With a potentially momentous shareholder vote at hand, a top Carl Icahn strategist says he and others nominated by the investor for Biogen Idec’s board would not try to oust CEO James Mullen. What’s more, he says, they would work to restore the company’s research operations to the greatness he admired when a young MIT student in the late 1980s and early 1990s.
Alex Denner, the 38-year-old Icahn Partners managing director who has worked with Icahn on biotech deals that include the successful takeover of ImClone Systems (he is still on ImClone’s board), is one of three people that Icahn nominated to Biogen’s board. Shareholders will choose between that slate and one advanced by Biogen tomorrow at the company’s annual shareholder meeting in Cambridge, MA.
When I talked to Denner a few days ago, he would not comment on tomorrow’s vote. Instead, he spoke chiefly of his vision for the company and what Icahn’s slate would try to do if elected. Many of his comments reflected the four key goals he laid out in a memo to Biogen shareholders filed last week with the Securities and Exchange Commission: to boost research and development spending, improve employee morale, bolster relations with partners, and possibly cut expenses outside research. However, Denner, who graduated from MIT with a degree in mechanical engineering in 1991 before getting his PhD from Yale University in biomedical engineering, also related how much he had admired the pioneering company as a student—and how he felt its research operation had slipped in recent years.
“When I was a student at MIT, you would look to Biogen and say, wow there’s true world-class research being done there,” Denner told me. “There are still great people at Biogen, but I think that the company’s strategy has failed them in terms of optimizing their capabilities.” He added, “The passion has come out of research there, and one of the things we would like to do is reinvigorate that passion.”
Denner also reiterated his displeasure with Biogen’s failed sales attempt last year: he and Icahn have charged, in essence, that the biotech stacked the deck to discourage suitors—and has not been fully forthcoming about details of the process. Icahn’s group successfully filed suit this spring to force Biogen to turn over documents relating to the attempted sale, and Denner says his belief that the process was flawed was reinforced by his review of those documents: “Some key issues were never brought up at board meetings, or at least there’s no record of them ever being brought up at board meetings,” he says. What’s more, he says, some statements Biogen made about the design and execution of the sales process appear to be incorrect. Biogen has roundly rejected the Icahn group’s claims.
Despite this obvious area of contention, Denner says he and his colleagues, if elected to the board—last week, three advisory firms for corporate elections backed Biogen’s slate over Icahn’s, raising the odds against them—will work constructively with management and will not seek to remove Mullen. “We’re looking to work with the board and current management to improve morale and boost the company’s prospects,” he says, adding that the group intends to “show people very quickly that we’re going to be helping a lot—I think we’ll be able to do that.” Of course Icahn’s long-term goal is likely not just to cooperate with the board but to control it. If he wins three of the four board seats up for election at tomorrow’s meeting, Icahn has said he would be in position to seek all four up for renewal at next year’s meeting. That would give him a controlling seven seats on the now 12-person board (Icahn is also proposing that Biogen’s bylaws be amended to fix the number of board seats at a dozen).
Denner points to his experience on the ImClone board as being valuable to Biogen: he and Richard Mulligan, who is also nominated for the Biogen board (the third nominee is Mulligan’s fellow Harvard Medical School professor Anne Young) helped Icahn take control of ImClone and have overseen its revival. “A lot of the things we did at ImClone, those experiences would presumably help at Biogen,” he says.
One specific area where his ImClone experience could come in handy, says Denner, is Biogen’s relations with its partners. Biogen is in arbitration with Genentech about development plans for a proposed follow-up to the successful cancer drug Rituxan on which the two are partners. In his recent shareholder memo, Denner cited his efforts in repairing relations between ImClone Systems and partner Bristol-Myers Squibb as a reason to think he can help Biogen. However, in our conversations, Denner didn’t go into detail other than to say he thinks both the Genentech partnership and Biogen’s partnership with Elan Pharmaceuticals on the multiple sclerosis and Crohn’s disease drug Tysabri could be strengthened.
In the end, Denner says Icahn’s group has a vested interest in seeking only the best outcome for Biogen. “We represent a lot of shares, more than the entire board and all of management combined. So we have a great interest in the company being successful,” he told me.
