Carl Icahn, the billionaire investor who has targeted at least seven drug companies in the past five years, threatened a proxy fight at Amylin Pharmaceuticals Inc. and urged the drugmaker to pursue a sale.
Amylin rejected a $22-a-share takeover offer from Bristol-Myers Squibb Co. in February, according to two people with knowledge of the matter who declined to be identified because the approach was private. In March, San Diego-based Amylin made a public offering of 13 million common shares and issued stock options to company executives at about $16 a share, actions Icahn criticized in an open letter today.
Amylin’s board is “dysfunctional and is not operating in a manner that enhances shareholder value,” he said. Icahn, Amylin’s third-largest stockholder, said he “would not shy away” from a proxy fight to replace the directors and demanded an extended deadline for nominations to the board.
“The revelation of the Bristol-Myers bid, as well as your failure to disclose it and your subsequent stock issuances at prices well below the reported $22 offer price, which occurred after that deadline, constitutes a dramatic change in circumstances requiring the board to permit shareholders another opportunity to nominate directors,” Icahn said in the letter.
Amylin challenged Icahn’s comments in a statement today.
‘Allegations Without Merit’
“We disagree with Mr. Icahn’s characterizations and strongly believe his allegations are without merit,” the company said. “Amylin’s board is fully aware of its fiduciary duties, and is committed to always acting in the best interests of all stockholders. The board continually considers all options available and is relentlessly focused on creating the greatest value for our stockholders.”
Icahn asked for a new 10-day nominating period and demanded an answer from Amylin by 5 p.m. New York time tomorrow.
In an interview yesterday, Icahn said he had sent the company a so-called 220 demand letter requesting information about its decision to make the share offering and issue stock options after receiving the bid from Bristol-Myers. He noted the request in today’s letter.
Amylin declined 1 percent to $23.88 at 4 p.m. New York time. The shares jumped 54 percent on March 28 after reports of the rejected offer. Bristol-Myers hasn’t approached the company since the rejection, the people familiar said.
In a March 6 filing with the Securities and Exchange Commission, Amylin said the board granted options to managers including Chief Executive Officer Daniel Bradbury as part of its 2009 Equity Incentive Plan.
More Than $22
Icahn, who held 14.4 million Amylin shares as of Dec. 31, gained board representation in 2009 after running a proxy contest, criticizing the company’s ability to return value to shareholders with the diabetes drug Byetta.
“This company could fetch more than $22,” Icahn said in the interview yesterday. “The company should go through a process and try to get the price they can for shareholders, and let the shareholders decide.”
The investor also criticized Amylin’s board because it “has still not acknowledged or denied the media reports regarding its rejection of” the Bristol-Myers offer.
Amylin declined to comment on March 28 when the bid was reported.
Icahn has waged battles at biotechnology companies from Biogen Idec Inc. to Genzyme Corp., shuffling management teams, driving restructurings and pushing for company sales. His pressure at Genzyme helped lead the company to a takeover by Paris-based Sanofi last April for $20.1 billion. He was less successful in a proxy fight at Forest Laboratories Inc. in August, failing to win representation on the company’s board.
Amylin has been focused on finding a partner to help market the diabetes drug Bydureon outside the U.S. since November, when it ended a collaboration with Eli Lilly & Co. The medicine, approved in January, is a once-weekly form of the earlier drug Byetta, and the two therapies may draw more than $1 billion in annual revenue over time, estimated Phil Nadeau, an analyst with Cowen & Co. in New York.
A 220 letter, which Icahn said he sent to Amylin yesterday, is normally used to request shareholder lists for communication purposes during proxy contests, said Morton Pierce, chairman of the mergers and acquisitions group at Dewey & Leboeuf LLP.
“The shareholder list is routinely asked for in a hostile tender offer because you want the list to communicate in a proxy contest,” Pierce said in a telephone interview yesterday. “I guess some activists are using it now to go beyond the scope to look for more information.”
If Amylin declines to provide the information Icahn is seeking, “ultimately a court will decide,” Pierce said. “The court proceeding on a 220 is usually very quick.”