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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K/A

(Amendment No. 1)





ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)For the transition period
from                                    to


Commission File Number 001-33389

VIVUS, INC.(Exact name of Registrant as specified in its charter)



Delaware(State or other jurisdiction of
incorporation or organization)

94-3136179(IRS employer
identification number)900 E. Hamilton Avenue, Suite 550
Campbell, California(Address of principal executive office)

95008(Zip Code)


Registrant's
telephone number, including area code: (650) 934-5200

Securities
registered pursuant to Section 12(b) of the Act:



Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.001 Par Value
(Title of class)

The Nasdaq Global Select MarketPreferred Share Purchase Rights
(Title of class)


Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ý    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No ý

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.    o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
(Check one):



Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a
smaller reporting company)

Smaller reporting company o Emerging growth company o


If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o    No ý

The aggregate market value of the common equity held by non-affiliates of the Registrant as of June 30, 2017, totaled approximately $128,175,791 based on
the closing stock price as reported by the Nasdaq Global Select Market.

As
of April 13, 2018, there were 106,041,014 shares of the Registrant's common stock, $0.001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE



Document Description

10-K partNone.






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EXPLANATORY NOTE

This Amendment No. 1 to Form 10-K, or this Amendment, amends the Annual Report on Form 10-K for the fiscal year ended
December 31, 2017 originally filed on March 14, 2018, or the Original Filing, by VIVUS, Inc., a Delaware corporation. We are filing this Amendment to present the information
required by Items 10, 11, 12, 13 and 14 of Part III of Form 10-K because a definitive proxy statement containing such information will not be filed within 120 days after
the end of our fiscal year covered by the Original Filing.

This
Amendment amends and restates in its entirety Items 10, 11, 12, 13 and 14 of Part III and amends Part IV of the Original Filing. Except as expressly set forth
herein, this Amendment does not reflect events occurring after the date of the Original Filing or modify or update any of the other disclosures contained therein in any way other than as required to
reflect the amendments discussed above. Accordingly, this Amendment should be read in conjunction with the Original Filing and our other filings with the Securities and Exchange Commission, or SEC.

When
we refer to "we," "our," "us," the "Company" or "VIVUS" in this document, we mean the current Delaware corporation, or VIVUS, Inc., and its California predecessor, as well as
all of our consolidated subsidiaries.

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INDEX





PART IIIItem 10:

Directors, Executive Officers and Corporate Governance

4Item 11:

Executive Compensation

9Item 12:

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

33Item 13:

Certain Relationships and Related Transactions, and Director Independence

36Item 14:

Principal Accountant Fees and Services

38PART IVItem 15:

Exhibits, Financial Statement Schedules

39


In
VIVUS's filings with the SEC, information is sometimes "incorporated by reference." This means that we refer you to information previously filed with the SEC that should be considered
as part of the
particular filing. As provided under SEC regulations, the "Compensation Committee Report" contained in this Amendment specifically is not incorporated by reference into any other filings with the SEC
and shall not be deemed to be "filed" with the SEC. In addition, this Amendment includes a website address. This website address is intended to provide inactive, textual references only. The
information on this website is not part of this Amendment.

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PART III

Item 10.Directors, Executive Officers and Corporate Governance

Our Executive Officers

The following table and the biographical information that follows it set forth information as of April 13, 2018 regarding our executive
officers:



Name

Age

PositionThomas B. King


63

Interim Chief Executive Officer and DirectorMark K. Oki


49

Chief Financial Officer and Chief Accounting OfficerJohn L. Slebir


52

Senior Vice President, Business Development and General Counsel and SecretarySantosh T. Varghese, M.D.


47

Chief Medical Officer


The
biographical information of Mr. King is set forth below under "Our Directors."

Mark K. Okihas served as our Chief Financial Officer and Chief Accounting Officer since October 2015. Prior to this, Mr. Oki held
the following positions at Alexza Pharmaceuticals, Inc., a publicly traded pharmaceutical company: Senior Vice President, Finance and Chief Financial Officer from July 2012 until October 2015,
Principal Accounting Officer from May 2010 until October 2015, Principal Financial Officer and Secretary from December 2011 until October 2015, Vice President, Finance and Controller from February
2010 until July 2012 and Controller from April 2006 until February 2010. From June 2001 until April 2006, he served as the Controller of Pharmacyclics, Inc., a publicly traded
development stage pharmaceutical company. From 1998 until 2001, Mr. Oki held several positions at Incyte Genomics, Inc., now Incyte Corporation, a publicly traded company, including most
recently as Assistant Controller. From 1992 until 1997, he held several positions at Deloitte & Touche LLP, a public accounting firm. Mr. Oki holds a B.S. in Business
Administration with a concentration in Accounting from San Jose State University.

John L. Slebirhas served as our Senior Vice President, Business Development and General Counsel since January 2014, and, since June 2012,
he also has served as our Secretary. From June 2011 until January 2014, Mr. Slebir served as our Vice President, Business Development and General Counsel, from January 2011 until June 2011, he
served as our Vice President, General Counsel, and, from September 2009 until January 2011, he served as our General Counsel on a part-time basis. From March 1999 until January 2011, Mr. Slebir
served as an attorney at Wilson Sonsini Goodrich & Rosati, P.C., specializing in corporate securities and corporate governance. Prior to joining Wilson Sonsini Goodrich & Rosati, P.C.,
Mr. Slebir was an attorney at two prominent Bay Area law firms specialized in insurance and sporting equipment defense litigation. Mr. Slebir holds a B.A. in Communications from San
Diego State University and a J.D. from Santa Clara University School of Law.

Santosh T. Varghese, M.D.has served as our Chief Medical Officer since January 2016. Dr. Varghese served as our Vice President,
Medical & Regulatory Affairs, Pharmacovigilance, and QA from October 2013 until December 2015, as our Vice President, Head of Medical Affairs, Pharmacovigilance, and Regulatory Compliance from
July 2013 until October 2013, as our Vice President, Head of Medical Affairs and Pharmacovigilance from April 2012 until July 2013, and as our Vice President, Head of Medical Affairs from March 2012
until April 2012. Prior to this, Dr. Varghese was Senior Vice President, Medical Affairs at Elan Pharmaceuticals, a biopharmaceutical company, from January 2011 until March 2012. From April
2010 until January 2011, Dr. Varghese served as an executive consultant in the pharmaceutical industry for medical education and pharmaceutical companies. From June 2008 until April 2010, he
was Vice President Primary Care & Cardiovascular in Global Medical Affairs at Schering-Plough Corporation (now Merck & Co.), a pharmaceutical

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company,
in addition to other senior roles at Schering-Plough Corporation from May 2006 until June 2008. From November 2000 until May 2006, he held senior roles at Aventis and Sanofi-Aventis (now
Sanofi SA), a pharmaceutical company. Dr. Varghese previously served on the board of directors of the American Lung AssociationNew York, and was an Adjunct Associate
Professor at Touro University College of Medicine (now New York Medical College). Dr. Varghese is the co-author of abstracts and journal publications in multiple therapeutic areas.
Dr. Varghese holds a B.S. in Biology from Pennsylvania State University and an M.D. from St. George's University School of Medicine. He completed his medical training in the Caribbean,
United States, and United Kingdom.

Our Directors

Our board of directors, or the Board, currently consists of six directors.

The
following table and the biographical information that follows it set forth information as of April 13, 2018 regarding our Board:



Name

Age

Position Held with the Company

First
Became a
DirectorThomas B. King


63

Interim Chief Executive Officer and Director


2017David Y. Norton(1)(2)(3)(4)


66

Chairman of the Board of Directors and Director


2013Jorge Plutzky, M.D.(1)(4)


59

Director


2013Eric W. Roberts(2)(3)(4)


54

Director


2015Herman Rosenman(1)(2)(4)


70

Director


2013Allan L. Shaw


54

Director


2015


(1)Member
of the Audit Committee of the Board(2)Member
of the Compensation Committee of the Board(3)Member
of the Nominating and Governance Committee of the Board(4)Member
of the Corporate Development Committee of the Board


Thomas B. Kinghas served as our interim Chief Executive Officer since December 31, 2017 and as a director of the Company since
May 24, 2017. He has served as an independent biotechnology consultant and advisor since August 2016. Previously, Mr. King served as President, Chief Executive Officer and a member of
the board of directors of Alexza Pharmaceuticals, Inc., a publicly traded pharmaceutical company, from June 2003 to August 2016. From October 2015 to August 2016, Mr. King also served as
Chief Financial Officer and Chief Accounting Officer of Alexza Pharmaceuticals, Inc. From September 2002 to April 2003, Mr. King served as President, Chief Executive Officer and a member
of the board of directors of Cognetix, Inc., a privately held biopharmaceutical development stage company. From January 1994 to February 2001, Mr. King held various senior executive
positions at Anesta Corporation, a publicly traded pharmaceutical company, including President and Chief Executive Officer from January 1997 to October 2000, and was a member of the board of directors
until it was acquired by Cephalon, Inc., a publicly traded biopharmaceutical company. Mr. King currently serves on the board of directors of Concentric Analgesics, Inc., Faraday
Pharmaceuticals, Inc. and Satsuma Pharmaceuticals, Inc., all privately held biotechnology companies. Mr. King also serves as a mentor at SPIRE Bioventures, a multi-disciplinary
international consortium aiding biotechnology entrepreneurs, and as an Advisory Board Member of the University of Colorado BioFrontiers Institute. Mr. King received a B.A. in chemistry from
McPherson College and an M.B.A. from the University of Kansas Graduate School of Business.

Mr. King's
qualifications as a director include his extensive leadership experience in the pharmaceutical and biopharmaceutical industry, including experience with small and large
development

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stage
pharmaceutical companies, and his experience serving on several boards of directors of both public and private companies.

David Y. Nortonhas served as a director of the Company since July 19, 2013. From February 2012 until July 2012, Mr. Norton
served as Interim CEO of Savient Pharmaceuticals Inc., a pharmaceutical company that filed for Chapter 11 bankruptcy in October 2013. Until his retirement in September 2011,
Mr. Norton was Company Group Chairman, Global Pharmaceuticals for Johnson & Johnson, a public healthcare company. In this position he was responsible for leading and developing the
strategic growth agenda, including the strategy for licensing, acquisitions and divestments, and ensuring alignment with its global strategic functions, research and development and commercial
organizations. Mr. Norton began his Johnson & Johnson career in 1979, and held a number of positions at the company, including Company Group Chairman, Worldwide Commercial and Operations
for the CNS, Internal Medicine franchise from 2006 to 2009, Company Group Chairman for the pharmaceutical businesses in Europe, the Middle East and Africa from 2004 to 2006, and Company Group Chairman
for the pharmaceutical businesses in North America from 2003 to 2004. He also serves as a director of the Global Alliance for TB Drug Development, a non-profit organization dedicated to the discovery
and development of new, faster-acting and affordable tuberculosis medicines, and as a director of Mallinckrodt plc, a specialty pharmaceutical company. Mr. Norton previously served as a
director of INC Research Holdings, Inc., a public global contract research organization, from February 2015 to August 2017 and as Chairman of the Board from May 2016 to August 2017. He also
previously served as a director of Savient Pharmaceuticals Inc. from October 2011 until December 2013, a Senior Advisor to Tapestry Networks, a member of the board of directors of the Alliance
for Aging Research, a member of the board of directors of the Pharmaceutical Research and Manufacturers of America, a committee member of the Australian Pharmaceutical Manufacturers Association, and a
member and previous Chairman of the board of directors of the American Foundation for Suicide Prevention. Mr. Norton is a graduate of Control Data Institute, Australia and the College of
Distributive Trades, United Kingdom.

