Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Icahn’s $2 Billion Man Starts Fund as Activists Shun Biotech

The Headquarters Of ImClone Systems Inc
Working as Carl Icahn’s top health-care investing executive for the past five years, Denner has targeted at least six drugmakers from ImClone Systems Inc. to Biogen Idec Inc., prompting sales of three. Photographer: Jin Lee/Bloomberg

Alex Denner knows how to spot biotechnology companies with promising drugs and make sure investments pay off.

Working as Carl Icahn’s top health-care investing executive for the past five years, Denner has targeted at least six drugmakers from ImClone Systems Inc. to Biogen Idec Inc., prompting sales of three. He’s generated about $2 billion in profit for Icahn, said a person familiar with his record who declined to be identified because the matter is private.

Now the 42-year-old Denner, who has a Ph.D. in biomedical engineering, is splitting with Icahn to start his own hedge fund. As some investors avoid health care, partly because of regulatory hurdles, Denner’s knowledge of science and business gives him an advantage as one of the industry’s few activists, said Les Funtleyder, a health-care strategist and portfolio manager at Miller Tabak & Co. in New York.

“Activist investors steer away because of health-care’s special characteristics,” he said. “It requires a special knowledge, which Alex has.”

Denner’s expertise and persuasive management style have facilitated Icahn’s negotiations with biotechs. The two men first met a decade ago when both invested in ImClone, at a time when most people were writing the company off. ImClone’s founder, Sam Waksal, pleaded guilty in 2002 of insider trading on word that regulatory approval of the company’s main drug would be delayed. ImClone’s shares plummeted 92 percent from a high of $73.83 in December 2001 to $6.11 in September 2002.

Value in Erbitux

Yet the experimental cancer medicine, Erbitux, was still a good drug, according to Denner. He bought ImClone stock and later teamed with Icahn to win board seats -- Icahn eventually became chairman -- and they engineered ImClone’s 2008 sale to Indianapolis-based Eli Lilly & Co. for $70 a share, or $6.5 billion.

First, though, they turned around ImClone. In 2006, Icahn named Denner head of an executive committee that ran the company. Erbitux had won regulatory approval two years before, and the company reported total revenue of $677.8 million the year Icahn’s team moved in. Denner focused on making ImClone more efficient, pushing for faster development of IMC-1121B, which was being tested in multiple cancers and had similarities to Genentech’s Avastin, a treatment already on the market.

Faster Process

Normally, the regulatory process involves three phases of studies before a drug can be submitted for marketing approval, determining safety, dosage and efficacy. Denner supported an idea to move 1121B’s testing directly from the first phase to the third in breast cancer, arguing that since Avastin already had been approved, testing could be accelerated.

The company successfully negotiated this strategy with regulators and, when Lilly announced its acquisition of ImClone, it cited 1121B as one of the most “promising ImClone pipeline molecules.”

The drug, also called ramucirumab, is now in Phase 3 testing in breast, colorectal, lung, liver and gastric cancers, according to Lilly.

Denner identifies companies whose research efforts lack focus or whose senior executives aren’t effectively growing the business. After buying a small stake, he typically urges management to consider his suggestions. If they resist, he seeks board seats to push for change and sometimes a sale of the company.

Reliable Advice

“My impression was that Carl Icahn very much depended on Alex and Alex’s views,” said Genzyme’s former CEO, Henri Termeer, in a telephone interview. Termeer’s company, which makes medicines for rare diseases, was acquired by Paris-based Sanofi for $20.1 billion in February, eight months after it added Icahn representatives.

If Icahn is the iron fist who expects corporate boards to yield to him, Denner has been the velvet glove who smooths the way for investments to pay off over time, according to board members and executives who’ve dealt with both men. Denner’s willingness to listen to others has helped him win over directors after he gains entrée to a board following a hostile proxy battle.

