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Volume 86 Issue 33 | p. 13 | News of The Week
Issue Date: August 18, 2008

Icahn Boosts Biotech Activity

Dealmaker moves on several fronts to shake up the drug industry
Department: Business

ACTIVIST INVESTOR Carl C. Icahn is working behind the scenes to make profitable deals happen for three biotechnology companies in which he owns sizable stakes.

In the midst of his efforts to get Bristol-Myers Squibb to increase its offer for ImClone Systems (C&EN, Aug. 11, page 21), Icahn disclosed last week that he has upped his stake in Biogen Idec, a major biopharmaceutical company he is pressuring to sell itself, from about 4% to 6.3%. Meanwhile, Enzon Pharmaceuticals, a small biotech firm that Icahn pushed to make a deal earlier this year, says it is exploring the sale of its specialty pharmaceuticals business or one or more of its marketed products.

The announcement involving Biogen Idec follows Icahn's defeat in a proxy battle in which he attempted to install three new members on the biotech company's board. That action came in the wake of Biogen Idec's failure to find a buyer among major drug companies last year.

Icahn is basing his opposition to Bristol-Myers' $60-per-share offer for ImClone on a claim that it "substantially undervalues the firm." Icahn also says he is disturbed that the Bristol-Myers designee on the ImClone board was privy to discussions about restructuring the company to increase stockholder value. Bristol-Myers currently owns 17% of the company; Icahn owns 14%.

The storied corporate raider's activism in the biotech sector comes at a time when major drug companies have launched campaigns to broaden their activity in biotherapeutics, largely through acquisition. In July, Roche bid $43.7 billion for the 44% of Genentech it does not already own; last week, Genentech rejected that bid as too low. Among firms that analysts named last year as possible buyers of Biogen Idec were GlaxoSmithKline, Sanofi Aventis, and Pfizer.

Icahn has had significant impact, both positive and negative, on the biotech industry, according to Eric Snyder, an analyst with New York City-based Mehta Partners. "With ImClone, it is hard to believe any company other than Bristol-Myers would buy them because they already were partners on Erbitux," he says, referring to ImClone's cancer drug. "Holding out for a higher price could be counterproductive to shareholders."

Icahn's move on Biogen Idec, however, could be viewed more positively, Snyder says, given its recent stock price drop (See page 24). "He is signaling there is still value to investors."

 
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