[Update: 1:55 pm Eastern, 11/20/09] After a bitter standoff earlier this year with billionaire investor Carl Icahn over alleged mismanagement, Cambridge, MA-based Biogen Idec now faces another sharp attack from a major shareholder.

New York-based HealthCor Management, a hedge fund that invests in health and biotech companies, said today in a regulatory filing that Biogen (NASDAQ: BIIB) overpays CEO James Mullen, that his performance has been poor, and that the company has a record of “excessive and fruitless” spending on R&D and little regard for its shareholders. HealthCor portfolio managers Joseph Healey and Arthur Cohen, in a letter dated November 18, urged the board to “revisit” Mullen’s compensation, cut research spending, and start buying back shares to boost the stock price. HealthCor said it holds 3.65 million shares, or about a 1.3 percent stake in Biogen, and it has held a position for more than a year.

HealthCor is urging the board to turn things around by buying back $500 million to $1 billion worth of stock annually. That would reduce the supply of available shares, and increase the value of those that remain on the market.

“We fear that continued acquiescence to the status quo will be viewed as an indictment of the Board’s lack of focus on shareholder value creation,” HealthCor wrote in a letter to the board, which was disclosed to the Securities and Exchange Commission.

[Update with company response, 1:55 pm Eastern, 11/20/09.] Biogen Idec “actively engages with our shareholders and we appreciate their input,” says company spokeswoman Jennifer Neiman. That said, she also noted that Biogen has already done share repurchases worth $5 billion since 2004, and last month its board authorized an additional $1 billion of share repurchases.

HealthCor said in its letter that it has been arguing for changes at Biogen for more than a year. The fund noted that the company’s stock has seen no real growth for six years, and is currently trading near levels seen before the company filed for FDA approval of natalizumab (Tysabri) in 2004. (The stock was selling for $44.26 per share on February 17, 2004, and was at $46.05 at the time HealthCor wrote its most recent letter on November 18, 2009.)

While “investors have been left holding the bag,” in HealthCor’s words, the firm …Next Page »

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[Updated: 10/9/09, 3:51 pm Pacific] Eastbourne Capital, one of the powerful dissident shareholders who won a partial victory in a proxy fight this spring against San Diego’s Amylin Pharmaceuticals, has sold its entire stake in the company, according to a regulatory filing released late today.

Eastbourne unloaded all of its holdings in Amylin (NASDAQ: AMLN) about four months after one of its nominated directors, Kathleen Behrens, was elected to the company’s 12-member board, along with Alex Denner, a nominee put forward by billionaire shareholder activist Carl Icahn. San Rafael, CA-based Eastbourne, led by founder and portfolio manager Rick Barry, held a 12.5 percent stake in Amylin during the spring proxy contest. Eastbourne had nominated three directors to the Amylin board, while Icahn had nominated two more, in their quest to shake up the board.

Today’s filing doesn’t say what price Eastbourne sold its shares at, or how much it generated in the stock sales, but Amylin closed this week at $14.20, not far from the company’s 52-week high of $15.90. Amylin, the developer of a novel treatment for diabetes, came under fire from Eastbourne and Icahn, who argued that it underperformed when compared to its peers, failed to control spending, and operated under unfavorable partnership terms with drug giant Eli Lilly.

A spokesman for Eastbourne declined to comment on the stock sales, and so did a spokeswoman for Amylin.

[Updated with added context from my colleague Bruce Bigelow.]

Eastbourne’s Barry indicated some frustration to Bruce in early August about the board’s slow pace in choosing a new chairman after the new directors were elected in June. Later in August, the board named former Novartis CEO Paulo Costa as chairman.

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The first half of this year, Amylin Pharmaceuticals CEO Dan Bradbury was absorbed in the closest thing corporate America has to political warfare—a boardroom challenge from billionaire Carl Icahn and another unhappy shareholder, Eastbourne Capital. The second half has been more about doing the basics Amylin (NASDAQ: AMLN) must do if the San Diego diabetes specialist is ever going to enter the top tier of big, profitable biotech companies.

Now that the dust appears to finally have settled on the proxy fight—new director Paulo Costa was elected the chairman last month—Bradbury has been back hammering away at the company’s need to make sure it nails the potential blockbuster diabetes drug in its pipeline. Yesterday, he was happy to talk about it by phone while he visited Amylin’s new biotech drug factory in West Chester, OH.

The importance of Amylin’s new factory to its future is hard to overstate, so there’s good reason for the CEO to drop in and make sure the troops keep their collective eye on the ball. Amylin and its partner Eli Lilly have made a $500 million investment in the factory, dating back to December 2005, in order to meet market demand for what they hope will be the next big thing for diabetes, exenatide once-weekly. This plant, which now has 250 employees, is getting ready to undergo an FDA inspection in the next six months as Amylin and Lilly seek clearance to start selling the drug in the U.S. It’s the only place in the world with the expertise, and capacity, to meet the first three years of market demand for exenatide once-weekly, which will seek to grab big market share among the 25 million people in the U.S. with diabetes.

To hear Bradbury tell the story, this is the time to execute on the fundamental game plan with things like manufacturing, and not for Monday morning quarterbacking about whether the coach is calling the right plays.