Mr. Norton's
qualifications as director include his extensive global commercial experience at the executive level in the pharmaceutical and biotechnology industry and his
experience serving on several boards of directors, including as Chairman of the board of a public pharmaceutical company.

Jorge Plutzky, M.D.has served as a director of the Company since May 9, 2013. Since 1996, Dr. Plutzky has served as the
Director of The Vascular Disease Prevention Program, which includes the Lipid/Prevention Clinic, in the Cardiovascular Medicine Division at Brigham and Women's Hospital, where he is also Director of
Preventive Cardiology. Since 1995, he has been on the faculty at Harvard Medical School and has directed a basic science laboratory focused on transcriptional mechanisms involved in adipogenesis,
lipid metabolism, and diabetes, and their relationship to inflammation and atherosclerosis. Throughout his career, Dr. Plutzky has also been involved in translational clinical studies
investigating links between metabolic disorders and cardiovascular disease. Dr. Plutzky has been a member of the scientific advisory boards of the Sarnoff Cardiovascular Research Foundation
since 2009 and Ember Therapeutics since 2012. Dr. Plutzky has been elected to the American Society for Clinical Investigation and is a Fellow of the American College of Cardiology.
Dr. Plutzky's papers have appeared in journals that includeScience,PNAS, Diabetes,Lancet, Annals of Internal Medicine, and Nature Medicine. Dr. Plutzky has been involved with the U.S. Food and Drug Administration, serving both as a member of the
Endocrinologic and
Metabolic Drugs Advisory Committee and in advising and presenting for new drug application sponsors. He has been involved with both the American Heart Association and the American Diabetes
Association. Dr. Plutzky has been recognized with the Eugene Braunwald Teaching Award, the University of Cologne's Klenk Lecture, Vanderbilt University's Rabin Lecture, Northwestern
University's DeStevens Lecture and Harvard Medical School's Tucker Collins Lecture. Dr. Plutzky served on the board of directors of Novelion Therapeutics Inc. (which acquired Aegerion
Pharmaceuticals, Inc.), a publicly traded biopharmaceutical company, from April 2015 to August 2017. Dr. Plutzky holds a B.A. from the University of Virginia, where he was an Echols
Scholar

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and
a member of Phi Beta Kappa, and an M.D. from the University of North Carolina, Chapel Hill. He completed research fellowships at the National Institutes of Health and the Massachusetts Institute
of Technology.

Dr. Plutzky's
clinical background, medical knowledge, and science expertise in the prevention and treatment of cardiometabolic disease brings valuable and unique insight to the
Board as evaluation, development and commercialization of our current and potential future products proceed.

Eric W. Robertshas served as a director of the Company since September 15, 2015. Since January 2012, Mr. Roberts has been a
founding Managing Director of Valence Life Sciences, LLC, a life sciences venture capital firm. From 2004 to 2012, Mr. Roberts was a founding Managing Director of Caxton Advantage
Venture Partners, an investment firm. From 1986 to 2004, Mr. Roberts served in a variety of roles as an investment banker, including as Managing Director, Partner and Founder of the Life
Sciences Department at Dillon, Read & Co. Inc., an investment bank which merged to become UBS AG, and Managing Director and Co-Head of the Global Healthcare Investment Banking
Group at Lehman Brothers, a former global services financial firm. Mr. Roberts currently serves on the board of directors of Invuity, Inc., a publicly traded medical technology company.
He also served on the board of directors of Gemin X Pharmaceuticals, Inc., a biotechnology company, from 2007 through its sale to Cephalon, Inc. (now Teva Pharmaceutical
Industries Ltd.) in 2011. Mr. Roberts holds a B.S. in economics from the Wharton School of the University of Pennsylvania.

Mr. Roberts'
qualifications as a director include his extensive experience as an investment banker and venture capitalist in the healthcare industry and his broad healthcare
industry knowledge.

Herman Rosenmanhas served as a director of the Company since July 19, 2013. Mr. Rosenman was Chief Financial Officer of
Natera, Inc., a publicly traded diagnostics company, from February 2014 to January 2017. Prior to this, Mr. Rosenman was Senior Vice President, Finance and Chief Financial Officer of
Gen-Probe, Inc. (currently, Hologic, Inc.), a molecular diagnostic company, from June 2001 to
October 2012. Prior to joining Gen-Probe in 2001, Mr. Rosenman was President and Chief Executive Officer of Ultra Acquisition Corp., a retail chain and consumer products manufacturer, from 1997
to 2000. In addition, he served as President and Chief Executive Officer of RadNet Management, Inc., a large healthcare provider, from 1994 to 1997, and as Executive Vice President and Chief
Financial Officer for Rexene Corp., a Fortune 1000 company in the petrochemicals industry. Mr. Rosenman was previously a partner at Coopers & Lybrand (currently,
PricewaterhouseCoopers LLP), where he served numerous Fortune 1,000 clients, principally in the pharmaceuticals and telecommunications industries. Mr. Rosenman currently serves on the
board of directors of Natera, Inc. and Oxford Immunotec Global PLC, a publicly traded diagnostics company. Mr. Rosenman also served on the board of directors of Discovery Partners
International, Inc., from 2003 until its reverse-merger into Infinity Pharmaceuticals, Inc. in 2006, and thereafter Infinity Pharmaceuticals, Inc., where he served until 2007, as
well as on the boards of directors of ARYx Therapeutics, Inc., from which he resigned in 2011, Emphasys Medical, Inc. and Medistem, Inc. (acquired by Intrexon Corp.).
Mr. Rosenman received a B.B.A. in finance and accounting from Pace University and an M.B.A. in finance from the Wharton School of the University of Pennsylvania.

Mr. Rosenman's
qualifications as director include his experience in the biotechnology and pharmaceuticals industries, his extensive leadership experience as both a Chief Executive
Officer and a Chief Financial Officer, his diverse industry background in companies ranging from large multinational corporations to start-ups, and his broad base of expertise with initial public
offerings, mergers & acquisitions, turn-arounds and high growth companies.

Allan L. Shawhas served as a consultant to the Company since February 1, 2018 and as a director of the Company since
September 15, 2015. Since February 2018, he has served as Chief Financial Officer on a consultant, part-time basis to Immunomet Therapeutics, a private clinical stage biotechnology company.
From January 2016 to February 2017, Mr. Shaw was the Chief Financial

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Officer
and Treasurer of Syndax Pharmaceuticals, Inc., a publicly traded clinical stage biopharmaceutical company. Mr. Shaw was Managing Director of Alvarez & Marsal LLC, a
global professional services firm, and led their biopharmaceutical consulting practice, from December 2011 to March 2015, and supported the firm on an ad hoc basis from March 2015 to October 2015.
From 2009 to 2011, he served as the Chief Financial Officer of NewLead Holdings LTD., a publicly traded global shipping company. From 2005 to 2009, he was the founder and Senior Managing
Director of Shaw Strategic Capital LLC, an international financial advisory firm, focused on providing strategic financial counsel on a wide variety of issues such as general corporate finance,
mergers and acquisitions, capital structuring, licensing and capital markets. From 2002 to 2004, Mr. Shaw was the Chief Financial Officer of Serono S.A., a publicly traded global
biotechnology company, and from 1994 to 2001, he was the Chief Financial Officer of Viatel, Inc., a publicly traded international communications company. Mr. Shaw serves on the board of
directors of Edith & Carl Marks JCH of Bensonhurst, a non-profit organization. He also served on the board of directors of Akari Therapeutics, Plc. from 2013 to 2016, the Central New
York Biotech Accelerator (formerly Central New YorkBiotech Research Center) from 2009 to 2013, NewLead Holdings LTD. from 2009 to 2011, Navios Maritime Holdings, Inc. from
2005 to 2010, Serono S.A. as an Executive Management Board Member from 2002 to 2004 and Viatel Inc. from 1996 to 2002. He has contributed to several corporate governance books and is a
member of the American Institute of Certified Public Accountants, New York Society of Certified Public Accountants and Corporate Directors Group. Mr. Shaw received a B.S. from the State
University of New York (Oswego College) and is a certified public accountant in the State of New York.

Mr. Shaw's
qualifications as a director include his extensive leadership experience as a Chief Financial Officer, his diverse industry background in companies of ranging sizes,
and his broad base of expertise with capital markets and operational expertise with a view toward corporate governance, risk management and leadership.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers and directors, and
persons who own more than 10% of a registered class of our equity securities, to file certain reports of ownership with the SEC. Such officers, directors and stockholders are also required by SEC
rules to provide us with copies of all Section 16(a) forms that they file. Based solely on our review of copies of such forms received by us or on written representations from reporting persons
that no other reports were required during the fiscal year ended December 31, 2017, we believe that during 2017, all of our executive officers, directors and 10% stockholders timely complied
with all Section 16(a) filing requirements except as follows: on June 19, 2017, David Y. Norton, Jorge Plutzky, M.D., Eric W. Roberts, Herman Rosenman and Allan L. Shaw, directors of the
Company, each filed one late Form 4 reporting the vesting of restricted stock units.

Code of Business Conduct and Ethics

The Board has adopted a Code of Business Conduct and Ethics, which is applicable to all of our employees, officers and directors. The Code of
Business Conduct and Ethics may be found on our website atwww.vivus.com. We will disclose any amendment to the Code of Business Conduct and Ethics or
waiver of a provision of the Code of Business Conduct and Ethics, including the name of the person to whom the waiver was granted, on our website on the Investor Relations page within four business
days following the date of such amendment or waiver.

Material Changes to Nominee Recommendation Procedures

There are no material changes to the procedures by which stockholders may recommend nominees to our Board.

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Audit Committee

We have a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The
Audit Committee's main function is to oversee our accounting and financial reporting processes, internal system of control, independent registered public accounting firm relationships and the audits
of our financial statements. The Audit Committee consists of directors Norton, Plutzky and Rosenman, none of whom is an employee of the Company and each of whom is independent within the meaning of
Rule 5605 of the Nasdaq listing rules and the independence requirements of Rule 10A-3 of the Exchange Act, in each case as currently in effect. The Board has determined that
Mr. Rosenman is an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K. Mr. Rosenman serves as Chairman of the Audit Committee.

Item 11.Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis discusses:



We
refer to the following individuals as our "named executive officers" for 2017:



Name

TitleThomas B. King

Interim Chief Executive OfficerMark K. Oki

Chief Financial Officer and Chief Accounting OfficerJohn L. Slebir

Senior Vice President, Business Development and General Counsel and SecretarySantosh T. Varghese, M.D.

Chief Medical OfficerSeth H. Z. Fischer(1)

Former Chief Executive Officer


(1)On
December 24, 2017, the Company and Mr. Fischer agreed that Mr. Fischer would depart from the role of Chief Executive Officer, effective
December 31, 2017.


General Philosophy

We compensate our named executive officers through a combination of base salary, cash bonus and equity compensation designed to be competitive
with comparable companies. Our core objective is to attract, retain, reward and motivate our named executive officers and to align our performance with the long-term interests of our stockholders. We
evaluate our compensation based on a number of factors, including corporate and individual performance. We compensate our named executive officers through a combination of base salary, cash bonus and
equity compensation designed to be competitive with comparable companies. Our core objective is to attract, retain, reward and motivate our named executive officers and to align our performance with
the long-term interests of our stockholders. We evaluate our compensation based on a number of factors, including corporate and individual performance. In 2017, our focus was continuing to maximize
the value of Qsymia® and STENDRA®/SPEDRA, building our product development pipeline and managing our cost structure. In 2017, we licensed the Qsymia commercial
rights in South Korea to Alvogen. If approved, South Korea will be the first territory outside of the U.S. in which Qsymia will be commercially available. We also regained the commercial rights for
STENDRA/SPEDRA in Africa, the Middle East, Turkey, and the CIS countries, including Russia, and are in active negotiations to license these territories to third parties. In

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2017,
we continued to address our cost structure to reflect the realities of the branded anti-obesity market reducing our selling, general and administrative costs by 23%. Also, in 2017, we expanded
our product development pipeline with the acquisition and development of tacrolimus for the treatment of pulmonary arterial hypertension, or PAH. During 2017, we obtained orphan drug designation in
the EU for tacrolimus and held a pre-investigational new drug application (IND) meeting with the U.S. Food and Drug Administration, or FDA, to address our questions related to preclinical, nonclinical
and clinical data and planned design of clinical trials of tacrolimus in class III and IV PAH patients, and clarified the requirements needed to file an IND to initiate a clinical trial in this
indication.

