EX-99.2
FIRST MANHATTAN CO. RELEASES CASE FOR FULL BOARD CHANGE AT VIVUS
Details Path to Creating Value at Vivus
Presentation Available athttp://www.ourmaterials.com/VVUS/
NEW YORK -- May 7, 2013-- First Manhattan Co. (“First Manhattan” or “FMC”), anowner-operated investment advisory firm and the beneficial holder of approximately 9.7 percent ofthe outstanding shares of VIVUS, Inc. (“Vivus”) (NASDAQ: VVUS), today filed a presentation with the Securities and Exchange Commission (the “SEC”) entitled “VIVUS–Why Change is Needed Now.” FMCwill use the presentation in meetings with Vivus shareholdersin advance of Vivus’Annual Meeting of Stockholders, which Vivus has scheduled for July 15, 2013.
The presentation details FMC’scasethat the upside potential of Qsymia, Vivus’ obesity drug, isenormous, butVivus’Board and management have repeatedly failed to successfully executeQsymia’s launch.As a result, Vivus shareholders have lost approximately 60 percent of the value of their investment in Vivus since Qsymia received FDA approval in July, 2012.
On May 1, 2013, FMC filed a preliminary proxy statement with the SEC in which it nominated sixhighly qualified directors for election to Vivus’ Board. FMC’s nomineesoffer the experience, ability and independence from management needed to unlock the enormous potential value at Vivus. The FMC nominees have deep expertise in pharmaceutical commercialization, regulatory affairs, public-company finance, and extensive turnaround experience. Each nominee is fully committed to fixing the fundamental problems at Vivus, reversing the failed Qsymia launch, and examining all options to enhance value for Vivus stockholders.
The investor presentation also outlines the strategies FMC's Board nominees are expected to implement to enable Qsymia to reach its full potential.
Key points in the presentation include:
First Manhattan believes the Vivus Board is underqualified, overpaid and is enrichingitself at the expense of shareholders.The currentBoard’s annual cashretainer of$101,400 for each Vivus Board memberexceeds the cash retainer for non-employeedirectors at four of the five largest US companies by market capitalization, includingApple, Walmart, and Google.It is approximately triple the average cash retainer at themost comparable companies, Orexigen (OREX) and Arena (ARNA), and more thandouble the median of a peer group selected by Vivus. In January 2013, with less than
one year of cash remaining on the balance sheet, the Board refused to slash its ownexcessive cash pay. The current Board is composed of members with strong ties to aCEO who has served since 1991, the year Vivus was founded. First Manhattan believesthis Board lacks the independence, judgment and necessary skills to commercializeQsymia. In fact, the Board increased management bonuses by 86% in 2012, the year ofQsymia’slaunch failure. In that same year, Board members sold $25M of their ownstock andoptions. The Board’slack of confidence in their own plan to fix the Qsymialaunch is further underscored by the fact that they failed to buy a single share since theQsymia launch debacle.
First Manhattan further believes that the Vivus Board has excessive managementrepresentation, lacks transparency and is a poor steward of shareholders’ capital.
Until FMC’s recent push for change, management controlled one-third of the VivusBoard. This level of management representation is triple the median ofVivus’ self-selected peer group. The Board and management lack transparency and block access toinformation that is typically provided to investors including weekly/monthly prescriptiondata and limitations on the ability to issue debt in the future. The Board has presidedover the failed launch of Qsymia which resulted in a near 60% decrease in shareholdervalue since FDA approval of Qsymia in 2012. During this time, the Board has blessed anincrease of SG&A to a last reported quarterly run-rate of over $50M, while failing toachieve profitability and simultaneously increasing management bonuses as notedabove.
First Manhattan’s Board nominees have been carefully chosen for their skills andexperience in new product launches, US and EU regulatory affairs, commercialpartnerships, and, turnarounds of distressed companies.Each nominee stronglysupportsaccountability, alignment with shareholders’ interestsand a dramatic cut inBoard compensation. They will bring to the Vivus Board the independence frommanagement and sound judgment that we believe has been lacking and that is essentialto turn around the Company.
The nominees’ interests are aligned with those of Vivus’ shareholders.FirstManhattan and its nominees have been buying Vivus stock at a time when Vivus’current Board members have not bought a single share. The nominees have committedto purchase additional stock upon election and to implement the best standards ofCorporate Governance.