Dan Bradbury

“Certainly in the first half of the year there were a lot of distractions for me. I have more time now to focus on actually running the business as opposed to board issues,” Bradbury says, during a break from meetings with Amylin’s Ohio staff. “It’s all about execution at the moment.” He adds,”We need to make sure everyone is fully on board with where we are as a company. The launch of exenatide once-weekly next year is critical to the future of the company.”

Why does getting this new drug right matter so much? Amylin generates almost 90 percent of its revenue from exenatide (Byetta), a novel peptide drug that was first approved by the FDA in April 2005 for patients who weren’t able to control their blood sugar with existing meds. The drug has gone on to become a commercial success, generating $678.5 million in sales last year, just its third full year on the market.

But the existing product has its limits, partly because it must be injected twice-daily. So Amylin and Lilly have sought to make this drug a lot more appealing to millions of patients by obtaining a license to drug delivery technology from Cambridge, MA-based Alkermes (NASDAQ: ALKS). That technology encapsulates the same peptide in a polymer microsphere that slowly dissolves in the bloodstream, so patients only need to get stuck with a needle once a week, not twice a day.

This new-and-improved drug has generated clinical trial data so far that Bradbury says are good enough to beat the biggest selling drugs in the diabetes market—Merck’s …Next Page »

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Irish drugmaker Elan breached its multiple sclerosis drug partnership with Biogen Idec when it tried to cut a separate deal to collaborate with Johnson & Johnson, according to a federal judge.

Elan, which made the announcement last night, said it respects the decision of the U.S. District Court for the Southern District of New York. Elan didn’t say whether it plans to appeal the judge’s decision, although it said it is still committed to working with J&J to close that deal in a way that’s consistent with its partnership with Cambridge, MA-based Biogen Idec (NASDAQ: BIIB), which has operations in San Diego.

The heart of the dispute is about who owns and controls the most effective multiple sclerosis drug on the market, natalizumab (Tysabri), co-marketed by Elan and Biogen. Elan’s proposed agreement with J&J would have given J&J an option to acquire Biogen’s 50 percent stake in the multiple sclerosis treatment if some other company acquires Biogen. Since a takeover at Biogen is what billionaire investor Carl Icahn has been pushing for over the past two years, and he now has gained two seats on the company’s board, the odds of this happening have to look a little better now than when Elan and Biogen struck their original partnership. The stakes are high, as Biogen’s rights to Tysabri would factor into any buyout discussions, and Tysabri is Biogen’s fastest-growing product, generating $588.6 million in revenue a year ago.

Jennifer Neiman, a spokeswoman for Biogen Idec, said Biogen would have the right to end the partnership with Elan if Elan doesn’t change its deal with J&J, according to a report by the Associated Press. Elan didn’t immediately return the AP’s calls seeking comment.

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New England’s life sciences startups gave us a lot to write about last week.

—Luke talked with Genocea Biosciences CEO Staph Bakali about his Cambridge, MA-based startup’s strategy for developing new vaccines. The approach, based on research at Harvard Medical School, helped Genocea garner $23 million in venture capital earlier this year and has drawn interest from George Siber, the former chief scientific officer of Wyeth Vaccines and Adel Mahmoud, who was president of Merck Vaccines while it was developing the cervical cancer vaccine Gardasil.

—Cambridge-based Biogen Idec (NASDAQ: BIIB) indicated in a regulatory filing that Cecil Pickett will relinquish his seat on the company’s board on October 5. Pickett, who was among the Biogen executives criticized by investor Carl Icahn earlier this year, will also retire from his post as the company’s president of research and development, as Biogen indicated in March.

—Daktari Diagnostics of Arlington, MA, raised $2.5 million of a proposed $3 million financing round from investors including Norwich Ventures, Partners Innovation Fund, and Mass Medical Angels. The startup is using technology licensed from Massachusetts General Hospital and Purdue University to develop a handheld device for counting so-called CD4 cells in blood samples, a standard way to track the progression of HIV disease.

—BL Healthcare raised $2.9 million of a planned $5 million round. The Foxboro, MA-based startup makes a TV set-top box for the remote healthcare market; the device has been cleared by the FDA.

—Cambridge-based iWalk, maker of a powered prosthetic ankle and foot, raised an undisclosed amount of new venture financing. General Catalyst led deal.

—Ryan caught up with Mark Goldsmith, CEO of Cambridge-based Constellation Pharmaceuticals, who dished about his young firm’s efforts to develop new treatments for cancer, and eventually other diseases, using the science of epigenetics. That field, which explores mechanisms for activating or muting certain genes without changing the underlying DNA, is also the province of fellow Cambridge startup EpiZyme, whose CEO also recently chatted with Ryan.

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[Update: 8:20 pm Eastern time with Biogen comments]

One of the Biogen Idec executives who was criticized earlier this year for displaying “failed leadership,” in the words of billionaire investor Carl Icahn, is resigning from the company’s board after an earlier pledge to keep the seat.

Cecil Pickett, Biogen’s president of research and development, will retire from both his full-time day job and relinquish his spot on the board on Oct. 5, according to a regulatory filing released late today. The Cambridge, MA-based company (NASDAQ: BIIB) said back in March that Pickett, whose term on the board wasn’t due to expire until 2011, planned to retain one of the company’s 13 board seats.