Our
compensation programs are designed to:



In
determining the compensation for our named executive officers, we, in connection with consulting with our compensation consultant, Radford, an Aon Company, or Radford, consider a
number of factors, including information regarding comparably sized companies in the biotechnology and pharmaceutical industries in the United States. We also consider the seniority level of the
employee, and the employee's overall performance and contribution to the Company.

Executive Compensation Program Objectives



Our Compensation Committee relies on experience with other companies in our industry and third-party industry compensation surveys, including
those compiled and periodically provided to the Compensation Committee by Radford, executive compensation data as reported in peer companies' proxy statements, and internally generated comparisons of
the various elements of total compensation to peer group companies, or the Peer Group, to determine base salary, performance-based cash bonuses and performance-based equity awards and the portion of
total compensation each element should comprise. Given our named executive officers' level of responsibility in the Company and impact on the performance of the Company, we believe that a larger
portion of our named executive officers' compensation should be based on performance than that of our lower-level employees. Consistent with our compensation philosophy, we have structured each
element of our compensation program as described below.

We
design our base pay to provide the essential reward for an employee's work. Once base pay levels are determined, annual increases in base pay are provided to recognize an employee's
expanded role and capabilities, specific performance achievements and contributions. Adjustments may also be made for changes in comparable peer company compensation levels in order to remain
competitive to attract and retain employees.

We
also utilize annual cash bonuses to compensate employees for the achievement of corporate objectives as well as an employee's outstanding results while allowing us to remain
competitive with other companies.

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We utilize equity-based compensation to ensure that we have the ability to retain employees over a longer period of time and to provide employees with a form of
reward that aligns their interests with those of our stockholders. Employees whose skills and results we deem to be critical to our long-term success are eligible to receive higher levels of
equity-based compensation. In 2017, our annual equity-based compensation to our named executive officers, other than Mr. Fischer, consisted of stock options, and our annual equity-based
compensation to Mr. Fischer included a mix of stock options and restricted stock units. Effective December 31, 2017, Mr. Fisher departed from the role as the Company's Chief
Executive Officer, and Mr. King was appointed to serve as the Company's interim Chief Executive Officer. Accordingly, Mr. King's equity-based compensation during 2017 was for his role as
a non-employee director on the Company's Board. The annual equity awards to our named executive officers (other than the 2017 option award to Mr. King for his role as a non-employee director)
and our other employees vest over a period of four years, providing a long-term incentive to our employees as they work on multi-year commercialization and drug development programs. The 2017 option
award to Mr. King vests over a three year period to provide a similar long-term incentive for our non-employee directors.

Core
benefits, such as our basic health benefits, 401(k) program, disability and life insurance plans, are designed to provide support to employees and their families and to be
competitive with other companies in our industry.



For determining 2017 compensation levels, our Compensation Committee, after consulting with Radford, chose a group of 22 companies to include in
the Peer Group based on their similarity to us in terms of industry focus, stage of development, market capitalization size, revenues, financial position, entity size, pharmaceutical assets, business
strategy, and the geographical location of the talent pool with which we compete. The market data for the Peer Group was drawn from publicly available documents. Additional compensation data for our
former Chief Executive Officer was obtained from the Radford Global Life Sciences Survey, which was provided to the Compensation Committee by Radford. For 2017, the Peer Group, which was determined by
the Compensation Committee after consulting with Radford, consisted of the following companies:



AcelRx Pharmaceuticals, Inc.

Infinity Pharmaceuticals, Inc.Adamas Pharmaceuticals, Inc.

Omeros CorporationAlimera Sciences, Inc.

Orexigen Therapeutics, Inc.Aralez Pharmaceuticals Inc.

Pernix Therapeutics Holdings, Inc.Arena Pharmaceuticals, Inc.

Retrophin, Inc.BioDelivery Sciences International, Inc.

SciClone Pharmaceuticals, Inc.Corcept Therapeutics Incorporated

Spectrum Pharmaceuticals, Inc.Corium International, Inc. CTI BioPharma Corp.

Sucampo Pharmaceuticals, Inc. (acquired by Mallinckrodt public limited company)Cumberland Pharmaceuticals Inc.

Teligent, Inc.Enanta Pharmaceuticals, Inc.

Zogenix, Inc.ImmunoGen, Inc.


The
data on the compensation practices of the Peer Group is gathered by our searches of publicly available information. Due to the variations between companies reporting the individual
and roles for which compensation is disclosed, directly comparable information is not available from each peer company with respect to each of our named executive officers. In considering the Peer
Group compensation data, the Compensation Committee recognizes that executives at different companies can play significantly different roles, with different responsibilities and scope of work, even
though they may hold similar titles or positions. Moreover, it is not always possible to determine the respective

11

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qualitative
factors that may influence compensation from the publicly reported compensation data, such as scope of each named executive officer's responsibilities, their performance during the period
under consideration or their perceived importance to their companies' business, strategy and objectives. Accordingly, the Compensation Committee looked to information about the Peer Group as one of a
number of considerations in establishing executive compensation levels (as described in more detail below). In determining compensation for our named executive officers, the Compensation Committee
reviewed both Peer Group information and the collective experience of the members of our Compensation Committee and executive management to establish our compensation practices.



In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we held a non-binding stockholder vote at our 2017
Annual Meeting of Stockholders, or the 2017 Annual Meeting, on our 2016 executive compensation practices. The Compensation Committee, while not bound to act on a negative vote, carefully considers the
opinion of its stockholders in making compensation decisions. We also have an ongoing dialogue with our largest stockholders about various aspects of our business and corporate governance, and we take
into consideration the concerns raised by such stockholders. The stockholders did not approve, on an advisory basis, our 2016 executive compensation at the 2017 Annual Meeting. After careful
consideration, the Compensation Committee made changes to the Company's executive compensation practices by reducing the number and Black-Scholes model value of equity awards granted to our named
executive officers. In alignment with our philosophy on stockholder say-on-pay and with the results of the say-on-pay frequency vote held at our 2017 Annual Meeting, we intend to continue to hold
non-binding stockholder say-on-pay votes annually.

Executive Compensation Components

We have structured each element of our compensation package as follows:



We determine our named executive officers' salaries based on job responsibilities and individual experience, and we benchmark the amounts we pay
against comparable competitive market compensation for similar positions within our Peer Group and industry. Specifically, we utilize information obtained from our comparison of Peer Group
compensation data and the annual Radford Global Life Sciences Survey, or the Comparison Data. Our Compensation Committee reviews the salaries of our named executive officers annually, and our
Compensation Committee grants increases in salaries based on a review of the Comparison Data and of individual performance during the prior calendar year provided that any increases are within the
guidelines determined by the Compensation Committee for each position. Guidelines are adjusted and modified on an annual basis based on information obtained from our review of the Comparison Data, as
well as from our Compensation Committee's and management's experience and general employment market conditions for our industry and geographic area. Increases in base salary are based on individual
performance as merit increases and on the Comparison Data as market increases; such increases are not automatic or guaranteed.

In
January 2017, our Compensation Committee reviewed base salaries for our then serving named executive officers. The Compensation Committee considered a number of factors in setting the
2017 base salaries for our then serving named executive officers, including maximizing the value of Qsymia and STENDRA/SPEDRA, building our product development pipeline and managing our cost
structure. In addition, the Compensation Committee reviewed the Comparison Data and the individual performance of our named executive officers during the prior calendar year. Following the
Compensation Committee's review, Messrs. Fischer, Oki and Slebir and Dr. Varghese received merit increases to their base salaries based on individual performance.

12

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The
table below provides the base salary for each named executive officer:



Name

2017
Increase
to Base
Salary

2017
Base
Salary ($)Thomas B. King(1)





Mark K. Oki


3.5
%

362,250John L. Slebir


3.5
%

468,650Santosh T. Varghese, M.D.


3.5
%

421,900Seth H. Z. Fischer


3.5
%

721,000


(1)Effective
December 31, 2017, Mr. King was appointed to serve as the Company's interim Chief Executive Officer.




Annual Bonus Plan.We awarded cash bonuses under the Annual Bonus Plan to our eligible named executive officers based on our overall
corporate
performance, achievement of general corporate performance objectives established by our Board of Directors in February 2017 and individual performance. The cash bonuses are based on an end-of-year
assessment by our Compensation Committee. The corporate performance and the achievement of corporate objectives determine the percent of the eligible cash bonus to be paid to each eligible named
executive officer. Each eligible named executive officer's individual performance is reviewed to determine how such named executive officer's performance contributed to our overall corporate
performance and achievement of corporate performance objectives. The Compensation Committee uses this information to determine the named executive officer's cash bonus award, such that the percent of
the eligible bonus to be paid to a named executive officer may be increased, decreased or eliminated based on the individual performance review. Cash bonuses under the Annual Bonus Plan are awarded on
a discretionary basis, and the Compensation Committee may modify, eliminate or adjust corporate objectives at any time, thereby ensuring that employees are compensated for performance.

For
2017, our corporate performance objectives as approved by our Board in February 2017, were as follows:



In
the Compensation Committee's opinion, the Company succeeded in meeting the following corporate objectives: achieving certain regulatory and intellectual property goals and achieving certain
compliance excellence goals and certain human resources goals. Further, in the Compensation Committee's opinion, the Company succeeded, in part, in meeting the following corporate objective: achieving
certain strategic engagement and business strategy goals. Based on the achievements in 2017, the Compensation Committee determined that bonuses under the Annual Bonus Plan equaling 69.4% of the
eligible cash bonus potential would be paid for 2017 to our eligible employees under the plan, including our eligible named executive officers.

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The
table below provides the target bonus for each named executive officer who participated in the Annual Bonus Plan for 2017 and the executive's actual bonus amount:



Name

2017 Target
Bonus as a
Percentage of
Base Salary

2017
Target
Bonus ($)

2017
Maximum
Bonus as a
Percentage of
Base Salary

2017
Maximum
Bonus
($)(1)

2017 Actual
Bonus as a
Percentage of
Base Salary

2017
Actual
Bonus ($)Thomas B. King(2)

















Mark K. Oki


40
%

144,900


40
%

144,900


28
%

100,561John L. Slebir


50
%

234,325


50
%

234,325


35
%

162,622Santosh T. Varghese, M.D.


40
%

168,760


40
%

168,760


18
%

75,942Seth H. Z. Fischer(3)


80
%

576,800


80
%

576,800








(1)The
Compensation Committee may award up to 10% of base salary of additional bonus to each named executive officer based on individual performance.(2)Effective
December 31, 2017, Mr. King was appointed to serve as the Company's interim Chief Executive Officer. Mr. King did not participate in
the Annual Bonus Plan for 2017.(3)On
December 24, 2017, the Company and Mr. Fischer agreed that Mr. Fischer would depart from the role of Chief Executive Officer, effective
December 31, 2017. The Company and Mr. Fischer entered into a Confidential Separation, General Release and Post-Separation Consulting Agreement, effective December 31, 2017, or
the Separation Agreement. Pursuant to the Separation Agreement, Mr. Fischer is entitled to receive: (a) twelve equal monthly payments of $48,066.67 beginning no later than
January 31, 2018, which is the equivalent of 1/12th of Mr. Fischer's 2017 target bonus of $576,800.04 and (b) a single lump sum cash payment of $576,800.04 no later than
January 31, 2018, which is one hundred percent of Mr. Fischer's 2017 target bonus. Please see below for a further description of the Separation Agreement.


