noted that Mullen has been getting rich. The Biogen CEO has received $63 million in compensation during this nearly six-year period, and he has sold $85 million worth of stock.
“We demand that the Board take steps to ensure that Mr. Mullen’s compensation is more closely aligned with the interests of the shareholders he is working for,” Healey and Cohen wrote in their letter to the Biogen board.
HealthCor also criticized Biogen for failing to develop any significant new drugs since the FDA approval of natalizumab in 2004. In an analysis of Biogen’s peers, HealthCor says the company is spending too much on R&D and getting too little in return. The analysis resembles one that Icahn released earlier this amidst his campaign to get Biogen shareholders to elect new directors.
It’s estimated that Biogen will spend about 27 percent of its revenue this year on research and development, while the average rate among its peers is 18 percent, according to HealthCor. “One analyst report suggests that Biogen Idec would be worth $5 to $6 more per share, if the Company cut R&D to a more reasonable 23 percent of sales,” Healey and Cohen wrote.
The performance of the R&D group has been “particularly disappointing,” HealthCor said, because only two of the company’s drugs in late-stage clinical trials were developed in-house or remain wholly owned by Biogen. Those two examples are the longer-lasting version of interferon-beta1a (Avonex), and a new use of the same drug for ulcerative colitis.