Two months after announcing his plans to retire, Pickett’s R&D operation came under a withering attack from Icahn. The billionaire investor urged shareholders to vote for his four nominees to the Biogen board, and one of the main arguments he advanced was that Biogen was the only major biotech company of the past five years that hasn’t introduced a single new drug. Icahn blamed that on a “lack of R&D focus.” Two of Icahn’s nominees, Alex Denner and Richard Mulligan, ended up winning seats on the board after a highly contentious shareholder meeting in June.

While it isn’t known how much influence Pickett would have had on R&D from his board perch, the loss of a director who had overseen Biogen’s R&D is a potential opportunity for Icahn to push for changes. Pickett is the second director to resign in two months, following MIT biologist and Biogen co-founder Phil Sharp, who stepped down last month. Sharp, who had been a director since 1982, was also serving a board term that was due to expire in 2011.

Biogen’s board will decide whether or not to fill the board vacancies, and if so, who will take those slots, says Biogen spokeswoman Jennifer Neiman. “It’s premature to comment on any long-term impact,” of the changes to the board, she says. Neiman added that the search for Pickett’s replacement as full-time president of R&D is “well underway.”

Denner, a portfolio manager for Icahn, didn’t immediately return a phone message requesting comment.

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After a bruising proxy battle ousted Amylin Pharmaceuticals’ chairman and lead outside director, the San Diego biotech issued a statement on June 2 that seemed to signal a cease-fire with dissident shareholders (including Carl Icahn). “We look forward to working with all our new directors to bring transformational medicines to patients and to drive sustainable and profitable growth,” the company said.

But have the directors of the San Diego diabetes drug developer really been able to bury the hatchet?

One sign they may not have is the fact that in the two months since shareholders ousted chairman Joseph Cook and director James Wilson—and elected four new directors to Amylin’s 12-member board— Amylin has yet to announce a new chairman. Two of Amylin’s longtime directors, founding CEO Howard “Ted” Greene and Ginger Graham, another former CEO, were more or less forced to resign in April to make room for the company’s slate of new board candidates. Votes were cast on May 27th at Amylin’s annual shareholders meeting.

Whether that’s enough time for a corporate board to choose a new chairman is a matter of debate. Aside from telling me the company has no information concerning a new chairman, Amylin didn’t have much to say. When asked if continuing dissension is prolonging the board’s deliberations on the matter, spokeswoman Anne Erickson e-mailed this statement to me:  “Our Chairman of the Board is elected each year following our Annual Meeting of Stockholders by the newly-elected Board. With four new Directors, the Board is working together to make a thoughtful decision about this very important role to the organization. Amylin welcomes all four new Directors to the Board and looks forward to a productive working relationship.”

Those four new directors include two who were elected from the company’s slate of nominees—former Icos chairman and CEO Paul N. Clark and former Novartis CEO Paulo F. Costa. The other new directors came from the dissident camps—Alex Denner has served as a portfolio manager for Icahn, and Kathleen Behrens, a consultant and former managing director of RS Investments, was nominated by Eastbourne Capital Management of San Rafael, CA.

Since Eastbourne Capital holds a 12.5 percent stake in Amylin, I checked in with the firm’s founder and portfolio manager, Rick Barry, via e-mail:

Xconomy: Is Amylin’s board having difficulty electing a new chairman?

Rick Barry: We don’t know, but it has been over two months since the annual meeting and there is no announcement regarding a new Chairperson. This concerns us and is likely to concern all other Amylin shareholders.

X: Can you tell me which Amylin directors Eastbourne views as appropriate candidates for board chairman?

RB: Of the four newly elected independent directors, Paul Clark and Paulo Costa were selected after a rigorous process by the Company’s corporate governance committee. They were shown to have excellent qualifications and Amylin deemed them desirable additions to maximize value for all Amylin Shareholders. We too supported their election, as did an overwhelming majority of the other shareholders. We believe that either of these two individuals would be an excellent choice for Chairperson.

X: Are there any current directors that Eastbourne is unwilling to support?

RB: We believe the Board needs to be lead by someone who has a fresh perspective, unburdened by past decisions with ample time and a successful track record. We would support any of the four newly elected independent directors.

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Relations appear to be increasingly strained between Biogen Idec (NASDAQ:BIIB) and the Irish drug company Elan, its partner for the distribution and development of the multiple sclerosis drug natalizumab (Tysabri). Elan said today that it has filed suit against Biogen over the Cambridge, MA-based biotech firm’s objections to Elan’s deal announced last month with affiliates of health products giant Johnson & Johnson (NYSE:JNJ).

Elan’s deal with Johnson & Johnson gives Elan the option to get financing from J&J to acquire Biogen’s rights to natalizumab if Biogen is acquired or undergoes some other change of control, according to Elan. And, according to Reuters, Elan’s $1.5 billion deal with J&J also gives J&J the option to purchase Biogen’s 50 percent stake in the Tysabri business if there’s a change in control at Biogen. Biogen has told Elan that Elan’s deal with J&J breaches the partnership agreement for the drug between Elan and Biogen. Elan disagrees. A Biogen spokeswoman wrote in an e-mail that the company has no comment about Elan’s recent legal action. The lawsuit Elan filed in federal court in New York seeks “declaratory and injunctive relief” that essentially confirms that Elan’s deal with J&J complies with its collaboration agreement with Biogen.