For
2018, under the Annual Bonus Plan, the Compensation Committee determined that our Chief Financial Officer, Senior Vice Presidents (or equivalent pay grade) and Vice Presidents (or
equivalent pay grade) would be eligible to receive target and maximum cash bonuses of up to 40%, 50% and 40% of their base salaries, respectively. The table below provides the 2018 base salary and the
target and maximum bonuses for each named executive officer who is participating in the Annual Bonus Plan for 2018:



Name

2018
Base
Salary ($)

2018 Target
Bonus as a
Percentage of
Base Salary

2018
Target
Bonus ($)

2018
Maximum
Bonus as a
Percentage of
Base Salary

2018
Maximum
Bonus ($)(1)Thomas B. King(2)


507,000











Mark K. Oki


383,985


40
%

153,594


40
%

153,594John L. Slebir


482,710


50
%

241,355


50
%

241,355Santosh T. Varghese, M.D.


426,120


40
%

170,448


40
%

170,448


(1)The
Compensation Committee may award up to 10% of base salary of additional bonus to each named executive officer based on individual performance.(2)Mr. King,
as the interim Chief Executive Officer, is not a participant in the Annual Bonus Plan for 2018.


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We award equity compensation to our named executive officers based on the performance of the named executive officer and guidelines related to
each named executive officer's position in the Company. For our employees, other than our named executive officers, we determine our equity award guidelines based on information derived from our
Compensation Committee's and management's experience. With respect to our named executive officers, we rely on Radford to review a comparison of companies and other relevant information regarding
companies in our industry and provide recommendations to us. Also, we utilize the Comparison Data to modify and adjust our equity
award guidelines. We typically base awards to newly hired employees on these guidelines, and we base awards to continuing employees on these guidelines along with an employee's performance for the
prior fiscal year. In determining the amount of awards, we generally do not consider an employee's current equity ownership in the Company or the prior awards that are fully vested. Rather, we
evaluate each employee's awards based on the factors described above and competitive market factors in our industry.

Our
stock option awards typically vest over a four-year period subject to the continued service of the employee to the Company. Twenty-five percent of the shares typically vest on the
first anniversary of the option award, with the remaining shares vesting monthly in equal amounts over the remainder of the vesting period. Our restricted stock unit awards typically vest over a
four-year period subject to the continued service of the employee to the Company. Twenty-five percent of the shares typically vest on each annual anniversary of the restricted stock unit award. Unless
our employees (including our named executive officers) elect otherwise, upon the vesting of the restricted stock units shares of Common Stock are sold to satisfy the tax liability due upon such
vesting. We believe these vesting arrangements encourage our employees to continue service to the Company for a longer period of time and remain focused on our multi-year long-term drug development
and commercialization programs.

Timing of Equity Awards.Our Compensation Committee typically makes award decisions for employees at its first meeting in each fiscal
year. We
believe determining annual awards at this time allow the Compensation Committee to consider a number of factors related to the stock option award and restricted stock unit award decisions, including
corporate performance for the prior fiscal year, employee performance for the prior fiscal year and expectations for the upcoming fiscal year. With respect to newly hired employees, our practice is
typically to make stock option awards at the first meeting of the Compensation Committee following the employee's hire date. We do not plan or time our stock option awards in coordination with the
release of material non-public information for the purpose of affecting the value of executive compensation.

Allocation of Equity Compensation.In 2017, we granted stock options to purchase 5,184,800 shares of our Common Stock, of which stock
options to
purchase (i) a total of 2,332,500 shares were awarded to named executive officers (includes shares granted to Mr. King during 2017 for his role as a non-employee director on the
Company's Board), representing approximately 44.99% of all stock option awards in 2017, and (ii) a total of 750,000 shares were awarded to directors (excludes shares granted to Mr. King
during 2017 for his role as a non-employee director on the Company's Board), representing approximately 14.47% of all stock option awards in 2017. Also, in 2017, we granted 450,000 restricted stock
units, of which (i) 150,000 restricted stock units were awarded to named executive officers, representing approximately 33% of all restricted stock unit awards in 2017, and (ii) 300,000
restricted stock units were awarded to directors, representing approximately 66.67% of all restricted stock unit awards in 2017. Our Compensation Committee does not apply a formula for allocating
stock options and restricted stock units to named executive officers. Instead, our Compensation Committee considers the role and responsibilities of the named executive officers, competitive factors,
the non-equity compensation received by the named executive officers and the total number of stock options and restricted stock units to be granted in the fiscal year. Mr. King received a stock
option award to purchase 125,000 shares of our Common Stock for his role as a non-employee

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Table of Contents

director
on the Company's Board in 2017 and did not receive any equity awards for his role as interim Chief Executive Officer in 2017.

Type of Equity Awards.Under our 2010 Equity Incentive Plan, we may award incentive stock options, within the meaning of
Section 422 of the
Internal Revenue Code of 1986, as amended, or the Code, to our employees, and we may award nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance
units and performance shares to our employees, directors and consultants. In 2017, we awarded stock options to our named executive officers, and in 2017, we also awarded restricted stock units to
Mr. Fischer. In 2017, Mr. King received stock options for his role as a non-employee director on the Company's Board.

Equity Awards in 2017.In January 2017, our Compensation Committee reviewed equity compensation for our named executive officers. The
Compensation
Committee reviewed the Comparison Data and the individual performance of such named executive officers during the prior calendar year. Following the Compensation Committee's review, all of our named
executive officers, with the exception of Mr. King, received stock options as reflected in the 2017 Grants of Plan-Based Awards Table below, and Mr. Fischer also received restricted
stock units as reflected in the 2017 Grants of Plan-Based Awards Table below. In 2017, Mr. King received stock options for his role as a non-employee director on the Company's Board as
reflected in the 2017 Grants of Plan-Based Awards Table below.

Retirement Savings Plan

We maintain a 401(k) retirement savings plan for the benefit of our eligible employees. Employees may elect to contribute their compensation up
to the statutorily prescribed limit. We currently match employee contributions up to a maximum of 4% of an employee's salary per pay period. In 2017, the employer-match contribution limit was $10,800
per employee.

Employment Agreement and Separation Agreement

Seth H. Z. Fischer, our former Chief Executive Officer, entered into the Separation Agreement, effective December 31, 2017, which
included the separation and release of claims agreement under his employment agreement with the Company dated September 3, 2013, which we refer to herein as the Employment Agreement. The
Employment Agreement had an initial term of four years, renewing annually thereafter unless either party provided notice of non-renewal. The Employment Agreement provided
for:



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Table of Contents



Under
Mr. Fischer's Employment Agreement, a "Change of Control" occurred when:



17

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On
December 24, 2017, the Company and Mr. Fischer agreed that Mr. Fischer would depart from the role of Chief Executive Officer and resign from the Board of the
Company, effective December 31, 2017. According to the Separation Agreement, effective December 31, 2017, Mr. Fischer will continue to serve as a strategic advisor to the Company
for a one year period until December 31, 2018, during which time Mr. Fischer's outstanding equity awards under the Company's 2010 Equity Incentive Plan will continue to vest in
accordance with their terms, subject to Mr. Fischer's continued service to the Company on each applicable vesting date. Additionally, the Separation Agreement provides for the amendment of all
outstanding stock options to purchase shares of the Company's Common Stock under the Company's 2010 Equity Incentive Plan that are held by Mr. Fischer, such that the vested portion of each such
stock option will be exercisable until the earlier of the expiration date specified in each stock option agreement or the date each such stock option is terminated in accordance with the Company's
2010 Equity Incentive Plan. Pursuant to the Separation Agreement, Mr. Fischer is entitled to receive: (a) twelve equal monthly payments of $60,083.34 beginning no later than
January 31, 2018, which is the equivalent of Mr. Fischer's 2017 base salary of $721,000.08, (b) twelve equal monthly payments of $48,066.67 beginning no later than
January 31, 2018, which is the equivalent of 1/12th of Mr. Fischer's 2017 target bonus of $576,800.04, and (c) a single lump sum cash payment of $576,800.04 no later than
January 31, 2018, which is one hundred percent of Mr. Fischer's 2017 target bonus.

Change of Control Benefits

A description of the change of control benefits given to our named executed officers and a table showing potential payments upon termination or
change of control of our named executive officers are set forth below under the section entitled "Potential Payments Upon Termination or Change of Control for each Named Executive Officer."

Perquisites and Other Benefits

We annually review the perquisites that our named executive officers receive. We offer short-term and long-term disability insurance plans to
all of our employees, including all of our named executive officers.

Compensation Process

The Compensation Committee reviews and approves the salaries and incentive compensation of our named executive officers and non-employee
directors and reviews and approves all new hire stock option awards to employees. In addition, the Compensation Committee approves equity awards for all employees as part of our annual performance
review process. The Compensation Committee approves a pool of equity awards for employees who are not executive officers, and the Chief Executive Officer distributes this pool in his discretion and
based on the performance of each individual. The agendas for meetings of the Compensation Committee are prepared by the Compensation Committee Chairman in consultation with management. Our Chief
Executive Officer, Chief Financial Officer, and General Counsel typically attend the meetings of the Compensation Committee, but the Chief Executive Officer, the Chief Financial Officer and the
General Counsel do not participate in deliberations relating to their own compensation. In rendering its decisions, the Compensation Committee considers the recommendations of the Chief Executive
Officer, with input by the Chief Financial Officer and the General Counsel, the information regarding comparably sized companies in the biotechnology and pharmaceutical industries in the United States
and its collective experience with other companies. Additionally, the Compensation Committee considers data and information provided by Radford. The Compensation Committee reviews the performance and
compensation of the Chief Executive Officer and Chief Financial Officer annually.

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Table of Contents

Our
Compensation Committee also works with our Chief Executive Officer and Chief Financial Officer in evaluating the financial, accounting, tax and retention implications of our various
compensation programs.

Effect of Accounting and Tax Treatment on Compensation Decisions

Section 162(m) of the Code imposes a limit on the amount of compensation that we may deduct in any one year with respect to our Chief
Executive Officer and each of our next three most highly compensated executive officers (other than the Chief Financial Officer), unless certain specific criteria are satisfied. While we consider the
deductibility of compensation when making our compensation decisions, we believe that it is important to maintain the flexibility to compensate our executives in a manner we believe will promote our
corporate goals and be in the best interests of our stockholders. Our Compensation Committee therefore has not adopted a policy requiring all compensation to be deductible.

Executive Time Off

All of our full-time employees, including our named executive officers, receive three to seven weeks of vacation each year, based upon the
length of service. Mr. King, our interim Chief Executive Officer, is entitled to receive four weeks of vacation each year. Unused vacation carries over to the following year and may accumulate
up to three weeks at any time. Upon termination, all employees are paid their accrued benefit that existed as of the date of such termination. Additionally, all employees receive two personal days and
eight sick days each year. Unused personal days carry over to the following year and may accumulate up to two days. All employees are paid their accrued benefit of any unused personal days as of the
date of termination. Sick days expire if unused as of the date of termination or the end of the calendar year.

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Table of Contents

2017 Summary Compensation Table

The following table presents information for our fiscal year ended December 31, 2017 concerning the total compensation paid to or accrued
for our interim Chief Executive Officer, former Chief Executive Officer, Chief Financial Officer, and each of our two other most highly compensated executive officers. We refer to these executive
officers as our "named executive officers" below.



