Biogen Idec Wins Proxy Fight Against Icahn

By Shilpa C Nangali

Biogen Idec has won a proxy fight against billionaire investor Carl Icahn, placing the company on course to continue as an independent entity. Icahn sought to place three members on the company's board in a bid to push Biogen to try again to sell itself, but his attempt failed. Icahn was not present at the company's annual meeting on June 19, 2008. Icahn had claimed that Biogen deliberately sabotaged a previous attempt to sell itself in part by not allowing potential buyers to talk to its partners, Elan and Genentech. Biogen, which sells the multiple sclerosis drugs Avonex and Tysabri, and the cancer drug Rituxan, has denied the charge, saying that it conducted a responsible auction, but no buyer was interested in acquiring the company for an acceptable price.

Biogen Idec's Phase I of their consolidated campus.

Based on a preliminary count provided by Biogen's proxy solicitor, stockholders have elected all four of the Company's nominees - Cecil B. Pickett, Ph.D., Lynn Schenk, J.D., Phillip A. Sharp, Ph.D., and Stelios Papadopoulos, Ph.D. - to the Biogen Idec Board of Directors at today's Annual Meeting of Stockholders. In addition, based on that preliminary count, the proposal to amend the Company's bylaws to set the size of the Board at 12 has been defeated. The press release noted that preliminary count is subject to the official tabulation of vote results, which will be provided by Biogen Idec's independent inspector of elections, IVS Associates, in approximately 2 to 3 weeks.

After months of campaigning and badgering, billionaire investor Carl Icahn's slate of three directors challenging company nominees at Biogen Idec came up on the short end of a shareholder vote on June 19, 2008, and it did not appear to be a close contest. The author writes that Biogen Idec's warhorse Avonex drug keeps selling, but someone is always predicting its commercial decline. And then there is Tysabri, a drug with a lot of potential and a history that scares investors. Rare but serious medical complications prompted Biogen Idec to take Tysabri off the market for a time, though it now predicts 100,000 patients will use it within the next two years. However, Tysabri's past problem, which crushed Biogen Idec stock at the time, remains a wild card. Biogen Idec executives and Icahn's representatives both said yesterday they planned to meet and work with each other in the near future.

Biogen Idec’s Chief executive Jim Mullen thinks Tysabri is on track to being used by 100,000 patients by the end of 2010. At the annual meeting on June 19, 2008, Mullen said: "We think we've been consistent and strong in creating value." After the meeting, Alexander Denner, one of Icahn's nominees, declined to discuss what steps his side might now take. Denner said that his side realized it would not likely prevail after proxy review firms such as RiskMetrics Group had recommended against its slate of candidates this month.

Biogen Idec spokeswoman Naomi Aoki said she "begs to differ" with Denner's views on the company's research and morale. She noted that the company has four products in late-stage development and a number of others in early-stage clinical trials. Aoki said: "Those are the kind of things that keep our scientists excited about the company."

Mark Schoenebaum, a Deutsche Bank analyst, thinks that shares of Biogen Idec and Genzyme will trade close to their current prices. He wrote that risks and rewards for Biogen shares are fairly balanced: its multiple sclerosis and Crohn's disease drug Tysabri may face difficult competition and the pipeline may not offer much growth, but eventually the company could be a buyout target.

Source: Bloomberg, Business Wire, Reuters, Global Insight Daily Analysis, Associated Press Newswire & The Boston Globe

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