Biogen has been the subject of buyout rumors in recent years, and in late 2007 ended an official search for a buyer after the activist investor and Biogen shareholder Carl Icahn pushed for a sale of the company: Biogen said that December that it didn’t receive any qualified acquisition bids during the sales process. Biogen’s collaboration with Elan has factored into such buyout discussions, at least in part because of the importance of natalizumab to Biogen’s business. The drug, which generated $588.6 million in 2008 revenue for Biogen, is one of the company’s top three products, along with MS drug interferon beta-1a (Avonex) and rituximab (Rituxan) for rheumatoid arthritis and non-Hodgkin’s lymphoma. Biogen and Elan, which discovered natalizumab, entered their development and marketing agreement in 2000.

Elan issued a statement that said: “This is the same agreement we have been operating under for the last nine years. It is unfortunate that, because of Biogen Idec’s actions, Elan was left with no alternative but to seek court intervention to protect its interest.”

Biogen markets natalizumab for multiple sclerosis in the U.S. and Europe, and Elan has responsibility for selling the drug in the U.S. for the intestinal disorder Crohn’s disease. Biogen has said in previous financial reports that it has pinned much of its near-term revenue growth on increased sales of natalizumab.

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Venture capital funding for San Diego’s life sciences companies was surprisingly strong from April through June—with another deal announced this week.

—One of the key trends to be teased out of venture capital investment data for the second quarter of this year is that VC funding for life science companies rebounded to record levels. In San Diego $154 million of nearly $209 million invested from April through June went into 13 life sciences startups, according to Dow Jones VentureSource. Three of San Diego’s five biggest VC deals were for biotech companies: PhotoThera, $50 million; Intellikine, $28.5 million; and SkinMedica, $9.4 million.

—Biogen Idec (NASDAQ: BIIB) became subject to considerable boardroom intrigue after activist investor Carl Icahn succeeded in getting two new directors elected to the board of the Cambridge, MA-based company. So now shareholders and media mavens are puzzling over the unexpected resignation of Phillip Sharp, the Nobel-Prize-winning biologist and Biogen co-founder, from the board where he has served for 27 years. Ryan reports that Biogen’s board will decide whether or not to replace Sharp on what is now a 12-member board of directors.

—In a data dump earlier this week, Orexigen (NASDAQ: OREX) said its drug candidate for treating obesity helped people lose weight in all three of its big clinical trials. The San Diego biotech said its drug, a longer-lasting form of two generic compounds, has cleared enough hurdles for Orexigen to file a new drug application to the FDA by this time next year.

—Speaking of VC funding of life science companies, San Diego’s BeneChill said this week it has raised $13.5 million in a Series C round of venture funding. BeneChill plans to use the proceeds to fund early commercialization of RhinoChill, a portable medical device that uses hypothermia to treat patients with cardiac arrest, stroke, or head injury.

—San Diego’s Pathway Genomics made its debut last week by announcing it can test consumers for their genetic risk for more than 90 health conditions for $250. The startup is among several new medical diagnostic personal genome companies  that are offering to help consumers decode their own personal genome to determine their risk for disease.

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Famed scientist Phil Sharp’s retirement from the board of directors at Biogen Idec (NASDAQ:BIIB) leaves the board without what was perhaps its leading scientific voice, but his departure doesn’t leave activist investor Carl Icahn with much of an opening to seize greater control over the company.

When I reported last week that Sharp had stepped down from the board of Biogen, which he co-founded in 1978, it was still unclear whether or how Sharp’s retirement would impact the balance of power at the Cambridge, MA-based biotech company, which Icahn is on a quest to take over. It turns out that Biogen’s board of directors will decide whether or not to find someone to take Sharp’s seat on what is now a 12-member board of directors—but the board wouldn’t have had this power had a vote that took place at Biogen’s annual shareholders meeting on June 3 turned out differently.

At the meeting, Biogen shareholders rejected an amendment that Icahn proposed to the company’s bylaws, which would have set the number of seats on the board of directors at 13. During the proxy battle leading up to the meeting, Biogen, which also has significant operations in San Diego, advised shareholders to reject that amendment because it would remove the board’s power to determine how many directors there should be.

As of this writing, there were no indications one way or another from Biogen about whether its board would seek a replacement for Sharp.

“There is no obligation to fill his seat, as you may recall from following our proxy contest,” Biogen spokeswoman Jennifer Neiman told me, “so the board will make that decision based on …Next Page »

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Phillip Sharp, the MIT biologist and geneticist who co-founded Biogen Idec (NASDAQ:BIIB) in 1978, has retired from the biotech powerhouse’s board of directors, according to a company statement issued this morning.

Sharp, 65, has served as a director of Biogen since 1982. During his tenure on the Cambridge, MA-based company’s board, Biogen has evolved from a research and development shop to an international company with more than $4 billion in annual revenue and one of the largest franchises for multiple sclerosis drugs in the world.

Sharp’s unexpected retirement follows a shakeup on the board last month when two new directors—Alex Denner and Richard Mulligan—were elected from a slate endorsed by activist investor Carl Icahn. It’s unclear how Sharp’s departure from the board will impact the balance of power at Biogen, as the company’s top brass has been at odds with Icahn over the billionaire investor’s vocal criticisms of management and his past efforts to push for a sale of the company. Icahn’s past actions also indicate that he would like to gain greater influence on the board of directors. Sharp had not responded to an e-mail query about his decision by the time we posted this article.

