Normally I’d say woe to the CEO who crosses notoriously active investor Carl Icahn, but this time he might have met his match. Yes, other executives may have fallen to his ummm… persistent nature, but biotech Amylin Pharmaceuticals Inc. (Nasdaq: AMLN) lead independent director James Wilson, is having none of it.
Along with strong shareholder Eastbourne Capital Management, Icahn has repeatedly attempted to stir up trouble at the company with the intent of changing the board of directors more to his liking. In Icahn’s case at least, the ultimate goal is to Amylin to sell itself to its diabetes drug partner Eli Lilly & Co. (NYSE: LLY). And as usual, he’s made no secret about his intentions.
Then again, neither has Wilson. In a just-released letter, Wilson alleged that the immediate transaction that Icahn so fervently supports, would “dramatically undervalue” the company.
“You informed us that you intend to leverage your relationship with our partner Lilly to promptly attempt to sell Amylin to Lilly,” the director wrote. “We believe that your desire to sell Amylin is inconsistent with what you have said previously and we continue to believe that this is not the time to consider such an action.”
The Determining Factor
One way or the other, I can’t help but admire anybody who will go up against the fiery investor. But considering that Icahn’s actions so far bear a striking resemblance to another one of his dealings last year - a dispute that he won - I’m not going to speculate about the outcome. Back then, it was ImClone Systems (Nasdaq: IMCL) the investor wanted to bend to his biddings. And that time, it took a prolonged struggle but in the end Icahn won out, overthrowing the board, having his way with the company - admittedly to its benefit - and selling it to none other than Eli Lilly for $6.5 billion.
So could this be a repeat?
Unfortunately for them, Amylin is without a doubt the underdog, and not just because of Icahn’s legendary tenacity. The biotech’s shares have fallen around 70% in the last eight months and only part of that can be blamed on the market chaos. In large part that’s due to concern about Byetta, Amylin’s most important product, which is currently under scrutiny for possibly leading to pancreatitis, a potentially deadly inflammation of the pancreas.
Admittedly, it’s actually a similar drug made by Novo Nordisk (NYSE: NVO) that’s really under investigation but these days, even associations can take a stock down. Currently Amylin has high hopes to successfully file regulatory approval for Byetta LAR - a once-weekly version of Byetta - by the end of this quarter.
The end result of the Icahn v. Amylin smackdown will probably center around those results when they do come out.
Monday, April 20, 2009 - by Jeannette Di Louie, Assistant Editor, Mt. Vernon Research
