NEW YORK (AP) -- Shares of Vivus Inc. fell Monday after its largest stakeholder sent a letter to the obesity drug maker's shareholders urging them to replace the company's board with a slate of nominees.
First Manhattan Co., which owns an about 9.9 percent stake in Vivus, said in its letter that the company is "hemorrhaging cash." The New York-based investment firm has nominated nine people to Vivus' board in a bid to replace the company's entire board.
The firm has criticized Vivus for the failed launch of weight loss drug Qsymia. The Food and Drug Administration approved Qsymia in July, and Vivus started selling the drug in September.
It was the second long-term weight loss drug approved in the U.S. since 1999, but sales have not lived up to expectations. In part that's because insurance coverage remains limited and out-of-pocket costs for patients are high. Qsymia also can't be dispensed at pharmacies and is only available through mail order.
In addition, attempts to get the drug approved for use in Europe have been so far unsuccessful.
Vivus issued a statement later on Monday saying that its board and management have made "substantial progress" with Qsymia and the company is well positioned to drive future sales of the drug. It said the next stage of the process will be critical to the company's success, adding that it's in talks with major drug companies to expand its reach with primary-care physicians.
"The company is confident that its management team is best equipped to execute through this critical phase of (Vivus') commercialization," it added.
Vivus shareholders will vote on board members at the Mountain View, Calif., company's annual meeting on July 15.
Vivus' stock ended down 82 cents, or 6 percent, at $13.02 after dropping as low as $12.79 earlier in the day. Over the past year, the company's shares have lost about 51 percent of their value.