Sharp won the Nobel Prize in Medicine in 1993 for his co-discovery of gene splicing, and he garnered the prestigious National Medal of Science in 2004. A luminary in the fields of cancer biology and genetics, he also holds the prestigious title of Institute Professor at MIT. He is also an Xconomist.

“Dr. Sharp has been a pioneering force in this company and this industry for more than three decades, contributing enormously to both our scientific and business achievements,” said Bruce R. Ross, chairman of Biogen, in a statement. “His work in the laboratory has led to major medical advances, and his business judgment in the boardroom has helped foster the growth of one of the world’s most successful biotechnology companies.”

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Ryan and Luke profiled some extremely interesting companies this week. More on those, and the rest of the week’s New England life sciences news, below.

—Billionaire investor Carl Icahn succeeded—at least partially—in his attempt to gain representation on the board of Cambridge, MA-based Biogen Idec (NASDAQ: BIIB). Roxanne reported live from the highly contentious annual meeting at which four board seats were up for grabs. The voting was so close, however, that only three winners were initially named–among them, Icahn portfolio manager Alex Denner. After the meeting, Bob got an exclusive interview with Denner and Harvard Medical School’s Richard Mulligan, who talked about why they thought Icahn’s attempt this year attempt to get his people on the Biogen board was more successful than a similar attempt last year. And late yesterday Biogen announced that Mulligan has won a seat on the board as well.

—Life Image CEO Hamid Tabatabaie told Ryan about his year-and-a-half-old startup’s efforts to address the problem of over-utilization of medical imaging with a system that would allow healthcare providers to better store, search, and share X-rays, MRIs, CT scans, and other digital medical images. Life Image, whose core software was developed at Boston’s Massachusetts General Hospital, raised $2.5 million in April in a Series A round of equity financing from Partners Innovation Fund and Massachusetts Technology Development Corporation.

—Ryan got the scoop on the technology being developed by Cambridge, MA-based Seventh Sense Biosystems, which closed its $4.75 million first round of financing from Flagship Ventures, Third Rock Ventures, and Polaris Venture Partners in December. CEO Doug Levinson (a Flagship partner) explained that the hitherto secretive startup wants to develop simple-to-use, unobtrusive health-monitoring tools. They would take the form of tattoo-like marks …Next Page »

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Carl Icahn has landed a one-two punch on Biogen Idec. Today, the Cambridge, MA-based biotech confirmed what the activist investor had proclaimed last week—that two members of Icahn’s board slate have been elected to Biogen’s board of directors. This afternoon, the company acknowledged that Richard Mulligan, a professor of genetics at Harvard Medical School and director of the Harvard Gene Therapy Initiative, had won election to its board. He will be joining fellow Icahn slate member Alex Denner, whose election was confirmed last week by the biotech.

As Xconomy reported in an exclusive interview with Denner and Mulligan last Thursday, Denner appeared to be the runaway winner in last week’s board election, where four director seats were up for grabs on the company’s 13-member board. We cited an Icahn vote-tracking tally that showed Mulligan in third place. But Biogen (NASDAQ: BIIB) only confirmed that Denner and two of its own candidates, Robert Pangia and William Young, had won election. Last week, Biogen said the race for the remaining place was still too close to call.

“We welcome Alexander Denner and Richard Mulligan to the Board and look forward to working with them to build on Biogen Idec’s strong track record of delivering value,” said Bruce R. Ross, Biogen Idec’s chairman, in a statement.

With a two-person toehold on Biogen’s 13-person board, Icahn plans to press an agenda for change at the company. As noted in our story last week, Denner and Mulligan told me that they hoped to focus on five areas at Biogen: shoring up relationships with partners, improving cost structure, strengthening and shoring up the product pipeline, improving strategic direction and focus, and settling litigation issues.

“Our objective is not to put the company up for sale,” Denner told me last week. “It’s to improve shareholder value, improve the pipeline, reinvigorate the culture and research, implement smarter spending, and improve the relationships between Biogen, Genentech-Roche, and Elan-and potentially to renegotiate a deal with Elan that’s better for the shareholders of both companies.”

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(Updated with Biogen Idec announcement of preliminary results, 3:18 pm, June 4—see below)

When last we left the cliffhanger that was yesterday’s Biogen Idec (NASDAQ: BIIB) annual meeting: the forces of billionaire investor Carl Icahn claimed they had won two of four director seats up for election. The New York Times was reporting Icahn had secured at least one place, and Biogen itself had adjourned the meeting saying results of the vote were not yet clear and would be announced later this month.

That was after a contentious day in which Biogen officials kept the voting open longer than anticipated—prompting charges by Icahn that the company was trying to change the outcome in its favor and leading the dissidents to file a lawsuit seeking to force Biogen to close the polls. “This is not North Korea,” proclaimed the leading member of Icahn’s slate, Alex Denner, when the extended voting period was first announced.

