Harvey Berger founded Ariad Pharmaceuticals, ran it for more than two decades, and stayed in charge even as the Cambridge, MA-based company’s fortunes turned sour a few years ago. Today, however, Berger has reached the end of that long, controversial road.
Ariad (NASDAQ: ARIA) said this morning that Berger will retire as its chairman and CEO on Dec. 31 or when a successor is found, whichever comes first. Ariad has already begun searching for a new leader; Berger will serve as a “special advisor” to the company’s board and to the new CEO once that person is hired.
Berger framed the transition positively, noting in a statement Ariad’s “established path to profitability,” a “well-defined set of corporate initiatives” and further that he’d always planned on retiring at 65, “which I will reach at the time of our upcoming annual meeting.” However, he’s announcing plans to step down less than three months after activist shareholder Sarissa Capital Management served notice that it would try to seek Berger’s “imminent retirement.” Sarissa, the fund run by former Carl Icahn lieutenant Alex Denner, has said in regulatory filings that it wants to appoint partner Richard Mulligan and former Takeda executive (and Mersana Therapeutics CEO) Anna Protopapas to Ariad’s board, and unseat Berger and lead independent director Wayne Wilson in the process.
In a separate release today, Ariad said that it has reached a deal with Sarissa to end the proxy battle. Protopapas has been named to Ariad’s board, Denner is leading the search for a new CEO, and Sarissa will pull its request to name any other board members.
That proxy fight surfaced in the wake of a rocky few years for Ariad. Ariad suspended all clinical trials of its lead cancer drug ponatinib (Iclusig) in 2013 due to safety concerns—namely, serious blood clots were piling up in patients at a higher than expected rate. The FDA instructed Ariad to yank the drug off the market shortly thereafter, and Ariad was in limbo for a few months before it was cleared to once again begin selling the drug—as a last-resort therapy for patients with chronic myeloid leukemia for whom “no other tyrosine-kinase inhibitor” like Novartis’ imatinib (Gleevec) can be prescribed, as well as patients with specific subtypes of acute lymphoblasic leukemia. Ariad had once been hoping ponatinib could beat imatinib head to head and become a frontline treatment for CML.
During the tumult, Ariad had to restructure, ax much of its workforce, and retrench. It’s since been trying to build ponatinib back up, gaining clearance to sell it in other countries (recently Canada) and testing a second drug, brigatinib, which has a “breakthrough therapy” designation from the FDA for lung cancer. But even today, shares—which climbed about 4 percent to $9.22 apiece in pre-market trading—are worth less than half what they were in late 2013, before imatinib’s tailspin.
Ariad didn’t mention any of that in the press release announcing Berger’s retirement this morning. Instead, colleagues and other directors focused on what Berger did to help build Ariad in the first place. He founded Ariad 23 years ago and has been the company’s CEO since 1991.
“My lasting memory of my first meeting with Harvey 25 years ago, when Ariad was just a twinkle in his eye, is one that helps explain the direction of Ariad over this period. Harvey was passionate about building a company where patients come first. He saw the promise of modern science to translate to life-saving medicines. And Harvey has delivered on this vision through his dedication and leadership,” said Harvard University professor Stuart Schreiber, in a statement.