Thenominees have a plan to generate better results for Vivus’ shareholders.Thenominees are already planning for a Day One full strategic and operational reviewduring which all options to increase shareholder value will be considered. If elected, thenominees will focus on rationalizing expenses in order to fully realignthe company’sefforts toward maximizing Qsymia’s potential;this includes successfully forming acommercial partnership, fixingVivus’ commercial team, andexecuting a Eurocentricapproach to EU approval for Qsymia.
Time is running out. Vivus has less than one year of cash on its balance sheet while management engages in profligate spending and revenues are minimal.Vivus’ shareholders must choose between (i)“more of the same” –a Board composed of members with strong ties to the longstanding CEO, who have overseen the failed launch of Qsymia, an approximate 60% loss of shareholdervalue since Qsymia’s FDA approval, and have shown zero conviction in theirown plan to rescue the launch; OR (ii) a fully reconstituted Board whose members have theexperience, ability, and independence from management to turnaround Qsymia’s launch andunlock the enormous potential value at Vivus.
The investor presentation can be found at the following link:http://www.ourmaterials.com/VVUS/
About First Manhattan Co.
First Manhattan Co. (“FMC”) was founded in 1964 and remains an owner-operated investment advisory firm. FMC is registered with the U.S. Securities and Exchange Commission as an investment adviser and as a broker-dealer, and is a member of the Financial Industry Regulatory Authority (FINRA).
FMC provides professional investment management services primarily to high net worth individuals as well as to partnerships, trusts, retirement accounts, pension plans and institutional clients. The firm currently manages in excess of $14 billion.
Additional Information and Where to Find It
FIRST MANHATTAN CO., FIRST HEALTH, L.P., FIRST HEALTH LIMITED, FIRST HEALTH ASSOCIATES, L.P., FIRST BIOMED MANAGEMENT ASSOCIATES, LLC, FIRST BIOMED, L.P. AND FIRST BIOMED PORTFOLIO, L.P. (COLLECTIVELY, “FIRST MANHATTAN”) INTEND TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) A DEFINITIVE PROXY STATEMENT AND ACCOMPANYING PROXY CARD TO BE USED TO SOLICIT PROXIES FROM THE STOCKHOLDERS OF VIVUS, INC. (THE "COMPANY") IN CONNECTION WITH THE COMPANY'S 2013 ANNUAL MEETING OF STOCKHOLDERS. ALL STOCKHOLDERS OF THE COMPANY ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY FIRST MANHATTAN, MICHAEL JAMES ASTRUE, JON C. BIRO, JOHANNES J.P. KASTELEIN, SAMUEL F. COLIN, DAVID YORK NORTON, HERMAN ROSENMAN, ROLF BASS AND MELVIN L. KEATING (COLLECTIVELY, THE "PARTICIPANTS") FROM THE STOCKHOLDERS OF THE COMPANY, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS. WHEN COMPLETED, THE DEFINITIVE PROXY STATEMENT AND FORM OF PROXY WILL BE FURNISHED TO SOME OR ALL OF THE STOCKHOLDERS OF THE COMPANY AND WILL, ALONG WITH OTHER RELEVANT DOCUMENTS, BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, COPIES OF THE DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING PROXY CARD (WHEN AVAILABLE) MAY BE OBTAINED WITHOUT CHARGE UPON REQUEST BY CONTACTING MACKENZIE PARTNERS, INC. AT (800) 322-2885 (TOLL-FREE) OR (212) 929-5500 (COLLECT).
INFORMATION ABOUT THE PARTICIPANTS AND A DESCRIPTION OF THEIR DIRECT OR INDIRECT INTERESTS BY SECURITY HOLDINGS IS CONTAINED IN THE PRELIMINARY PROXY STATEMENT ON SCHEDULE 14A FILED BY FIRST MANHATTAN WITH THE SEC ON MAY 1, 2013. THIS DOCUMENT CAN BE OBTAINED FREE OF CHARGE FROM THE SOURCES INDICATED ABOVE.
Contacts:
The Abernathy MacGregor Group
Chuck Burgess / Mike Pascale
212-371-5999
clb@abmac.com / mmp@abmac.com
Mackenzie Partners
Larry Dennedy / Charlie Koons
212-929-5239 / 212-929-5708
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