Name and Principal Position

Year

Salary
($)(1)

Bonus
($)(2)

Stock
Awards
($)(3)

Option
Awards
($)(3)

Non-Equity
Incentive Plan
Compensation
($)(4)

All Other
Compensation
($)(5)

Total
($)Thomas B. King(6)


2017








59,688








30,176


89,864Interim Chief Executive Officer and DirectorMark K. Oki(7)


2017


362,250








210,595


100,561


10,800


684,206Chief Financial Officer and


2016


350,000








52,510


126,000


4,000


532,510Chief Accounting Officer


2015


71,794


30,000





146,520


20,825





269,139John L. Slebir


2017


468,650








239,313


162,622


10,800


881,385Senior Vice President, Business


2016


452,800








351,000


203,760


10,600


1,018,160Development and General


2015


438,800





185,726


433,245


191,975


10,600


1,260,346Counsel and SecretarySantosh T. Varghese, M.D.


2017


421,900








210,595


75,942


10,800


719,237Chief Medical Officer


2016


407,600








308,880


146,736


10,600


873,8162015


395,000





143,562


227,571


138,250


10,600


914,983Seth H. Z. Fischer(8)


2017


721,000





168,000


547,000





1,915,400


3,351,400Former Chief Executive Officer and


2016


696,600





372,000


561,600


501,552


40,600


2,172,352Director


2015


675,000





357,510


1,105,267


472,500


41,359


2,651,636


(1)The
amounts in this column include payments in respect of vacation, personal days, holidays and sick days taken during the fiscal years presented.(2)The
amount in this column for Mr. Oki represents a sign on bonus in connection with his employment with the Company. Please see footnote 7 below.(3)The
amounts included in this column do not reflect compensation actually received by the named executive officer but represent the grant date fair value computed in
accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 15 to our consolidated financial statements included in the Original Filing.
See also the 2017 Grants of Plan-Based Awards table below for information on option awards and restricted stock unit award made in 2017.(4)The
amounts for fiscal year 2017 in this column consist of cash bonus payments under the Annual Bonus Plan approved by the Compensation Committee in January 2018.
Please see "Compensation Discussion and Analysis" above for a description of the Annual Bonus Plan.(5)The
amounts in this column include (i) contributions made by the Company under its 401(k) Plan; (ii) severance payments under Mr. Fischer's
Separation Agreement; (iii) reimbursement for auto expenses and lodging expenses in Mountain View,


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Sunnyvale,
or Campbell, CA; (iv) excess medical waiver reimbursement; and (v) Board fees earned or paid in cash to Mr. King for his role as a non-employee director on the
Company's Board, as provided in the following table:


Name

Year

401(k)
Contributions
($)

Severance
Payments
($)

Reimbursement
for Auto
Expenses
and Lodging
Expenses in
Mountain
View,
Sunnyvale or
Campbell, CA
($)

Excess
Medical
Waiver
Reimbursement
($)

Board
Fees
($)Thomas B. King


2017














30,176Mark K. Oki


2017


10,800











2016


4,000











2015














John L. Slebir


2017


10,800











2016


10,600











2015


10,600











Santosh T. Varghese, M.D.


2017


10,800











2016


10,600











2015


10,600











Seth H. Z. Fischer


2017


10,800


1,874,600


15,000


15,000


2016


10,600





15,000


15,000


2015


10,600





15,759


15,000





(6)The
amount in the Stock Awards column represents the value of a stock option award received by Mr. King for his role as a non-employee director on the
Company's Board, and the amount in the All Other Compensation column represents fees earned or paid in cash to Mr. King for his role as a non-employee director on the Company's Board. Effective
December 31, 2017, Mr. King was appointed to serve as the Company's interim Chief Executive Officer. Mr. King has been on the Company's Board since May 24, 2017.(7)Mr. Oki
was appointed as our Chief Financial Officer and Chief Accounting Officer effective as of October 19, 2015. For 2015, compensation shown was
earned in 2015 and not annualized.(8)On
December 24, 2017, the Company and Mr. Fischer agreed that Mr. Fischer would depart from the role of Chief Executive Officer, effective
December 31, 2017. The Company and Mr. Fischer entered into the Separation Agreement, effective December 31, 2017. Please see "Compensation Discussion and Analysis" above for a
description of the Separation Agreement.


21

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Table of Contents

2017 Grants of Plan-Based Awards

The following table provides information with regard to each grant of an award made to a named executive officer under any plan during the
fiscal year ended December 31, 2017.



All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(#)

All Other
Option
Awards:
Number of
Securities
Underlying
Options(#)

Exercise
or Base
Price of
Option
Awards
($/Sh)(2)Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)

Grant Date
Fair Value
of Stock
and Option
Awards($)(3)Grant
DateName

Threshold($)

Target($)

Maximum($)Thomas B. King(4)Stock Options

7/27/2017














125,000


1.15


59,688Restricted Stock Unit Award






















Annual Bonus Plan






















Mark K. OkiStock Options

1/27/2017














385,000


1.12


210,595Restricted Stock Unit Award






















Annual Bonus Plan







144,900


144,900











John L. SlebirStock Options

1/27/2017














437,500


1.12


239,313Restricted Stock Unit Award






















Annual Bonus Plan







234,325


234,325











Santosh T. Varghese, M.D.Stock Options

1/27/2017














385,000


1.12


210,595Restricted Stock Unit Award






















Annual Bonus Plan







168,760


168,760











Seth H. Z. FischerStock Options

1/27/2017














1,000,000


1.12


547,000Restricted Stock Unit Award

1/27/2017











150,000








168,000Annual Bonus Plan







576,800


576,800














(1)The
row entitled "Annual Bonus Plan" for each respective named executive officer in the table above reflects the threshold, target and maximum value of a cash bonus
award to each respective named executive officer for 2017 under the Annual Bonus Plan approved by the Compensation Committee in January 2018. Please see "Compensation Discussion and Analysis" above
for further detail on the maximum value of a cash bonus award to each respective named executive officer. The cash bonus award amounts actually paid under the Annual Bonus Plan to the named executive
officers in 2017 are shown in the Summary Compensation Table for 2017 under the heading "Non-Equity Incentive Plan Compensation." Please see "Compensation Discussion and Analysis" above for a
description of the Annual Bonus Plan.(2)Stock
options are granted at an exercise price equal to the fair market value of the Company's Common Stock, as determined by reference to the closing price reported
by The Nasdaq Global Select Market on the date of grant.(3)The
grant date fair value of stock awards is calculated based on the market value of the Company's Common Stock on the date of grant. The grant date fair value of
option awards is calculated using the Black-Scholes option pricing model on the date of the grant.(4)Effective
December 31, 2017, Mr. King was appointed to serve as the Company's interim Chief Executive Officer. Mr. King has been on the
Company's Board since May 24, 2017. The information in the table above relates to a stock option award received by Mr. King for his role as a non-employee director on the Company's
Board.


22

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Table of Contents

Outstanding Equity Awards at Fiscal Year-End

The following table presents certain information concerning the outstanding equity awards held as of December 31, 2017 by each named
executive officer.



Option Awards

Stock AwardsName

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1)

Option
Exercise
Price
($)(2)

Option
Expiration
Date(3)

Number of
Shares or Units
of Stock That
Have Not
Vested(#)(4)

Market Value of
Shares or Units
of Stock That
Have Not
Vested
($)(5)Thomas B. King(6)


24,305


100,695


1.15


7/27/2024Mark K. Oki


121,875


103,125


1.26


10/30/202244,802


48,698


1.06


1/22/2023


385,000


1.12


1/27/2024John L. Slebir


3,750





6.39


9/4/2019


1,400


700166,250





8.74


1/21/2021


8,094


4,04750,000





12.04


1/27/202270,000





12.39


1/25/202349,937


1,063


7.75


1/28/2021179,666


66,734


2.74


1/23/2022299,479


325,521


1.06


1/22/2023


437,500


1.12


1/27/2024Santosh T. Varghese, M.D.


200,000





24.23


4/25/2022


925


46352,500





12.39


1/25/2023


4,594


2,29733,291


709


7.75


1/28/2021101,864


37,836


2.74


1/23/2022263,541


286,459


1.06


1/22/2023


385,000


1.12


1/27/2024Seth H. Z. Fischer(7)


1,000,000





12.90


9/3/2020


20,625


10,313458,354


170,246


2.74


1/23/2022


37,500


18,750479,166


520,834


1.06


1/22/2023


150,000


75,000


1,000,000


1.12


1/27/2024


(1)The
stock options outstanding generally vest, subject to the employee's continued service to the Company, with respect to 25% of the options upon the one year
anniversary of the grant date and 1/36th of the remaining options vesting each month thereafter, with full vesting occurring on the fourth anniversary of the date of grant.
Mr. Fischer's option grant on September 3, 2013 provided for monthly vesting of 1/36th of the total number of options granted, commencing after September 3,
2013, subject to his continued service to the Company. Mr. King's option grant on July 27, 2017 provides for monthly vesting of 1/36th of the total number of options
granted commencing after May 24, 2017, subject to his continued service to the Company.(2)Stock
options are granted at an exercise price equal to the fair market value of our Common Stock, as determined by reference to the closing price reported by The
Nasdaq Global Select Market on the date of grant.(3)Options
granted in January 2013 or prior thereto generally expire 10 years from the date of grant, and options granted after January 2013 generally expire
seven years from the date of grant.(4)Subject
to the employee's continued service to the Company, the restricted stock unit awards outstanding vest (i) over a four year period with 25% vesting
annually on each anniversary of the vesting commencement date, (ii) over a four year period with 25% vesting on January 1, 2016 and an additional 1/16th vesting at
the end of each calendar quarter thereafter (i.e. March 31st, June 30th, September 30th and
December 31st), (iii) with 50% vesting on January 22, 2017 and an additional 12.5% vesting on each of


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Table of Contents

April 22,
2017, July 22, 2017, October 22, 2017 and January 22, 2018, or (iv) over a four year period with 25% vesting on January 27, 2018 and an additional
1/16th vesting quarterly thereafter. (5)The
market value of unvested restricted stock units is based on the closing price of our Common Stock on The Nasdaq Global Select Market of $0.50 per share on
December 29, 2017 (the last trading day of the year).(6)Effective
December 31, 2017, Mr. King was appointed to serve as the Company's interim Chief Executive Officer. Mr. King has been on the
Company's Board since May 24, 2017. The information in the table above relates to a stock option award received by Mr. King for his role as a non-employee director on the Company's
Board.(7)According
to Mr. Fischer's Separation Agreement with the Company, Mr. Fischer will continue to serve as a strategic advisor to the Company for a one
year period until December 31, 2018, during which time Mr. Fischer's outstanding equity awards under the Company's 2010 Equity Incentive Plan will continue to vest in accordance with
their terms, subject to Mr. Fischer's continued service to the Company on each applicable vesting date. Additionally, the Separation Agreement provides for the amendment of all outstanding
stock options to purchase shares of the Company's Common Stock under the Company's 2010 Equity Incentive Plan that are held by Mr. Fischer, such that the vested portion of each such stock
option will be exercisable until the earlier of the expiration date specified in each stock option agreement or the date each such stock option is terminated in accordance with the Company's 2010
Equity Incentive Plan. Please see "Compensation Discussion and Analysis" above for a description of the Separation Agreement.


2017 Option Exercises and Stock Vested

The following table shows the number of shares acquired pursuant to the vesting of restricted stock units by each named executive officer during
the fiscal year ended December 31, 2017 and the aggregate dollar amount realized by the named executive officer upon vesting of the restricted stock units.



Stock AwardsName

Number of Shares
Acquired on
Vesting(#)

Value Realized
on
Vesting($)(1)Thomas B. King





Mark K. Oki





John L. Slebir


7,875


8,820Santosh T. Varghese, M.D.


