April 9 (Bloomberg) -- Alex Denner, Carl Icahn’s former top health-care investing executive, is starting an activist hedge-fund firm called Sarissa Capital Management LP, according to three people familiar with the matter.
Denner, 43, will begin Greenwich, Connecticut-based Sarissa by next quarter with a seed investment from Meritage Group LP, one of the people said. He will be joined by Mayu Sris, a former investment analyst at Icahn Associates Corp. from 2005 to 2010, as managing director at Sarissa and Richard Mulligan, a professor of genetics at Harvard Medical School, as senior managing director, said the people, who asked not to be identified because the information isn’t public.
Mark DiPaolo, a lawyer who worked with Icahn from 2005 until this year, has also joined Denner’s fund, according to one of the people.
Denner declined to comment. Mark Mindich, chief operating officer at Meritage, didn’t respond to a telephone call and e-mail seeking comment.
Sarissa will run a health-care focused, typically activist, and long-biased portfolio with fewer than 20 positions, one of the people said. Five core positions will usually represent more than 50 percent of investments, the person said.
Denner, a senior managing director who generated about $2 billion in profit at Icahn, joined in 2006 and left at the end of 2011, the people said. His activist strategy is to identify companies whose research efforts lack focus or whose senior executives aren’t effectively expanding the business. After buying a 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.
Before joining Icahn, Denner worked at Viking Global Investors LP in New York from 2005 to 2006 as a portfolio manager specializing in health care, the people said. Before that, he was a portfolio manager at Morgan Stanley.
Denner and Mulligan worked with Icahn on many of his investments in drugmakers, facilitating Icahn’s negotiations with biotechnology companies including Biogen Idec Inc., Genzyme Corp., MedImmune LLC and ImClone Systems Inc.
Denner and Icahn met more than 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 to insider trading on word that regulatory approval of the company’s main drug would be delayed. 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 $6.5 billion.
Icahn has a track record of investing in drugmakers and profiting from their turnarounds or sales to larger companies. In addition to ImClone, he invested in Genzyme, which was sold to Sanofi for $20.1 billion in 2011; Amylin Pharmaceuticals Inc., which agreed to be bought by Bristol-Myers Squibb Co. for $5.3 billion in June; and Biogen, whose stock has more than doubled in the last two years.
Denner and Mulligan sit on the boards of Biogen and Enzon Pharmaceuticals Inc. and have previously been directors at other drug companies.
Hedge funds that opened in 2012 totaled 1,108 as industry assets increased to a record $2.25 trillion, slightly lower than 2011’s total of 1,113 startups, according to Chicago-based Hedge Fund Research Inc.
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