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12:00 AM
Feb 04, 2008
 |  BioCentury  |  Finance

Ebb & Flow

Carl Icahn has parlayed a 4.2% stake in Biogen Idec (NASDAQ:BIIB) into a probable proxy fight, last week proposing to restructure the board in an attempt to restart efforts to sell the company.

Not only did he propose a slate of three board members to help fill the four seats that are up for election this year, but he also asserted that if Biogen Idec's management "failed to act to enhance shareholder value" he would be back next year to propose four more directors to constitute a majority of the board.

Icahn also proposed to set the number of board members at 12, which would help his arithmetic add up. Currently, Biogen Idec has no specified number of board members.

No date has been set for the annual shareholder meeting at which the vote will take place, but Biogen Idec spokesperson Naomi Aoki said to expect it in the late spring or early summer. In 2007, the meeting was in May.

"I think Biogen Idec is going to get bought this year; this effectively puts pressure on management to sell," concluded Sven Borho of OrbiMed.

Rearview mirror

In an SEC filing, Icahn made clear he didn't think much of Biogen Idec's effort to sell itself last year (see BioCentury, Dec. 17, 2007).

"We believe that Biogen's recent purported attempt to find a suitor was not conducted in a way to enhance the success of the endeavor," he said in the filing. "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."

Specifically, Icahn complained about the inability of potential bidders to discuss change of control provisions with partner Elan (NYSE:ELN) prior to making a "binding proposal" (see BioCentury, Oct. 22, 2007).

Partner Genentech (NYSE:DNA) wasn't seen as an impediment, since it had said it wouldn't execute the change of control provision in its deal for Rituxan rituximab and in the unlikely event that it did, the acquirer would be in control of the process in any case, Biogen Idec President and CEO James Mullen noted at the JP Morgan Healthcare Conference in January. Genentech has not publicly commented on the matter. He added that the parties were "asked to submit a binding offer contingent only on the resolution of the change of control agreements." Then the bidder would have had "direct access to Genentech and Elan before executing a definitive agreement."

Moreover, according to Mullen, Elan gave us "some fairly good guidance that we could convey to third parties, and we did so."

He added: "People wanted to talk to Elan and we said there will be a time and there will be a place."

Mullen noted that the potential for Elan to change the deal terms for Tysabri natalizumab for multiple sclerosis (MS) and Crohn's disease in combination with Biogen Idec's skyrocketing share price were critical consideration for big pharma companies.

"At the prices that the market took...

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