4,600


5,152Seth H. Z. Fischer


279,000


310,980


(1)The
aggregate dollar amount realized upon vesting is based on the closing price of our Common Stock on The Nasdaq Global Select Market on the vesting dates.


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Table of Contents

Potential Payments Upon Termination or Change of Control for each Named Executive Officer

Based upon a hypothetical triggering date of December 31, 2017, the quantifiable benefits for each named executive officer upon the
occurrence of certain specified events are set forth in the table below.



Executive benefits and payments
upon termination:(1)

Involuntary
termination
not for cause
or by
constructive
termination
not in connection
with a change of
control($)

Benefits in
connection
with a change
of control($)

Involuntary
termination
not for cause
or by
constructive
termination
in connection
with a change
of control($)

Written Notice of
Non-Renewal of
Employment
Agreement($)

Death or
Disability($)Thomas B. King(2)Base salary














Bonus














Medical continuation














Outplacement services














Value of accelerated stock options(3)














Value of accelerated restricted stock units(4)














Mark K. OkiBase salary


271,688





543,375





Bonus


227,765





336,440





Medical continuation


25,425





50,850





Outplacement services














Value of accelerated stock options(3)














Value of accelerated restricted stock units(4)














John L. SlebirBase salary


351,488





702,975





Bonus


383,707





559,451





Medical continuation


25,425





50,850





Outplacement services














Value of accelerated stock options(3)














Value of accelerated restricted stock units(4)


2,374





4,747





Santosh T. Varghese, M.D.Base salary


316,425





632,850





Bonus


276,345





402,915





Medical continuation


25,425





50,850





Outplacement services














Value of accelerated stock options(3)














Value of accelerated restricted stock units(4)


1,380





2,760








(1)Our
former Chief Executive Officer, Mr. Fischer, is not included in this table. On December 24, 2017, the Company and Mr. Fischer agreed that
Mr. Fischer would depart from the role of Chief Executive Officer, effective December 31, 2017. The Company and Mr. Fischer entered into the Separation Agreement, effective
December 31, 2017. Pursuant to the Separation Agreement, Mr. Fischer is entitled to receive: (a) twelve equal monthly payments of $60,083.34 beginning no later than
January 31, 2018, which is the equivalent of Mr. Fischer's 2017 base salary of $721,000.08, (b) twelve equal monthly payments of $48,066.67 beginning no later than
January 31, 2018, which is the equivalent of 1/12th of Mr. Fischer's 2017 target bonus of $576,800.04, and (c) a single lump sum cash payment of $576,800.04 no later than
January 31, 2018, which is one hundred percent of Mr. Fischer's 2017 target bonus. Please see "Compensation Discussion and Analysis" above for further details.


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(2)Effective
December 31, 2017, Mr. King was appointed to serve as the Company's interim Chief Executive Officer. Mr. King does not currently have
any termination or change of control benefits provided to him under any agreement.(3)Represents
the aggregate value of the acceleration of vesting of the named executive officer's unvested stock options based on the product of (i) the spread
between the closing price of our Common Stock on December 29, 2017 (the last trading day of the year) of $0.50 and the exercise price of the stock options, and (ii) the number of shares
of our Common Stock underlying unvested stock options. Aggregate intrinsic value represents only the value for those stock options in which the exercise price of the option is less than the market
value of our stock on December 29, 2017 (the last trading day of the year).(4)Represents
the aggregate value of the acceleration of vesting of the named executive officer's unvested restricted stock units based on the product of
(i) $0.50, which is the closing price of our Common Stock on December 29, 2017 (the last trading day of the year), and (ii) the number of shares of our Common Stock underlying
unvested restricted stock units.


The
Compensation Committee believes that providing our named executive officers protection against a termination of employment by the Company without cause or by a named executive
officer for good reason is consistent with competitive practices and will help retain our named executive officers and maintain leadership stability. The Compensation Committee also believes that
providing our named executive officers with benefits upon a change of control is in the best interests of our stockholders because change of control benefits help reduce the potential reluctance of
our named executive officers to pursue certain change of control transactions that create employment uncertainty. The change of control benefits are designed to help retain the Company's named
executive officers and maintain a stable work environment.

Because
of the so-called "parachute" tax imposed by Section 280G of the Code, we limit the change of control benefits of our named executive officers such that no taxes will be
imposed under Section 280G. For our named executive officers, we have agreed that their severance benefits will be either (i) delivered in full, or (ii) delivered as to such
lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the named executive officer on an after-tax basis of the greatest amount
of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.

Termination and Change of Control Benefits for our Interim Chief Executive Officer

Our interim Chief Executive Officer does not currently have any termination or change of control benefits provided to him under any agreement.

Termination and Change of Control Benefits for our Former Chief Executive Officer

Termination and change of control benefits for Mr. Fischer were set forth in his Employment Agreement and his Separation Agreement. On
December 24, 2017, the Company and Mr. Fischer agreed that Mr. Fischer would depart from the role of Chief Executive Officer, effective December 31, 2017. The Company and
Mr. Fischer entered into the Separation Agreement, effective December 31, 2017. Please see "Compensation Discussion and Analysis" above for further details.

Termination and Change of Control Benefits for our Other Named Executive Officers

We have entered into a Second Amended and Restated Change of Control and Severance Agreement, or the Amended Agreement, with each of our named
executive officers, other than Messrs. Fischer and King.

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The Amended Agreement provides that if the named executive officer's employment with the Company is terminated without Cause or by the named executive officer for
Good Reason and the termination does not occur within three months before a Change of Control or 18 months after a Change of Control (as such terms are defined in the Amended Agreement) of the
Company, the named executive officer will receive, subject to signing a release of claims in favor of the Company, (i) monthly severance payments equal to the monthly salary the named executive
officer was receiving immediately prior to the termination date for nine months, (ii) monthly severance payments equal to 1/12th of the named executive officer's target
bonus for the fiscal year in which the termination occurs for nine months, (iii) an additional pro rata portion of the named executive officer's target bonus for the fiscal year in which the
termination occurs calculated based on the number of months during such fiscal year the named executive officer was employed by the Company (and a prior fiscal year to the extent the bonus for such
prior fiscal year has not yet been declared and paid by the Company) multiplied by the average of the actual bonus percentage payouts in the two most recent years prior to the year of termination,
(iv) up to nine months of reimbursement for premiums paid for COBRA coverage, and (vi) any then-outstanding and unvested equity awards held by the named executive officer are subject to
50% accelerated vesting.

The
Amended Agreement also provides that if the named executive officer's employment with the Company is terminated by the Company without Cause or by the named executive officer for
Good
Reason within three months before a Change of Control or 18 months after a Change of Control, the named executive officer will receive, subject to signing a release of claims in favor of the
Company, (i) monthly severance payments equal to the monthly salary the named executive officer was receiving immediately prior to the Change of Control for 18 months,
(ii) monthly severance payments equal to 1/12th of the named executive officer's target bonus for the fiscal year in which the termination occurs for 18 months,
(iii) an additional pro rata portion of the named executive officer's target bonus for the fiscal year in which the termination occurs calculated based on the number of months during such
fiscal year the named executive officer was employed by the Company (and a prior fiscal year to the extent the bonus for such prior fiscal year has not yet been declared and paid by the Company)
multiplied by the average of the actual bonus percentage payouts in the two most recent years prior to the year of termination, and (iv) up to 18 months of reimbursement for premiums
paid for COBRA coverage. The Amended Agreement also provides that if the named executive officer's employment is terminated without Cause or for Good Reason within three months before a Change of
Control or 18 months after a Change of Control, all equity awards granted to the named executive officer by the Company will automatically vest in full and become immediately exercisable.

For
purposes of the Amended Agreement, a "Change of Control" occurs when:



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Chief Executive Officer Pay Ratio

We identified our median employee by reviewing annual base salaries for all persons who were employed by us on December 31, 2017,
excluding our former Chief Executive Officer. We annualized the base salary of all employees who were hired in 2017 but did not work for the entire year. After identifying the median employee, we
calculated the annual total compensation for this employee using the same methodology we use for our named executive officers as disclosed in the Summary Compensation Table for 2017 above. The annual
total compensation of our median employee was $123,027, resulting in a ratio of 27:1. The above ratio and annual total compensation amount have been calculated using methodologies and assumptions
permitted by SEC rules. Mr. King was appointed to serve as the Company's interim Chief Executive Officer, effective December 31, 2017, and did not receive compensation for his role as
interim Chief Executive Officer in 2017. Given this, we did not calculate the pay ratio using our interim Chief Executive Officer.

Director Compensation

The following table sets forth the compensation paid by us during the fiscal year ended December 31, 2017 to our non-employee directors:



Name

Year

Fees Earned
or Paid in
Cash($)(1)

Stock
Awards($)(2)

Option
Awards($)(3)

All Other
Compensation
($)(4)

Total($)Thomas B. King(5)(6)


2017


30,176





59,688





89,864David Y. Norton(5)(7)


2017


85,000


60,000


44,250


11,938


201,188Jorge Plutzky, M.D.(5)(7)


2017


58,000


60,000


44,250


14,371


176,621Eric W. Roberts(5)(7)


2017


72,000


60,000


44,250


25,006


201,256Herman Rosenman(5)(7)


2017


87,000


60,000


44,250


16,820


208,070Allan L. Shaw(5)(7)(8)


2017


86,000


60,000


44,250


22,340


212,590Mayuran Sriskandarajah(5)(7)


2017


3,692


60,000





2,916


66,608


(1)Under
the cash compensation arrangement approved by the Board on April 29, 2016, each non-employee director will receive an annual retainer of $40,000, with
the Chairman of the Board of Directors receiving an additional $25,000 per year, the Chairman of the Audit Committee receiving an additional $20,000 per year, the Chairman of the Compensation
Committee receiving an additional $15,000 per year, the Chairman of the Nominating and Governance Committee receiving an additional $10,000 per year, members of the Audit Committee (other than the
Chairman of such Committee) receiving an additional $10,000 per year, members of the Compensation Committee (other than the Chairman of such Committee) receiving an additional $7,500 per year, members
of the Nominating and Governance Committee (other than the Chairman of such Committee) receiving an additional $5,000 per year, and members of any unchartered committees receiving an additional $1,500
per meeting attended. The annual retainers, less any amounts previously paid under the then existing compensation arrangement, will be paid in equal quarterly installments effective as of
October 30, 2015, and the per meeting fees for any unchartered committees will be paid quarterly effective as of April 29, 2016.


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(2)As
of December 31, 2017, the aggregate number of restricted stock units outstanding for each non-employee director was as follows:


Name

Stock awards
outstanding
at 12/31/17Thomas B. King


David Y. Norton


Jorge Plutzky, M.D.


Eric W. Roberts


12,501Herman Rosenman


Allan L. Shaw


12,501Mayuran Sriskandarajah





(3)As
of December 31, 2017, the aggregate number of stock options outstanding for each non-employee director was as follows:


Name

Stock options
outstanding
at 12/31/17Thomas B. King


125,000David Y. Norton


225,000Jorge Plutzky, M.D.


