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Vivus investor prepares for proxy fight

MOUNTAIN VIEW, Calif. (AP) -- One of Vivus Inc.'s largest shareholders is trying to replace the company's entire board of directors, saying the launch of its weight loss drug Qsymia has failed.

First Manhattan Co. is nominating replacements for each of the six directors on the Vivus board. The firm said it has expressed concerns to Vivus about its strategy and the "failure" of the launch of Qsymia, which began about six months ago. First Manhattan said Vivus needs new and more independent leadership, and that it believes the company should focus on fixing its U.S. strategy and getting Qsymia approved in the European Union.

First Manhattan owns 8.8 million shares of Vivus, good for an 8.8 percent stake in the company.

Vivus said its board and management have been open to First Manhattan's input. Vivus said it is working to improve sales and insurance reimbursement for Qsymia and is seeking partnership for Stendra, an impotence drug it developed.

The Food and Drug Administration approved Qsymia in July, and Vivus started selling the drug in September. Analysts predicted that sales would eventually reach billions of dollars per year, but early sales have been disappointing because of limited insurance coverage and high copays. Qsymia also can't be dispensed at pharmacies and is only available through mail order.

In February, Vivus said it has filled about 57,000 prescriptions for Qsymia since it went on sale, and revenue in the fourth quarter totaled $2 million. It has been trying to boost sales with supply agreements and a free trial program for prospective patients, and it is negotiating with regulators about allowing the drug to be dispensed at certain pharmacies. The Food and Drug Administration is scheduled to make a decision on the pharmacy application in April.

European Union regulators have not approved the drug, and a panel of regulatory advisers has voted against approval.

First Manhattan's nominees are Michael Astrue, Jon Biro, Johannes Kastelein, Samuel Colin, David York Norton and Herman Rosenman. In January Astrue completed a six-year term as commissioner of the Social Security Administration, and he is also a published poet. Biro is the chief financial officer of Consolidated Graphics Inc., and Rosenman was CFO of diagnostic test maker Gen-Probe Inc. before it was acquired by Hologic Inc. in 2012. York is a former group chairman for Johnson & Johnson's global pharmaceutical business.

Vivus' six directors are Chairman Mark Logan, CEO Leland Wilson, President Peter Tam, Charles Casamento, Ernest Mario, and Linda Shortliffe.

In a statement Friday, Vivus described its current board as comprised of "six highly qualified and experienced directors." The company will make its recommendation on the board election in its upcoming proxy statement, it added.

Shares of Vivus rose 28 cents, or 2.5 percent, to $11.70 Friday. After Qsymia was approved the shares traded as high as $31.21.