In short, it was not your usual boring cookie-and-coffee shareholder meeting. Since then, Biogen has essentially said only that the voting results are not yet fully tabulated and that it will announce the outcome as soon as possible. The company has not commented on what a potential Icahn pick or two on the board might mean. “From our perspective, it’s difficult to comment on Dr. Denner’s claim, given that the official tabulation has not yet been completed,” says Jennifer Neiman, a company spokeswoman.

Alex Denner, left, and Richard Mulligan, on a Cambridge street.

It is a different matter for Icahn’s team, though. I met Denner and the other apparent Icahn-backed victor, Richard Mulligan, last night for an exclusive interview. The pair describe how the Biogen contingent had abruptly left the meeting without shaking hands with them, and they named (for the first time, as far as I can tell) the two members of Biogen’s slate they thought had lost. Denner and Mulligan also shared some insights about why they believe they were more successful this year than last—when Icahn’s slate was shut out from winning a single board seat. And they spoke about their plans to reinvigorate Biogen—stressing, in Denner’s words, that “our objective is not to put the company up for sale.” (This is the same assurance Denner made to shareholders of San Diego-based Amylin Pharmaceuticals, and it worked in that hard-fought proxy contest, as he was elected to Amylin’s board.)

On the voting front, Denner appears to have been the runaway winner. According to a preliminary tally from a vote tracking service they use, Denner was more than 20 million votes ahead of the nearest other vote-getter. But with four seats in total up for election, the next four candidates—Mulligan and three of Biogen’s four choices—were closely grouped, within a few million votes of each other and apparently at the point where one or two changes of mind by major shareholders could shift the outcome.

But the tally showed Mulligan in third place overall. If that holds when the votes are finalized, that means he would also gain a board seat. So would Biogen picks Robert Pangia and William Young, while Biogen choices Alan Glassberg and Lawrence Best would be defeated. All four are current Biogen board members. The other two members of Icahn’s slate, Thomas Deuel and David Sidransky, were far back and appeared out of the running.

[Update: June 4, 3:18 pm: Biogen has put out a press release announcing that it appears Denner, Pangia, and Young have been elected to its board, as indicated in our article. It says the vote for the fourth board seat is too close to call.]

Denner says the vote has not been finalized and that he anticipates Biogen might try strategies to change the outcome—but that he feels confident he and Mulligan will prevail. “From what our sources tell us it’s very clear,” he told me earlier in the day. But, “I guess you never know.”

Last night, Denner reiterated his objection to the delay in the voting and expanded a bit on his North Korea analogy. “I think it’s like North Korea or some banana republic, where the voting process is not respected,” he says.

Denner says they felt like two wall flowers at a dance when Biogen’s leadership …Next Page »

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The big news in the San Diego biotech community this week came from the boardroom instead of the laboratory. Dissident shareholder factions elected representatives to the boards of both San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN)and Biogen Idec, the Cambridge, MA, biotech that has a significant local presence.

—Amylin’s founding CEO Howard “Ted” Greene, who also is the company’s biggest individual shareholder, may have played a key role in influencing the recent board election. Greene told me he’s optimistic about the outcome, in which a dissident faction of Amylin shareholders gained two board seats and ousted the chairman and lead outside director.

—Meanwhile, in Cambridge, MA, representatives of billionaire investor Carl Icahn claimed victory yesterday in their proxy contest with Biogen Idec (NASDAQ: BIIB) by winning two of four board seats in a recent shareholder election. The company adjourned the annual shareholder meeting without announcing the official results, however.

[Editors note: A previous version of the Targeted Genetics item incorrectly reported that Robin Ali presented results of his research in San Diego.  He did not attend the meeting]

—The potential loss of Seattle’s Targeted Genetics (NASDAQ: TGEN), which is struggling to avoid bankruptcy, will make it harder to bring new gene therapy treatments to market, according to Robin Ali, a University College London researcher.  At the American Society of Gene Therapy meeting in San Diego last week, a colleague of Ali’s presented clinical trial results from Ali’s experimental gene therapy treatment for a rare, genetic form of blindness that was supported by Targeted Genetics. “If they were to close,” Ali told Xconomy’s Denise Gellene by email, “it would leave a gap in the market that would take time to fill.”

—Celladon CEO Krisztina M. Zsebo told Denise at the American Society of Gene Therapy annual meeting that the San Diego gene therapy startup is in discussions with several pharmaceutical companies and expects to announce a …Next Page »

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[Update, 3:05 pm Eastern]

Billionaire investor Carl Icahn’s representatives say they have pulled out a victory in their proxy contest with Biogen Idec, winning two of the four seats that were up for grabs in a shareholder election. The official results weren’t yet announced, as the company adjourned the annual shareholder meeting without declaring who won.

Alex Denner, an Icahn portfolio manager, and Richard Mulligan, a professor at Harvard Medical School, told a group of reporters during a recess in the meeting this afternoon they believe they won seats on the Biogen board. They based their comments on feedback from a proxy solicitation firm, although they didn’t provide hard numbers or a margin of victory.

The mood was tense, just minutes before shareholders stepped back into the meeting when it reconvened at 2 pm. “This could have happened in a more dignified way,” Mulligan said to the group of reporters. When one reporter asked he and Denner if they considered this to be a victory, Denner said yes.

