BOSTON (Reuters) - Billionaire investor Carl Icahn said on Monday he is seeking three seats on the board of Biogen Idec Inc <BIIB.O>, setting the stage for a battle for control of one of the world's biggest biotechnology companies.
By Toni Clarke
BOSTON (Reuters) - Billionaire investor Carl Icahn said on Monday he is seeking three seats on the board of Biogen Idec Inc <BIIB.O>, setting the stage for a battle for control of one of the world's biggest biotechnology companies.
Icahn's move follows a failed attempt by Cambridge, Massachusetts-based Biogen to sell itself -- a failure Icahn believes was deliberate.
"We believe that the process was flawed in a number of key respects and that the process was run to placate us and other large shareholders who we believe asked for Biogen to find a buyer," Icahn said in a statement.
!ADVERTISEMENT!Biogen said its board would review his proposed nominations in light of the best interests of all shareholders, and denied sabotaging the sale.
"We ran what can only be described as a comprehensive and thorough sale process that was consistent with industry standards," said Biogen spokeswoman Naomi Aoki.
Biogen, which has a market value of $17.3 billion, makes the multiple sclerosis drugs Avonex and Tysabri and the cancer drug Rituxan. It co-markets Rituxan with Genentech Inc <DNA.N> and Tysabri with Elan Corp <ELN.I> <ELN.N> of Ireland.
"We expect volatility in Biogen's shares, given what looks to be a looming proxy fight with the potential outcome of reopening the auction process that was initiated last fall," Geoffrey Meacham, an analyst at JP Morgan, said in a research note.
Icahn owns 12.4 million Biogen shares, or about 4.24 percent of the total outstanding.
The three proposed candidates for the board are Alexander Denner, managing director of the Icahn investment vehicle Icahn Partners; Richard Mulligan, professor of genetics at Harvard Medical School; and Dr. Anne Young, head of the neurology service at Massachusetts General Hospital.
Denner and Mulligan are also board members at biotechnology company ImClone Systems Inc <IMCL.O>, which ceded control to Icahn in 2006 after a bitter battle during which Icahn accused the company's management of failing to properly develop the cancer drug Erbitux.
Biogen has not yet set the date of its 2008 annual meeting, when four seats on the 12-member board will open, said Aoki.
Up for re-election will be Cecil Pickett, the company's president of research and development; Phillip Sharp, institute professor at the Massachusetts Institute of Technology and co-founder of Biogen; and Lynn Schenk, an attorney who previously served as chief of staff to the governor of California.
Thomas Keller is reaching the mandatory retirement age and will not stand for re-election.
"We believe Drs. Pickett and Sharp could be re-elected without contest," said analyst Meacham. "However, the other two board seats up for reelection are where the Icahn affiliates could potentially challenge."
As members of the executive committee that ran ImClone while it searched for a full-time chief executive, Denner and Mulligan renegotiated its relationship with partner Bristol-Myers Squibb Co <BMY.N>, settled outstanding litigation, and strengthened the clinical development program for Erbitux.
ImClone shares have risen 37 percent since then.
Biogen shares have fallen 32 percent since it put itself up for sale last October. They plunged more than 25 percent on December 12, when the company said it was ending the auction after failing to get any bidders.
Icahn believes Biogen made it prohibitively difficult for potential buyers to talk to Elan, which has certain rights in Tysabri if there is a change of control at Biogen.
"We also believe that the confidentiality agreement was so restrictive that certain potential bidders were not able to sign the agreement and therefore were not able to participate in the bidding," Icahn said in his statement.
Icahn said he is concerned that Biogen is poised to make a "toxic" large-scale acquisition that would run counter to the spirit of a sale of the company.
His concerns were exacerbated by a report in Britain's Times newspaper on Saturday that Biogen might be pondering a bid for the Danish company Genmab <GEN.CO>. The speculation sent Genmab shares up more than 7 percent.
Biogen shares were down 57 cents, or 1 percent, to $58.35 in afternoon trade on Nasdaq.
(Reporting by Toni Clarke; additional reporting by Edward Tobin in New York; editing by John Wallace and Tim Dobbyn)
