Sarissa’s Stake in Vivus, Inc. (VVUS) Points to Renewed Interest in the Company

Other interesting moves

The announcement of Sarissa’s stake comes on the heels of First Manhattan’s nomination of Dr. Denner to VIVUS, Inc. (NASDAQ:VVUS)’ board of directors. Denner is just one component of First Manhattan’s preferred slate of directors, and all of the parties involved are eagerly anticipating the mid-July shareholder meeting that will decide its fate. VIVUS’ current management team vigorously opposes First Manhattan’s slate and has repeatedly rebuffed its attempts to secure greater control of the company’s decision-making processes.

Promising pipeline and acquisition noises

One of the key issues at hand concerns Qsymia, a promising obesity drug that may also earn approval as a treatment for diabetes and sleep apnea. Against First Manhattan’s wishes, VIVUS, Inc. (NASDAQ:VVUS) chose to launch Qsymia without the aid of a larger pharmaceutical firm that could provide distribution and doctor-outreach assistance. As such, the drug has not yet enjoyed the success that many expected of it. In fact, some observers have noted that the drug’s prescription base would need to increase by a factor of 10 in order to support VIVUS’ current stock price.

Given the low likelihood that this will occur in the absence of a larger partner, First Manhattan has aggressively advocated for the sale of VIVUS, Inc. (NASDAQ:VVUS). While no buyers have yet stepped forward, many market-watchers believe that a buyout bid is on the horizon. The likelihood of this will increase with the election of First Manhattan’s preferred slate of directors.

Long-term outlook: Invest or stay away?

During the run-up to the July 15 shareholder vote, it is likely that VIVUS will see increased volatility. If First Manhattan’s slate of candidates are elected, new investors may well pile into the company on the expectation that it will seek outside help to market Qsymia or submit to a takeover bid. In either case, long-term investors could be rewarded for their patience.

On the other hand, short-side traders might benefit from an unsuccessful vote. However, this fluid situation defies easy categorization. Investors who wish to benefit from it would do well to assess their own risk appetites and ensure that they are comfortable with sustained levels of volatility.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Sarissa’s Stake in VIVUS Points to Renewed Interest in the Company originally appeared on Fool.com.

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