Has Carl Icahn Lost His Pharma Mojo?
Billionaire activist investor Carl Icahn is currently trying to bend three different drug companies to his will -- Biogen (BIIB), Amylin (AMLN) and Genzyme (GENZ). But so far he hasn't managed to execute the kind of big, transformational move that he's famous for at any of them.
Investors and managers underestimate Icahn at their peril, of course. But it's worth asking: Why have his recent interventions in pharmaceuticals been so undramatic? It's been two years since he engineered the sale of ImClone to Eli Lilly (LLY) at a 33 percent premium for shareholders. Since then, little has happened at each drug company since Icahn's executives got involved:
He has two people on the board at Biogen. Icahn has said he wants the company broken up. But that will be difficult because as soon as Biogen undergoes a change of control its partners (Elan and Johnson & Johnson) get the right to take Tysabri, the company's blockbuster MS drug. Biogen's stock has underperformed both the NASDAQ and the NASDAQ's pharma stocks.
At Amylin, Icahn has two people on the board. The company's stock has also trailed the NASDAQ and the NASDAQ's pharma stocks. Its revenues are treading water and Bydureon (the once-weekly version of Byetta), a diabetes treatment that many expect to be huge, has been delayed again. The most obvious acquirer for Amylin is its Byetta partner Lilly, but that company has said it is happy with the arrangement the way it is.
Icahn wants to elect four of nine board members at Genzyme. The company looks like a simpler problem for Icahn to fix: management has screwed up the manufacturing of one of the genetic therapies on which it had a monopoly. That tanked GENZ stock. Surely it's ripe for a turnaround and a quick, profitable sale? But with Pfizer (PFE) and Shire (SHPGY) launching competing products into the vacuum left by Genzyme, the company will be difficult to value for an acquirer until the market share situation stabilizes -- and that won't be until 2011 at the earliest.
The New York Times recently suggested that Icahn doesn't understand that not every troubled company's problems can be solved by turfing out management and handing over operations to a larger, cash-paying company:
"There are times when you push back and be harsh and times when you roll up your sleeves and work with management, getting more involved with operations," said Eric Jackson, an activist investor in Naples, Fla. "Carl's record on that score hasn't been as successful."We'll see.
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