Icahn to Nominate Biogen Directors in Control Bid

Investor Carl Icahn will nominate four directors to Biogen Idec Inc.’s board, signaling the billionaire’s second run for control of the biotechnology company.

Biogen received notice that Icahn intends to nominate the slate of directors at the company’s annual meeting and fix the size of the board at its current 13, the Cambridge, Massachusetts company said today in a statement. Icahn Capital LP and Icahn Associates owned a combined 6 percent stake in Biogen as of Sept. 30, making the investor and his funds the fourth-largest shareholder.

Biogen, the world’s biggest maker of multiple sclerosis drugs, first became embroiled in a battle for control with Icahn in December 2007, when it ditched a plan to sell itself. Icahn, known for buying into companies he deems undervalued and pushing for change or a sale, lost an ensuing proxy fight with the company in June. Biogen shares have declined 30 percent since the company abandoned efforts for a sale.

“I assume Icahn wants to make it easier to sell” the company, said Jason Zhang, an analyst at Bank of Montreal in New York, in a telephone interview today. “We agree this time that Biogen is a pretty good takeover target.”

Biogen’s board “will review the notice and consider it in light of the best interests of all shareholders of the company,” the company said in the statement.

Icahn nominated Alex Denner, Richard Mulligan, Thomas Deuel, and David Sidransky for the board positions, according to Biogen’s statement. He also wants to move the company’s jurisdiction of incorporation to North Dakota. Icahn and Denner did not immediately return telephone calls seeking comment.

Shares Decline

Biogen sank 80 cents, or 1.5 percent to $52.48 at 4:10 p.m. New York time, in Nasdaq Stock Market composite trading, after the company reported that fourth-quarter sales of its MS drug Tysabri rose less than analysts projected. Biogen’s fourth- quarter profit rose 2.7 percent to $206.7 million from the same period a year earlier.

The company today also reported a new case of the brain illness, progressive multifocal leukoencephalopathy, in a Tysabri user. The latest case adds to four other Tysabri patients that have developed PML since July. In December, Biogen reported one of those patients had died. Tysabri was once pulled from the market because of the fatal brain infection.

Biogen’s share of Tysabri sales increased 74 percent to $156 million. Global net sales of Tysabri were $218 million, less than the $250 million expected by J.P. Morgan analyst Geoffrey Meacham. The company may not reach its goal set 18 months ago of 100,000 patients on therapy by the end of 2010, Chief Executive Officer James Mullen said today in a conference call with analysts.

Sale Prospects

Uncertainty about Tysabri’s growth may dim Biogen’s prospects as a takeover target, said analyst Christopher James, of Rodman and Renshaw, in a telephone interview today.

“The investment community continues to focus on Tysabri growth, whether that’s the right way to value the company or not,” James said.

Still, Biogen’s pipeline of drugs in development may make it attractive to some suitors, especially its experimental treatment for heart failure, James said. Biogen has five drugs in late-stage testing, the company said today in the conference call. They include treatments for heart disease and MS.

Previous Offer

On Oct. 11, 2007, Biogen disclosed that Icahn offered $23 billion, or about $82 a share, for the company, representing a 22 percent premium over its $67.12 closing price the day before. The company had received no other offers and ended efforts to sell itself. The following January, Icahn proposed a slate for Biogen’s board, calling the bid process “flawed.” His slate of nominees won less than 25 percent of shareholders’ votes cast, according to Biogen.

Biogen said it hasn’t set a date yet for its 2009 annual, though historically it has been held in May or June.

In recent years, Icahn has purchased shares of biotechnology companies, whose products may attract big drugmakers seeking acquisitions. On Jan. 30, he announced plans to nominate five directors to Amylin Pharmaceuticals Inc.’s board, and boosted his holdings in the company to 9.4 percent on Feb. 5.

Icahn’s latest moves mirror his dealings with ImClone Systems Inc., in which the investor doubled his holdings in the company in 2006, engineered his election to the board and pushed for a sale. Eli Lilly & Co. bought ImClone last November for $6.3 billion, or $70 a share.

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