Vivus (VVUS) Plunges After Another CEO Resigns

Shares of Vivus (VVUS) plunged last week, after the company's new CEO, Anthony Zook, resigned only after a month on the job. Zook was appointed after activist shareholder First Manhattan won a battle proxy battle to take control of the company. First Manhattan believed Zook to be a good fit for the company, due to his prior industry experience. Zook's departure was reportedly due to recurring issues from a previously diagnosed medical condition.

In Zook's place, Vivus has appointed Seth Fischer, a former executive from Johnson & Johnson (JNJ) as the new CEO. Fischer is also on the board of Trius Therapeutics and BioSig Technologies, and has worked in the pharmaceuticals industry for three decades. Fischer is Vivus' third CEO in less than two months. Daily Chart
Vivus investors have already been concerned about an increasing amount of executive departures with "golden parachute" deals, exacerbated by weak sales of its anti-obesity drug Qsymia. The weight control medication market is getting increasingly crowded, with competitors such as Arena (ARNA) and Orexigen (OREX) also entering the market. Arena's Belviq had a moderately more successful launch than Qsymia, but neither drug came anywhere near the "blockbuster" levels that investors had hoped for. Orexigen's Contrave, which is still pending FDA approval, targets the brain to suppress the appetite, and could become another major competitor in a crowded market. Zook had previously intended to boost sales of Qsymia by finding a major pharma partner to sell the drug and pursue market approval in Europe, where it had previously been rejected. Unfortunately, Orexigen's Contrave is currently closer to approval in the European market. Weight loss medications have been under the microscope over the past decade, after the previous generation of treatments, most notably fenfluramine, seriously damaged heart valves. Fenfluramine, which was combined with phentermine in the popular drug combination fen-phen, was banned in 1997. Meanwhile, Qsymia sales have dwindled to a mere 10,000 per week. Those are anemic sales considering that the company announced that Qsymia was available at approximately 10,000 retail locations nationwide -- including leading retailers Walgreens, Costco, and Duane Reade. Other critics claim that cheaper generic appetite suppressants are equally effective as Qsymia. Shares of Vivus have fallen nearly 50% over the past twelve months, and the company is currently unprofitable. The company has $358 million in cash and equivalents, but reported a negative operating cash flow of $205 million last quarter. Other News About VVUS Vivus CEO Steps Down Citing Health Reasons Vivus CEO leaves after only a month on the job. Vivus Gets 3 CEOs in Less Than 2 Months Will this CEO finally hold on to the top spot? Other Stocks in the News Should You Invest in This Designer's Footsteps? Is Yves Behar a designer worth investing in? These Networking Companies Are Modernizing U.S. Hospitals Will these networking comapnies benefit from rising demand for better Wi-Fi connections? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Sep 13, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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