Big proxy battles, like the one unfolding at San Diego’s Amylin Pharmaceuticals, have become much like national political campaigns. There’s a media strategy. There are carefully choreographed events. There are war rooms on both sides. When dissident shareholder Eastbourne Capital Management submitted its filing “Amylin Pharmaceuticals: The Case for Change” to the SEC on May 5th, Amylin responded nine days later with its point-by-point response, “Refuting Eastbourne’s Claims.”
So it was both unexpected and a big deal when Amylin’s founding CEO, Howard “Ted” Greene, threw his support to dissident shareholders Carl Icahn and Eastbourne Capital in a letter to shareholders. Greene, who was Amylin’s chief executive from 1987 to 1996, now supports a slate of five new directors nominated by Eastbourne and Icahn, who together own a 22.5 percent stake in Amylin.
Greene made no secret of his unhappiness in April, after it became clear in his resignation letter that Amylin’s board had more-or-less forced him and Ginger Graham, another former Amylin CEO, to resign their longtime board seats. But in an e-mail to me last month, Greene also made it clear that he still supported the company, saying, “I’ll look to find other ways to help my favorite company…”
So what happened? Could there be bad blood in the Amylin boardroom? Has something happened since Greene resigned that prompted him to switch sides? When I asked Greene to explain his change of heart, he responded at length, which I have copied here in its entirety:
“1. In my view, Amylin’s commercialization strategy has been flawed. It was crafted by the current Chairman of the Board (while he was CEO) and his corporate alma mater, Lilly, to make Amylin essentially an equal partner with Lilly in the commercialization process. At the time we believed our products would be so beneficial for patients that revenues would catapult us into the big pharma league and give us the critical mass needed for a large sales force. We were naïve. As we’ve now learned, selling non-insulin injectible products to primary care physicians is a big challenge, and even Lilly—with 80 years experience selling insulin—has stumbled. At this point I think Dan Bradbury has the right ideas for repositioning Amylin with a specialty sales force, and for innovative programs that help patients meet their expectations for our medicines. To ensure board support for these ideas, I think certain members encumbered with traditional pharmaceutical dogma and our past mistakes should be replaced.
2. With Ginger Graham’s and my departure, stock ownership by our board of directors declines by over 60 percent. I believe that our directors who do not own any stock (but just hold options) are dedicated to restoring value for shareholders. But, it’s disappointing to me that many of them have never put a significant amount [of] their own money into our stock, given how undervalued I think it now is. I’ve served on boards for over 30 years, and it’s clear to me that having a lot of skin in the game sharpens one’s strategic priorities and sense of urgency. Given that I’m not on the board anymore, I’ll sleep easier if the next proxy table of beneficial stock ownership by directors will show a much bigger number of shares.
Amylin is a great company with great technology and great employees. But, our board—myself included—using our best judgments at the time went down the wrong path for launching us into the commercial arena. In recognition of this, I think shareholders would be well served by supporting new members on our board.
As I said in my letter yesterday, this is why I plan to vote for the slate proposed by Eastbourne, including Icahn’s candidates.”