NEW YORK (AP) — Vivus Inc.'s biggest shareholder said Tuesday it is suing the obesity drug maker as it continues to fight for greater control of the company.
First Manhattan Co., which as a 9.9-percent stake in Vivus, said it was in position to win a proxy fight when Vivus adjourned voting on a slate of new board members. It filed suit aiming to stop the drug maker and its representatives from soliciting proxies or votes for the company's annual shareholder meeting. The investment firm also wants the court to certify disputed results of the election of Vivus' directors, and to stop the company's current directors from taking any further action on behalf of Vivus.
The suit was filed in the Court of Chancery of the State of Delaware.
The legal action is the latest step in a dispute that began in March. Vivus said Tuesday it has been negotiating with First Manhattan in good faith.
Stating that the launch of Vivus' weight loss drug Qsymia was unsuccessful, First Manhattan initially moved to replace Vivus' entire board of directors, claiming that the company needed new and independent leadership. The firm said the company should change its U.S. business strategy and work to get Qsymia approved in Europe
It also sought expand the board to nine directors from six.
Last month, First Manhattan reached out to shareholders seeking support for its slate. And earlier this month, it said it would name Anthony Zook, the former president of MedImmune, as Vivus' CEO if it gains control of the company. Leland Wilson has been CEO of Vivus since 1991.
Shareholders will elect a slate of directors at the company's annual meeting, which was originally scheduled for Monday but was moved to Thursday. First Manhattan wants the court to recognize the votes cast on Monday.
On Saturday, Vivus said it will invite three of First Manhattan's nine nominees, Michael Astrue, Alex Denner and David Norton, to join its board no matter how shareholders voted at the meeting. But on Sunday, the company changed the meeting date and said it has informed the Securities and Exchange Commission that First Manhattan's paid advisers made false and misleading statements to Vivus shareholders.
That statement was related to a report by Institutional Shareholder Services, a proxy advisory firm. Earlier this month, ISS said First Manhattan had chosen good nominees and recommended that Vivus shareholders elect Astrue, Denner, and Norton to the company's board.
"The dissidents have made a compelling case that there is a clear need for additional board oversight of the Qsymia launch and commercialization as well as greater shareholder perspective on the board," ISS said in its report.
First Manhattan maintained Tuesday that Vivus rescheduled the meeting because it was afraid its own nominees would lose the election. Vivus said it felt it needed to report First Manhattan's statements to the SEC and said it adjourned the shareholder vote so its shareholders would have additional time to consider accurate information.
Shares of Vivus rose 9 cents to $14.58 in afternoon trading.