Then, at 2 pm, Biogen chairman Bruce Ross called the meeting to order. He made his comments brief. The polls were closed, he said, but results are still being tallied and the meeting would have to be adjourned until a final count is available, Ross said. The final result will be made available when shareholders re-convenes later this month at Biogen headquarters, he said. Biogen Idec spokeswoman Naomi Aoki said the company plans to issue a statement shortly on the day’s events.

Denner clarified things a little more in a follow-up call to my boss, Xconomy editor-in-chief Bob Buderi, after the meeting was adjourned. “From what our sources tell us it’s very clear,” that he and Mulligan had won, Denner says. But, “I guess you never know.” The polls are closed, Denner says. So presumably that indicates there’s no more possibility of campaigning for more votes that might change the outcome.

It was an anticlimactic end to a tense series of events. Earlier in the day, Ross dismissed calls from Icahn’s representatives to announce the voting results, and instead declared a recess in the meeting at about 11 am. That prompted Icahn to accuse the company of trying to manipulate the voting process, with Denner at one point blurting out to Ross that, “this is not North Korea.”

The fight is over the future direction of the Cambridge, MA-based biotech company (NASDAQ: BIIB), the world’s largest maker of multiple sclerosis drugs. Icahn, who holds the fourth-largest position in the company with 5.6 percent ownership stake, launched a blistering attack on the company this proxy season for failing to introduce any new drugs since 2004, for botching the marketing of its existing products, letting expenses get out of hand, and for a stock price that has lagged its peers. Icahn said the company suffers from “failed leadership” and he suggested the company consider splitting into two pieces, one focused on cancer research and the other on inflammation, to sharpen its focus.

Biogen fought back, as it did a year ago, when Icahn also tried to gain influence on the company’s board. It countered that its pipeline of drug candidates is strong, physicians are regaining confidence in its fastest-growing multiple sclerosis drug after a couple of safety scares, and that splitting the company up would be counterproductive because it would raise expenses and inefficiencies. Icahn’s ideas would “destroy shareholder value,” the company said.

If Denner and Mulligan do end up victorious, they will win three-year terms to the Biogen board, which has 13 members. Their candidacy gained significant currency last month when RiskMetrics Group, the largest and most influential advisor to institutional investors on proxy elections, endorsed them for the Biogen board. The other Icahn nominees were Thomas Deuel of The Scripps Research Institute and David Sidransky of Johns Hopkins University School of Medicine.

There was no word on the outcome of an Icahn-backed resolution about whether the company should reincorporate from Delaware to North Dakota. Corporate laws in North Dakota make it easier for shareholder activists like Icahn to mount successful proxy campaigns to take over company boards.

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[Updated with Bloomberg comment at 12:55 pm Eastern]

Tensions at the Biogen Idec annual shareholders meeting are palpable. Representatives from billionaire investor Carl Icahn have twice called for the polls to be closed—once before CEO James Mullen gave a speech, and a second time before an unscheduled recess was called at approximately 11 am.

The first motion to end voting came after a contentious round of questions from stockholders, which ended around 9:45am. Mullen rose to give a talk, and Icahn representative Richard Jones interrupted, calling for the polls to be closed. When Chairman Bruce Ross indicated that they would remain open, Jones proposed that the motion be put to a stockholder vote.

“That cannot be done procedurally,” said Bruce Ross, chairman of the board. “The motion is out of order.”

What followed were two long PowerPoint presentations by Mullen and Biogen’s President of Research and Development, Cecil Pickett. Jones and other Icahn reps, including Alex Denner, one of Icahn’s nominees to the board, got up and left the room multiple times. They were followed by many eyes in the room, including Mullen’s.

Following the presentations, there was another round of questions, and Ross took the podium again to “exercise his authority to call a recess.”

Before the shareholders had begun to file out, Jones immediately stood up objected. “There has been an inordinate amount of time at this meeting spent on company presentations,” he said. Ross didn’t budge.

The meeting will reconvene at 2 pm Eastern time, according to a Biogen spokeswoman, a detail that Ross failed to mention when he called the recess. Shortly after the recess was announced, Denner called out to Ross, saying “this is not North Korea,” according to Reuters. As of 11:30 am, the news of the recess and what it means was still percolating through the crowd. Icahn’s people huddled in groups around their Blackberrys, craning their necks to quietly confer on strategy.

Later, in a comment to the Boston Globe, Denner said he expected the Icahn slate won at least one seat. The recess, Icahn told Bloomberg News, was an attempt by the company to manipulate the process.

“They’re stalling,” Icahn said to Bloomberg. “They want people to change their votes.”

“”It’s sort of despicable,” Icahn was quoted as saying in the Globe. “Imagine if this was a presidential election, and you’re losing and you call a recess. It’s typical of the way this company has been run. It’s like a country club. They want it their way, and that’s the way it’s going to be. They don’t want to be accountable to anyone.” In a statement, Icahn accused the company of trying to “hijack” the election.

Meanwhile, in the back of a parking lot shortly after the recess, Mullen conferred with his staff on how best to shuttle the Biogen board members to lunch.

During the recess, the company said it was trying to provide shareholders more time to cast their votes. “There are certain shareholders who haven’t had the opportunity to vote, and we are trying to give them the opportunity to vote,” Biogen spokeswoman Naomi Aoki told Bloomberg.