225,000Eric W. Roberts


175,000Herman Rosenman


225,000Allan L. Shaw


175,000Mayuran Sriskandarajah





(4)During
2017, restricted stock units held by non-employee directors of the Company vested. These restricted stock units were settled by issuing to each non-employee
director shares in the amount due to the director upon vesting, less the portion required to satisfy the estimated income tax liability based on the published stock price at the close of market on the
settlement date or the next trading day, which the Company issued to the non-employee director in cash. The amounts shown in this column for each non-employee director represents this cash.(5)Messrs. Roberts
and Shaw have served as directors of the Company since September 2015, Messrs. Norton and Rosenman have served as directors of the
Company since July 2013, Dr. Plutzky has served as a director of the Company since May 2013, and Mr. King has served as a director of the Company since May 2017.
Mr. Sriskandarajah served as a director of the Company from September 2015 to January 2017.(6)Mr. King
has been on the Company's Board since May 24, 2017. Effective December 31, 2017, Mr. King was appointed to serve as the
Company's interim Chief Executive Officer. Due to this appointment, Mr. King will not continue to participate in the Company's cash and equity compensation arrangement for non-employee
directors.(7)From
October 2015 to February 2018, the Audit Committee consisted of Messrs. Norton, Rosenman and Shaw, with Mr. Rosenman designated as the Chairman of
the Audit Committee. Since February 2018, the Audit Committee has consisted of Messrs. Norton and Rosenman and Dr. Plutzky, with Mr. Rosenman designated as the Chairman of the
Audit Committee. From October 2015 to January 2017, the Nominating and Governance Committee consisted of Messrs. Norton, Roberts and Sriskandarajah, with Mr. Sriskandarajah designated as
the Chairman of the Nominating and Governance Committee. Since January 2017, the Nominating and Governance Committee has consisted of Messrs. Norton and Roberts, with Mr. Norton acting
as the Chairman of the Nominating and Governance Committee from January 2017 to February 2018 and designated as the Chairman of the Nominating and Governance Committee since February 2018. From
October 2015 to February 1, 2018, the Compensation Committee consisted of


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Messrs. Roberts,
Rosenman and Shaw, with Mr. Shaw designated as the Chairman of the Compensation Committee. From February 2, 2018 to February 22, 2018, the Compensation
Committee consisted of Messrs. Roberts, and Rosenman, with Mr. Roberts acting as the Chairman of the Compensation Committee. Since February 23, 2018, the Compensation Committee
has consisted of Messrs. Norton, Roberts and Rosenman, with Mr. Norton designated as the Chairman of the Compensation Committee. Since becoming a chartered committee of the Board on
January 2, 2018, the Corporate Development Committee has consisted of Messrs. Norton, Roberts and Rosenman and Dr. Plutzky, with Mr. Roberts designated as the Chairman of
the Corporate Development Committee. Mr. Norton has served as the Chairman of the Board of Directors since September 2014. (8)On
February 26, 2018, Mr. Shaw entered into a Consulting Agreement, effective February 1, 2018, with the Company. Mr. Shaw has served as
a member of the Company's Board since September 15, 2015, and Mr. Shaw will continue serving on the Board. Effective February 1, 2018, Mr. Shaw resigned from the Company's
Audit Committee and Compensation Committee. As a continuing Board member, Mr. Shaw will continue to participate in the Company's cash and equity compensation arrangement for non-employee
directors.


On
April 29, 2016, the Board approved changes to the cash and equity compensation arrangement for the Company's non-employee directors.

Under
the cash compensation arrangement, each non-employee director will receive an annual retainer of $40,000, with the Chairman of the Board of Directors receiving an additional
$25,000 per year, the Chairman of the Audit Committee receiving an additional $20,000 per year, the Chairman of the Compensation Committee receiving an additional $15,000 per year, the Chairman of the
Nominating and Governance Committee receiving an additional $10,000 per year, members of the Audit Committee (other than the Chairman of such Committee) receiving an additional $10,000 per year,
members of the Compensation Committee (other than the Chairman of such Committee) receiving an additional $7,500 per year, members of the Nominating and Governance Committee (other than the Chairman
of such Committee) receiving an additional $5,000 per year, and members of any unchartered committees receiving an additional $1,500 per meeting attended. The annual retainers, less any amounts
previously paid under the then existing compensation arrangement, will be paid in equal quarterly installments effective as of October 30, 2015, and the per meeting fees for any unchartered
committees will be paid quarterly effective as of April 29, 2016.

Under
the equity compensation arrangement, following the initial appointment or election to the Board, each non-employee director will be granted as determined by the Board (i) a
non-qualified stock option to purchase 125,000 shares of Common Stock with an exercise price equal to the fair market value of our Common Stock as of the date of grant, or (ii) an equivalent
number of restricted stock units to afford approximately the same value of (i), or (iii) a combination thereof, or the Initial Grant. Initial Grants vest monthly over three (3) years on
each monthly anniversary date commencing on the date service as a non-employee director began and will continue to vest, subject to each such non-employee director continuing to be a Service Provider
(as defined in the 2010 Equity Incentive Plan) on the relevant vesting dates and, if stock options, have (i) a seven (7) year term and (ii) a six (6) month post-termination
exercise period.

Thereafter,
provided that the non-employee director is re-elected to the Board and has served as a director for at least six (6) months as of such election date, each such
non-employee director will be granted on the date of the Annual Meeting of Stockholders as determined by the Board (i) a non-qualified stock option to purchase 100,000 shares of Common Stock
with an exercise price equal to the fair market value of our Common Stock as of the date of grant, or (ii) an equivalent number of restricted stock units to afford approximately the same value
of (i), or (iii) a combination thereof, or the Subsequent Grant. Subsequent Grants vest monthly over one (1) year following the date of grant, subject to each such non-employee director
continuing to be a Service Provider (as defined in the 2010

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Equity
Incentive Plan) on the relevant vesting dates and, if stock options, have (i) a seven (7) year term and (ii) a six (6) month post-termination exercise period.

Options
granted under the 2010 Equity Incentive Plan to non-employee directors have a term of seven years unless terminated sooner upon termination of status as a director or otherwise
pursuant to the 2010 Equity Incentive Plan. Such options are transferable by the non-employee director only in certain limited circumstances, and each option is exercisable during the lifetime of the
non-employee director only by such non-employee director or a permitted transferee.

On
October 27, 2017, the Board approved changes to the equity compensation arrangement for the Company's non-employee directors. No changes were made to the cash compensation
arrangement for the Company's non-employee directors.

Under
the new equity compensation arrangement, following the initial appointment or election to the Board, each non-employee director will be granted as determined by the Compensation
Committee of the Board (i) a non-qualified stock option to purchase 225,000 shares of Common Stock with an exercise price equal to the fair market value of our Common Stock as of the date of
grant, or (ii) an equivalent number of restricted stock units to afford approximately the same value of (i), or (iii) a combination thereof, or the Initial Grant. Initial Grants vest
monthly over three (3) years on each monthly anniversary date commencing on the date service as a non-employee director began and will continue to vest, subject to each such non-employee
director continuing to be a Service Provider (as defined in the 2010 Equity Incentive Plan) on the relevant vesting dates and, if stock options, have (i) a seven (7) year term and
(ii) a six (6) month post-termination exercise period.

Thereafter,
provided that the non-employee director is re-elected to the Board and has served as a director for at least six (6) months as of such election date, each such
non-employee director will be granted on the date of the Annual Meeting of Stockholders as determined by the Compensation Committee of the Board (i) a non-qualified stock option to purchase
150,000 shares of Common Stock with an exercise price equal to the fair market value of our Common Stock as of the date of grant, or (ii) an equivalent number of restricted stock units to
afford approximately the same value of (i), or (iii) a combination thereof, or the Subsequent Grant. Subsequent Grants vest monthly over one (1) year following the date of grant, subject
to each such non-employee director continuing to be a Service Provider on the relevant vesting dates and, if stock options, have (i) a seven (7) year term and (ii) a six
(6) month post-termination exercise period.

On
October 27, 2017, the Compensation Committee of the Board approved Subsequent Grants under the new equity compensation arrangement for a non-qualified stock option to purchase
150,000 shares of our Common Stock for each of David Y. Norton, Jorge Plutzky, M.D., Eric W. Roberts, Herman Rosenman and Allan L. Shaw.

On
January 2, 2018, the Board approved changes to the cash compensation arrangement for the Board, such that certain non-employee directors will also receive the following: the
Chairman of the Corporate Development Committee will receive an additional $17,500 per year and members of the Corporate Development Committee (other than the Chairman of such Committee) will receive
an additional $8,750 per year.

Compensation Committee Interlocks and Insider Participation

None of our directors who served on our Compensation Committee during 2017 is currently or has been, at any time since our formation, one of our
officers or employees. However, Mr. Shaw previously served on the Compensation Committee in 2017 until February 1, 2018, and on February 26, 2018, he entered into a Consulting
Agreement with the Company, effective February 1, 2018. During 2017, no executive officer served as a member of the board of directors or compensation committee of any entity that has one or
more executive officers serving on our Board or our Compensation Committee. The Compensation Committee currently consists of directors Roberts, Rosenman and Norton. None of the members of our
Compensation Committee during 2017 currently has or has had any relationship or transaction with a related person requiring disclosure pursuant to Item 404 of Regulation S-K.

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Table of Contents

Compensation Committee Report

The information contained in this report shall not be deemed to be "soliciting material" or "filed" with the SEC or
subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference into a document
filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

The
Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Amendment No. 1 to Annual Report on Form 10-K for the year ended
December 31, 2017.



COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORSDavid Y. Norton
Eric W. Roberts
Herman Rosenman


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Table of Contents

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

Information about our equity compensation plans at December 31, 2017, that were approved by our stockholders was as follows:



Plan Category

Number of
Shares to
be issued
Upon
Exercise of
Outstanding
Options
and
Rights

Weighted
Average
Exercise
Price of
Outstanding
Options

Number of
Shares
Remaining
Available
for Future
Issuance(3)Equity compensation plans approved by stockholders(1)


14,538,282

$
3.34


4,260,254Equity compensation plans not approved by stockholders(2)








​
​
​
​
​
​
​
​
​
​
​Total


14,538,282

$
3.34


4,260,254​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​
​
​
​


(1)Consists
of three plans: our 1994 Employee Stock Purchase Plan, our 2001 Stock Option Plan and our 2010 Equity Incentive Plan.(2)The
Company currently has no instruments outstanding or available for issuance under non-approved equity compensation plans.(3)Includes
4,043,868 shares for the 2010 Equity Incentive Plan and 216,386 shares for the 1994 Employee Stock Purchase Plan.


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Table of Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to us with respect to beneficial ownership of our Common Stock as of April 13,
2018 by (i) each person or entity who is known by us to own beneficially more than 5% of our Common Stock; (ii) each of our directors; (iii) each of our named executive officers,
as specified in the "Compensation Discussion and Analysis" section of this Amendment; and (iv) all directors and executive officers as a group. Unless otherwise noted, the address of the
persons or entities shown in the table is 900 E. Hamilton Avenue, Suite 550, Campbell, California, 95008.



Beneficially Owned
Stock(1)Name

Number
of Shares

Percent5% HoldersRenaissance Technologies LLC(2)


8,231,154


7.8
%Non-Employee DirectorsDavid Y. Norton(3)


220,245


*Jorge Plutzky, M.D.(4)


215,894


*Eric W. Roberts(5)


176,407


*Herman Rosenman(6)


216,074


*Allan L. Shaw(7)


207,875


*Named Executive OfficersThomas B. King(8)


124,999


*Mark K. Oki(9)


328,186


*John L. Slebir(10)


1,187,221


1.1
%Santosh T. Varghese, M.D.(11)


939,849


*Seth H. Z. Fischer(12)


2,828,998


2.7
%All directors and executive officers as a group (10 persons)(13)


6,445,748


6.1
%


*Less
than 1%(1)Applicable
percentage ownership is based on 106,041,014 shares of Common Stock outstanding as of April 13, 2018. Beneficial ownership is determined in
accordance with SEC rules. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of Common Stock subject to options and restricted
stock units held by that person that will be exercisable/vested within 60 days of April 13, 2018 are deemed outstanding. Those shares, however, are not deemed outstanding for the purpose
of computing the percentage ownership of any other person. The persons named in this table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned
by them, subject to community property laws, where applicable, and except as indicated in the other footnotes to this table.(2)Consists
of 8,231,154 shares of Common Stock as to which Renaissance Technologies LLC and its affiliates (together "Renaissance Technologies") have sole
voting power with respect to 7,740,226 shares of Common Stock, sole dispositive power with respect to 7,766,177 shares of Common Stock and shared dispositive power with respect to 464,977 shares of
Common Stock. Beneficial ownership information is based on a Schedule 13G filed with the SEC on February 14, 2018. The address of Renaissance Technologies is 800 Third Avenue, New
York, New York, 10022.


