Amylin Founder Resigns, Suggests Chairman Follow; Icahn and Eastbourne Likely Delighted

(MoneyWatch)  The Amylin board of directors is crumbling in its resistance to insurgent investors Carl Icahn and Eastbourne Capital. Amylin founder Howard Greene resigned as director and wrote a letter suggesting that chairman Joseph Cook should also step down. Greene said he won't vote for Cook because:

A majority of you decided we could not win our proxy fight if we did not replace two ex-CEO Board members, including me. Even if I agreed, the obvious and appropriate choice to not stand for election would be our Chairman, who has presided over the loss of shareholder value that sparked the proxy fight.

Icahn (pictured) and Eastbourne have proposed rival slates of five new directors for the 12 member board; Amylin has thus far been united in its resistance to them, going so far as to threaten financial suicide if they lose control of Amylin to the outsider bids.

Greene promised to become a third pain in the backside for the Amylin board:

Over the years I have invested heavily in Amylin, first to launch the company and then to keep us afloat. As a result, my departure from the Board has reduced Director ownership of AMLN stock by over 50%. Such a large reduction in Board shareholdings cannot be reassuring to investors who are concerned about Board alignment with their financial interests.

... I intend to be a proactive outside shareholder with an important equity position. I will expect the new Board to preside over commercial results commensurate with our leading science, which can help millions of patients with diabetes and obesity.

Eastbourne has previously compared Cook and his board's machinations to Enron and Worldcom. In a letter commenting on the board's refusal to remove a "poison pill" provision that would trigger immediate debt repayments of $900 million if Icahn or Eastbourne win, Eastbourne said:

That reluctance, in our view, serves to condone a distortion of the electoral process and would, to any reasonable observer, suggest an attitude toward the rights of shareholders reminiscent of the worst aspects of pre-Enron/WorldCom era corporate governance practices.

The Greene resignation seems to indicate that not everbody inside Amylin is on board with the company's kamikaze approach to fending off its critics.

It also lends some credence to the Eastbourne/Icahn position that fresh direction at Amylin is required for corporate strategy reasons, and not just because both investors made terrible bets on the company's stock.

The bids were triggered when, disgruntled that Amylin's stock had fallen from a high of $53.25 to just $5.50, Icahn and Eastbourne announced separate and ostensibly competing slates for the board of directors, five each.

Both investors want to see a new board constituted for similar reasons. They believe Amylin's handling of diabetes drug Byetta has been seriously flawed and they want to consider an acquisition of the company (which would boost the price of the stock they hold).

• See previous coverage of Amylin:
• Inside Amylin's Anti-Icahn Suicide Pact
• Amylin Battle Heats Up as Eastbourne Capital Touts Rival Directors' Slate to Icahn's
• Icahn Moves on Amylin; Will Lilly Step Up?
• Behind the Byetta Crisis: Is This Drug Really All That and a Bag of (Fat-Free) Chips?