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Shareholders of Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) will have to wait a while to hear the outcome of the hotly contested board election. The company’s board called a recess during the annual meeting before results were announced on whether billionaire investor Carl Icahn was able to gain any seats on the company’s 13-member board.

The morning session of the meeting was contentious, and the call for a recess drew an objection from Alex Denner, one of the four nominees Icahn has put forward for the Biogen board. Icahn’s nominees shouted objections to the recess, calling it an improper manipulation of the process, according to this Wall Street Journal account.

“This is not North Korea,” Denner called out to Biogen chairman Bruce Ross after the recess was called, according to a Reuters account.

The meeting is expected to resume at 2 pm Eastern time.

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Shareholders of Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) will have their say today on whether or not they want billionaire investor Carl Icahn’s nominees to shake things up in the boardroom.

The votes will be tallied at the company’s annual meeting being held at 9 am Eastern time today at the American Academy of Arts & Sciences in Cambridge. This election puts four of Biogen’s 13 director slots up for grabs, between nominees from Icahn and the company. Winners will get a three-year term.

This year’s proxy contest has been a rematch of sorts, after Icahn failed in his bid to gain seats on the board at last year’s election. This time around, Icahn delivered a much more hard-hitting case about the need for change, accusing the company of “failed leadership” and suggesting it ought to consider splitting in two to gain greater focus. Icahn cited a number of flaws he sees in the company’s current operation, including: Biogen’s rising expenses; botched marketing of its top multiple sclerosis drugs; inability to develop any new drugs since 2004; and a stock performance that has lagged its peers. This argument helped sway the most influential firm that advises investors on proxy elections—RiskMetrics Group—to recommend two of Icahn’s four nominees, Alex Denner and Richard Mulligan.

That was the biggest victory of the contest for Icahn so far, but Biogen has scored its points as well. The company’s slate of nominees won recommendations from the two other main proxy advisory firms—Glass Lewis & Co. and Proxy Governance. Biogen shot back quickly at Icahn’s ideas in its presentations to investors, disclosed with the SEC last month. It said that physicians are regaining confidence in its fastest-growing MS drug, natalizumab (Tysabri) after some safety scares last year, that its pipeline is full of promising drugs, and that splitting the company in two would actually raise expenses and make it more difficult to develop drugs with broad potential for both cancer and autoimmune diseases. Icahn’s ideas, the company said, “would destroy shareholder value.”

Dissidents in elections like these always are fighting an uphill battle, because many companies like Biogen stagger their election terms in a way that makes it impossible for a majority of directors to be voted out in a single election. But not many investors have the kind of bully pulpit or famous name recognition of Icahn, which enable him to tackle highly-skilled corporate PR head-on.

But it’s difficult even for Icahn, so he’s supporting a second proposal to make the company reincorporate in North Dakota instead of Delaware—partly because he helped craft new laws in North Dakota that make it easier for activists like himself to mount successful proxy fights, as described in this interesting Bloomberg News feature.

One thing that certainly helps dissidents in any proxy fight is shareholder resentment over the fact that a stock has been dragging down their portfolio.

On that score, Biogen would have to be considered favored to win heading into today. The company’s stock price closed yesterday at $52.32, down 14 percent from the same day a year ago. That’s nothing to write home about, but …Next Page »

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San Diego-based Amylin Pharmaceuticals has witnessed an extraordinary struggle for control of its board of directors in which a key turning point came when founding CEO Howard “Ted” Greene publicly switched sides and urged shareholders to vote for the dissidents’ nominees.

So what does Greene have to say about the results of the shareholder vote that Luke reported this morning? I caught up with Greene this afternoon by telephone in northern Michigan, where he’s on vacation. He says the changes give the San Diego diabetes drug developer a fresh opportunity.

Greene sounds generally upbeat about the results, in which four new directors are joining Amylin’s 12-member board—two dissident nominees, and two new company nominees. From the dissidents’ camp, shareholders elected Alex Denner, a fund manager for billionaire investor Carl Icahn, and Kathleen Behrens, a consultant nominated by Eastbourne Capital Management. From the company’s own slate of candidates, shareholders elected two new independent directors, former Icos chairman and CEO Paul N. Clark and former Novartis CEO Paulo F. Costa.

“One-third of the board has turned over,” Greene says. “So the new board is going to take a hard look at the company’s performance and the way they do some of the marketing and sales.”

One of the extraordinary aspects to the outcome of the board election is not merely that the dissident faction gained two board seats in the May 27 shareholder vote. It’s that they dethroned the two most prominent incumbents—Amylin chairman Joseph Cook and lead independent director James Wilson—in an election that was a pure popularity contest. The 12 nominees elected to Amylin’s board are the ones who received the most shareholder votes. Cook and Wilson, who were the public faces of the company’s defensive reaction to the shareholder activists, were the ones who became least popular in the end.

Icahn and Eastbourne, which together hold about a 22.5 percent stake in Amylin, were targeting Cook and Wilson in their call for a board shakeup and improved performance at Amylin. But Greene, who is Amylin’s biggest individual shareholder and a leading figure in San Diego’s biotech community, clearly helped tip the balance.

When Greene was asked to resign from Amylin’s board in April, he groused in an open letter filed with the SEC that “the obvious and appropriate choice to not …Next Page »

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