“My biggest surprise was how personable Alex is, and funny,” said Lynn Schenk, a board member at Biogen, where the Icahn team secured three board seats after two separate proxy fights. “He really listens to his board colleagues and treats opinions other than his own with respect.”

Biogen Battle

Not that Denner isn’t aggressive. At Biogen’s June 2009 annual shareholder meeting, the company wouldn’t give him the floor, and called a recess before announcing the results of Denner’s proxy fight.

“This is not North Korea!” Denner shouted as people filed out of the room. He and another Icahn-backed nominee, Harvard University geneticist Richard Mulligan, won seats.

Once on the board, they began to spur change. The company has since replaced its chief executive officer and refocused the business on multiple sclerosis and other neurological diseases. It is shedding assets in other research areas, such as cancer and cardiovascular disorders, and reducing 13 percent of its workforce. The stock has more than doubled to $113.24 since June 2009.

Denner hasn’t always been successful. A team he led failed in August to gain representation on the board of New York-based Forest Laboratories, maker of the antidepressant Lexapro and Alzheimer’s disease medicine Namenda.

Critic Fires Back

Frank Perier, the finance chief at Forest Labs, said during the proxy fight that Denner “has no true hands-on business experience,” and shouldn’t be telling his company to change its practices. Denner called Perier’s assertion “factually incorrect.”

“Does running a major biotech company not count as business experience?” he said, citing his time at ImClone.

Denner, who grew up near Boston, was a “geeky kid” who always wanted to be an investor, he said in an interview. His mother opened a brokerage account for him when he was 11, and he traded equities, including Coca-Cola Co. and other names he recognized -- and got a positive return.

“It was a very small amount of money,” he recalled.

In school, he loved science and math. His father was a mechanical engineer, the same major Denner chose when he was an undergraduate at the Massachusetts Institute of Technology in Cambridge. In graduate school at Yale University in New Haven, Connecticut, he initially intended to study the math involved with the fluid flow of turbulence.

New Challenge

After auditing a few biology classes, he decided to change directions and analyze the biological signals that provide clues about cardiac health. It was the early 1990s, a time when the Human Genome Project -- and its hope of unlocking the secrets of a healthy life -- had just begun.

There was a lot happening in biology then, and “there still is now,” Denner said. “The basic fundamentals of how cells work and how DNA works are still being elucidated.”

After getting his Ph.D., Denner became a portfolio manager at Morgan Stanley and then at hedge fund Viking Global Investors LP in New York. He joined Icahn’s firm in 2006, when they were working together at ImClone.

Paying Off

Prior to that, some of Denner’s health-care investments were in then-tiny companies that were developing drugs few thought would work. They were Summit, New Jersey-based Celgene Corp. and Gilead Sciences Inc., based in Foster City, California -- now two of the world’s biggest biotechs.

Denner lives in Greenwich, Connecticut, with his wife, Jasmina, and their sons, Max, 6, and Lex, 7. Lex is short for Lysander, the name of the Spartan general who won the final battle that ended the Peloponnesian War, Denner said. “We chose it because it’s a cool name,” he explained.

While working with Icahn, Denner would drive into Manhattan to the investor’s offices in the General Motors building across from the Plaza Hotel. He found a garage a few avenues across town that allowed him to park his own car, which he said he preferred to handing the keys over to valet attendants.

That fastidiousness is reflected in everything he does, from picking stocks to his dining choices. He eats at Nobu, one of Manhattan’s most upscale sushi restaurants, as many as three times a week. He likes it because it’s clean, he said. He’s toured the kitchen, and even checked to make sure the stones for resting chopsticks are cleaned between patrons. “You could get hepatitis!” he joked.

For all his success, “Alex is very self-effacing,” said Waksal, who spent five years in prison after being convicted of securities fraud. Waksal said he’s glad Denner recognized ImClone’s value.

“Alex actually understands the science -- and how to build that into a business,” Waksal said. “When a company is broken, he knows what should be done to fix it.”

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.