is a strong endorsement for a change in the Vivus board.