Icahn Throws Down the Gauntlet, Attacks Biogen Idec’s “Failed Leadership”

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in its cancer drug and MS franchises, Icahn said. This lack of dealmaking prowess “limits future growth prospects,” he said. The company did just one cancer drug deal over the past year even though there were 150 opportunities, Icahn said, while competitors like Bristol-Myers Squibb, Roche, and Pfizer acquired cancer drugs. Biogen has completed just five product in-licensing deals in five years, he said.

On the R&D side, Icahn said Biogen’s productivity is the worst in its peer group, which includes Gilead, Genentech, Amgen, and Genzyme. Among peers, Biogen is the only company that hasn’t introduced a new drug since 2004, Icahn said. During that period, 23 new cancer drugs have been brought onto the market.

On market valuation, Biogen has seen a marginal increase of a couple billion dollars since the November 2003 merger, bringing its value up to about $15 billion as of April 2009. Genentech, by comparison, saw its value more than double in those years to $101 billion, while Gilead and Celgene more than tripled to $43 billion, and $18 billion, respectively, Icahn said.

On executive pay, Icahn pointed out that Mullen has sold $85 million worth of his shares in the company at an average price of $59 a share since the merger. (Biogen shares closed yesterday at $49.14). He noted that Mullen was paid $60.8 million in total compensation, combining salary, bonus, and stock options over the past five years, while Biogen’s stock declined from $66.61 to $47.63 in that time.

The second half of Icahn’s presentation makes the case for why he thinks his four nominees could help turn around Biogen, as some of the same nominees did with New York-based ImClone Systems, which was sold last year to Eli Lilly for more than $6.5 billion. Icahn’s proposals for Biogen include:

—Studying whether to split Biogen into two companies, one focused on neurology, and the other on cancer

—Examining the cost structure of the company

—Prioritizing and re-invigorating R&D

—Improving partner relationships

At the end of his presentation, Icahn summed up his position. “We have shown that management has failed shareholders strategically and operationally, resulting in a company not well positioned for future changes!” (The exclamation point is his.)

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