Amylin Battle Heats Up as Eastbourne Capital Touts Rival Directors' Slate to Icahn's

(MoneyWatch)  Eastbourne Capital has proposed a five-member team of its own for Amylin's board. Carl Icahn proposed his own slate last week. Both sets of investors are unhappy with the company that has a joint venture with Eli Lilly on diabetes drug Byetta. Eastbourne said of its move:

Eastbourne is aware of Icahn Capital LP's nomination of a slate of five directors, but does not believe that these separate efforts to bring change to Amylin are in competition with each other.

Nobody believes that -- of course they're in competition. Here's a section from Eastbourne's letter to the Amylin board:

While we have not lost faith in the potential of Amylin's products and pipeline, we have lost confidence in Amylin's leadership to take this rich product portfolio and execute an operational strategy that is in the best interest of the shareholders.

We have communicated to you and management our belief that the Board of Directors needs to be significantly strengthened to ensure that the proper steps are taken to realize the full commercial value of Amylin's assets. We are sorely disappointed with the Board's response to our concerns.

We recently learned from public filings that Icahn Capital LP nominated a slate of five Directors for election at the next annual meeting. We are not surprised that another large shareholder appears to share our dissatisfaction with the current direction of the Company and is seeking change at the Board level.

Translation: "We bought a lot of your stock and it has gone down and we have lost money. You suck!"

BNET mentioned last week that the obvious buyer for Amylin would be Eli Lilly. But a glance at Amylin's Q4 results suggest some good reasons why Lilly would prefer just to take its joint-venture payments from Amylin and not acquire the company outright.

You'll notice that Amylin lost $297 million in the last year. Also, its payments to Lilly on the Byetta deal were $302 million. Thus, if Lilly had owned Amylin in January 2008 Lilly would have lost $302 million and only made $5 million in net income on the Amylin part of its business. (The same seesaw tipped the wrong way in 2007 also.)

Arguably, for other acquirers, the key seems to be to somehow remove Lilly from the equation. Good luck with that!