VIVUS, Inc. (VVUS) Tender Offer A Win-Win Deal For Carl Icahn

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It’s not hard to understand why Mr. Icahn likes the convertible senior notes of the company. As mentioned above, whether he goes activist on it or remains a passive investor, it will turn out to be a win-win deal for him. The more than 50% drop that VIVUS’s shares have endured this year make it highly lucrative at these levels. VIVUS, Inc. (NASDAQ:VVUS) made headlines in 2012 when its anti-obesity drug, Qsymia, which is still its flagship product, was launched. However, that excitement was short-lived as even after launching nine months prior to the emergence of a new competitor, Qsymia failed to make a mark and meet the sales expectations of analysts. Its sales have been declining continuously quarter-over-quarter and anti-obesity drugs by other drug makers have surpassed it in sales by quite a margin. Nothing that VIVUS, Inc.’s management has done in the past several quarters has been able to improve the sales of Qsymia or improve the overall health of the company, which perhaps explains why its market-cap prior to this tender offer announcement was nearly three-times lower than the cash and cash-equivalents it held in its books. Before this announcement was made, the best hope for VIVUS, Inc.’s shareholders was either the company getting acquired by a big pharmaceutical major or the erectile dysfunction drugs from the company, Stendra and Spedra, became major successes. Even though none of those things have happened, the interest of a renowned investor in the stock has the potential to allow it to see better days ahead.

Disclosure: None

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