VIVUS, Inc. (VVUS): An Obese Proxy Fight

Page 1 of 2

Proxy fights are like the demolition derby of the investment world. Pitting management desperately trying to keep their jobs against passionate rich investors always makes for an entertaining fight. Unfortunately, even if management makes it to the finish line, it’s likely to limp across, beaten up in the process.

The latest entertainment comes from VIVUS, Inc. (NASDAQ:VVUS) and First Manhattan, owner of 9.9% of the biotech.

First Manhattan dealt a blow on Monday, laying out its case for how the company is “hemorrhaging cash,” urging shareholders to vote for its slate of board members.

Source: First Manhattan.

VIVUS’ management struck back Tuesday, refuting many of First Manhattan’s claims in a step by step approach.

VIVUS, Inc. (NASDAQ:VVUS)Lies, damn lies, and statistics
First Manhattan points to VIVUS, Inc. (NASDAQ:VVUS)’ large short interest as a sign that investors aren’t confident in the management team. Management counters, pointing out that its most direct competitor, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), has a comparable short interest. I’m not sure that’s the best counter argument — maybe investors hate Arena’s management, too? — but the point is that it’s clear many investors are betting that companies continue to struggle to sell obesity drugs.

The chart above, management insists, shows a “lack of understanding that investment is needed for the commercial launch of Qsymia and the work necessary to build the market during the time when the restricted mail-order only REMS distribution was in place.” You’ve got to spend money to make money and all that jazz.

In First Manhattan’s letter, Sam Colin, senior managing director at First Manhattan, quotes famed investor Warren Buffett multiple times. Management’s retort? “Sam Colin is certainly NO Warren Buffett.” Does that imply they’d step down if the real Warren Buffett was willing to take over VIVUS, Inc. (NASDAQ:VVUS)’ board?

What’s an investor to do?
I think investors are best off giving management a little more time. First Manhattan makes it sound all too easy. Changing the obesity space, where no drug has ever been a blockbuster, isn’t exactly going to happen overnight.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!