Carl Icahn has launched a new line of attack on Biogen Idec’s credibility. The billionaire investor, in a memo to shareholders filed with the Securities and Exchange Commission early today, says the company’s public statements about its sale process last year don’t match up with internal documents it had to hand over in court. Based on his reading of the documents, which he sued to obtain in Delaware court, Icahn concludes the board of the Cambridge, MA-based company (NASDAQ: [[ticker:BIIB]]) had “very little” input in crafting and overseeing the effort, despite public statements to the contrary.
Icahn’s memo starts with a juicy headline: “Biogen’s Sale Process: When Will We Know the Truth?” Icahn has argued since January that Biogen’s sale process was doomed to fail from the start because of how it restricted bidders from talking to Biogen’s two big partners, Irish drugmaker Elan and South San Francisco-based Genentech, until first submitting a binding offer.
Icahn starts making his case with a statement from Biogen CEO James Mullen in February, when he called the sale process “professional, objective and thorough.” Minutes from the board meeting on October 12, the day the sale process was announced, tell a different story, Icahn says. The documents show no mention that the board was advised on the design of the sale process. It wasn’t until December 12, Icahn says, that the board got its first, and only, description of the design of the sale process. That was the day Biogen pulled the plug on its sale, which triggered a $5 billion drop in market value the next day.
Icahn goes on to say that at least one potential bidder, who isn’t named, walked away after it asked for permission to speak with Elan, presumably to discuss terms of the partnership for marketing Tysabri, the fast-growing multiple sclerosis drug. At an investor conference in January, Mullen said that the company’s terms didn’t get in the way of bidders entering the sale process.
Biogen’s response was blunt. “There’s nothing in the documents that shows the process was flawed in any way, despite Mr. Icahn’s false allegations. The documents are completely consistent with what we said all along,” says spokeswoman Naomi Aoki. The board actually met and reviewed the sale process eight times between October and December, she says. When asked how Icahn could come to the conclusion that only one such board discussion took place, she said, “it’s inaccurate.”
Icahn started building his stake in Biogen shares in August, SEC filings show, just a few months after he made a bundle by pushing for the $15.6 billion sale of MedImmune to AstraZeneca. His efforts to repeat that history with Biogen haven’t worked out the same way, although if he gets his way on June 19, when shareholders will vote on his three nominees to the board, it could move him a step closer to another payday.