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Table of Contents

(3)Consists
of (i) 57,745 shares of Common Stock and (ii) 162,500 options to purchase shares of Common Stock exercisable within 60 days of
April 13, 2018.(4)Consists
of (i) 53,394 shares of Common Stock and (ii) 162,500 options to purchase shares of Common Stock exercisable within 60 days of
April 13, 2018.(5)Consists
of (i) 63,907 shares of Common Stock, (ii) 2,778 restricted stock units vested within 60 days of April 13, 2018, and
(iii) 109,722 options to purchase shares of Common Stock exercisable within 60 days of April 13, 2018.(6)Consists
of (i) 48,574 shares of Common Stock, (ii) 5,000 shares of Common Stock Mr. Rosenman is deemed to beneficially own that are held in an
Individual Retirement Account for the benefit of Mr. Rosenman, and (iii) 162,500 options to purchase shares of Common Stock exercisable within 60 days of April 13, 2018.(7)Consists
of (i) 45,375 shares of Common Stock, (ii) 2,778 restricted stock units vested within 60 days of April 13, 2018, and
(iii) 159,722 options to purchase shares of Common Stock exercisable within 60 days of April 13, 2018.(8)Consists
of 124,999 options to purchase shares of Common Stock exercisable within 60 days of April 13, 2018.(9)Consists
of 328,186 options to purchase shares of Common Stock exercisable within 60 days of April 13, 2018.(10)Consists
of (i) 130,474 shares of Common Stock and (ii) 1,056,747 options to purchase shares of Common Stock exercisable within 60 days of
April 13, 2018.(11)Consists
of (i) 87,768 shares of Common Stock and (ii) 852,081 options to purchase shares of Common Stock exercisable within 60 days of
April 13, 2018.(12)Consists
of (i) 379,125 shares of Common Stock, (ii) 9,375 restricted stock units vested within 60 days of April 13, 2018, and
(iii) 2,440,498 options to purchase shares of Common Stock exercisable within 60 days of April 13, 2018.(13)Includes
(i) 14,931 restricted stock units vested within 60 days of April 13, 2018 and (ii) 5,559,455 options to purchase shares of
Common Stock exercisable within 60 days of April 13, 2018.


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Table of Contents

Item 13.Certain Relationships and Related Transactions, and Director Independence

Change of Control Agreements with Executive Officers

Our current executive officers, excluding our interim Chief Executive Officer and former Chief Executive Officer, have Second Amended and
Restated Change of Control and Severance Agreements that provide for certain benefits in the event of a Change of Control. In addition, our
former Chief Executive Officer's Employment Agreement provided for certain benefits in the event of a Change of Control. The above referenced agreements recognize that there may be periods where
another company, entity or individual considers the possibility of acquiring the Company or that a change in our Board may otherwise occur (collectively known as a Change of Control), with or without
the approval of our Board. These agreements recognize that such an event may cause a distraction to employees, which may in turn cause employees to consider alternative employment opportunities. The
Board determined that it was in the best interest of the Company to give such employees an incentive to continue their employment during periods when the threat or occurrence of a Change of Control
may exist. These agreements are discussed in more detail in the sections entitled "Compensation and Discussion Analysis" and "Potential Payments Upon Termination or Change of Control for each Named
Executive Officer" found elsewhere in this Amendment.

Our
former Chief Executive Officer entered into the Separation Agreement, effective December 31, 2017, with the Company, which provided for severance payments. Please see
"Compensation Discussion and Analysis" found elsewhere in this Amendment for further details.

Indemnification Agreements

We have entered into indemnification agreements with each of our directors and executive officers. These agreements require us to indemnify such
individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with us.

Consulting Agreement

On February 26, 2018, the Company and Allan L. Shaw entered into the Consulting Agreement, effective February 1, 2018.
Mr. Shaw has served as a member of the Company's Board since September 15, 2015, and Mr. Shaw will continue serving on the Board. Effective February 1, 2018,
Mr. Shaw resigned from the Company's Audit Committee and Compensation Committee. As a continuing Board member, Mr. Shaw will continue to participate in the Company's cash and equity
compensation arrangement for non-employee directors. Under the Consulting Agreement, Mr. Shaw will provide services to the Company relating to new commercial product candidates, the outstanding
debt balances of the Company and other strategic partnering opportunities and capital structure matters. The Consulting Agreement will remain in effect until June 30, 2018 unless terminated
earlier pursuant to the Consulting Agreement or extended by written agreement of the parties. Under the Consulting Agreement, Mr. Shaw received an initial payment of $60,000 for the month of
February 2018 and then $30,000 per month starting in the month of March 2018, with any partial months being paid on a pro
rata basis. Mr. Shaw will also be eligible to receive cash bonuses based on certain factors related to the Company, with total cash bonuses not to exceed $250,000.

The
Consulting Agreement included that the Company will recommend at the next meeting of the Compensation Committee of the Board that Mr. Shaw be granted a stock option to
purchase 300,000 shares of our Common Stock at a price per share equal to the fair market value as determined by the closing price of our Common Stock on the date of grant. On March 9, 2018,
the Compensation Committee of the Board authorized and approved the grant to Mr. Shaw of a stock option to purchase 300,000 shares of our Common Stock at a price per share equal to the closing
price of our Common Stock on the date of grant ($0.49 per share). Subject to Mr. Shaw continuing to provide services under the Consulting Agreement on the relevant vesting dates, the option
will vest as follows: 50,000 shares

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Table of Contents

subject
to the option will vest on the date of grant, 50,000 shares subject to the option will vest on June 30, 2018, 100,000 shares subject to the option will vest on December 31, 2018
and 100,000 shares subject to the option will vest on June 30, 2019. The option has a 7-year term from the date of grant and an exercise period equal to 6 months from the date
Mr. Shaw ceases to be a Service Provider (as defined in the Company's 2010 Equity Incentive Plan).

In
addition, Mr. Shaw will be eligible to receive an additional fully vested stock option to purchase 100,000 shares of our Common Stock at the discretion of the Board.

Other
than the above mentioned agreements, we have not been a party to any transaction or series of similar transactions in which the amount involved exceeded or will exceed $120,000 and
in which any current director, executive officer, holder of more than 5% of our Common Stock or entities affiliated with them had or will have a material interest.

Review, Approval or Ratification of Transactions with Related Parties

We, or one of our subsidiaries, may occasionally enter into transactions with certain "related parties." Related parties include our executive
officers, directors, or 5% or more beneficial owners of our Common Stock and immediate family members of these persons. We refer to transactions in which the related party has a direct or indirect
material interest as "related party transactions." Each related party transaction must follow the procedures set forth in the Company's
Code of Business Conduct and Ethics and be reviewed and approved by the Audit Committee prior to the entering into of such transaction.

The
Audit Committee considers all relevant factors when determining whether to approve a related party transaction including, without limitation, the
following:



Board Independence

As required under the applicable listing standards of The Nasdaq Stock Market, a listed company's board of directors must affirmatively
determine that a majority of its directors are "independent," as defined by such listing standards. That definition includes a series of objective tests, including that the director is not an employee
of the company and has not engaged in various types of business dealings with the company. Additionally, the board of directors must make a subjective determination as to each director that no
relationship exists that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these
requirements, our Board has determined that four of our current six directors each satisfy the director independence standards of The Nasdaq Stock Market. Our Board determined that Thomas B. King, our
interim Chief Executive Officer, is not independent by virtue of his employment with the Company, and Allan L. Shaw in not independent by virtue of his role as a consultant with the Company.
Messrs. King and Shaw are not members of any of the committees of our Board, each of which is composed of only independent directors.

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Table of Contents

Item 14.Principal Accounting Fees and Services

Principal Accountant Fees and Services

The Audit Committee engaged OUM & Co. LLP, or OUM, as our independent registered public accounting firm beginning with the
fiscal year ended December 31, 2005. The following table presents fees for professional services rendered by OUM for the audit of our annual financial statements for fiscal years 2017 and 2016
and fees billed for audit-related services, tax services and all other services rendered by OUM for these periods:



2017

2016Audit Fees(1)

$
436,726

$
458,166Audit-Related Fees(2)





Tax Fees(3)





All Other Fees(4)





​
​
​
​
​
​
​
​Total Fees

$
436,726

$
458,166​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​​
​
​
​
​
​
​
​


(1)Audit
Fees: This category consists of fees for the audit of our annual financial statements, review of the financial statements included in our quarterly reports on
Form 10-Q and services that are normally provided by the independent auditors in connection with regulatory filings or engagements, and for attestation services related to Sarbanes-Oxley
compliance for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.(2)Audit-Related
Fees: There were no audit-related fees billed by OUM during these periods.(3)Tax
Fees: There were no tax fees billed by OUM during these periods.(4)All
Other Fees: There were no other fees billed by OUM during these periods.


Pre-Approval Policy and Procedures

The Audit Committee reviews and pre-approves all audit and non-audit services that may be provided by the independent registered public
accounting firm, or Independent Auditor, during a specified period without the need to obtain specific pre-approval from the Audit Committee. The Independent Auditor provides an annual engagement
letter to the Audit Committee with a reasonably detailed description of class of services proposed to be provided by the Independent Auditor during the period covered by the engagement letter and
related estimated fees, and the Audit Committee pre-approves such engagement letter as appropriate. By approval of the engagement letter, the services in that engagement letter will have specific
pre-approval. The services may include audit, audit-related, tax and all other services, and such service or class of services is subject to the pre-approved limit. Pre-approval is generally provided
for up to one year, and the Audit Committee may periodically revise the amount and/or list of services that have received class pre-approval as necessary. Once such services have been rendered by the
Independent Auditor and approved by the Audit Committee, the pre-approved limits of the annual engagement letter are re-established. If it is anticipated that the service will exceed the annual
pre-approved limits, prior to commencing the audit or other permitted non-audit service, the Audit Committee will pre-approve the particular service on a case-by-case basis. No service that is absent
from the record of class-approved services in the annual engagement letter may be commenced without specific pre-approval. The Audit Committee has delegated the authority to grant pre-approvals to the
Audit Committee Chairman when the full Audit Committee is unable to do so. Such pre-approvals are then reviewed by the full Audit Committee at its next regular meeting. The

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Independent
Auditor and our senior management periodically report to the Audit Committee regarding the extent of services provided by the Independent Auditor and the related fees for the services
performed, as needed. In 2017, all audit services were pre-approved and reviewed in accordance with our policy; in 2017, there were no non-audit services.

PART IV

Item 15.Exhibits, Financial Statement Schedules

The financial statements, financial statement schedules and exhibits listed in the exhibit index of the Original Filing are filed with, or
incorporated by reference in, this Amendment.

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Table of Contents

VIVUS, INC.  AMENDMENT NO. 1 TO ANNUAL REPORT ON FORM 10-K FOR  THE YEAR ENDED DECEMBER 31, 2017  EXHIBIT INDEX



Exhibit
Number

Description31.3

Certification of Interim Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended31.4

Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended


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Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment
to be signed on its behalf by the undersigned, thereunto duly authorized:



VIVUS, INC.,
a Delaware CorporationBy:

/s/ THOMAS B. KING Thomas B. King Interim Chief Executive Officer
(Principal Executive Officer)


Date:
April 26, 2018

41

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