Icahn burrows into Amylin, Biogen; NRG sets date for Exelon clash; Cougar buyout on track

By Cristal Cody

Tupelo, Miss., June 5 - Activist investor Carl Icahn made headway in his mission after securing at least one seat on the board of directors of Biogen Idec Inc., in addition to last month's win for a board seat at Amylin Pharmaceuticals, Inc., an analyst said Friday.

On the hostile front, NRG Energy, Inc. on Friday set the date of its annual shareholders meeting for July 21 in the battle with Exelon Corp. over board seats and the company's ultimate sale.

If Exelon is unsuccessful in appointing its nominees to NRG's board, the energy company likely will be forced to alter its takeover offer, an analyst told Prospect News on Friday.

In other situations, Johnson & Johnson's takeover of Cougar Biotechnology, Inc. should close without a hitch now that the tender offer has started, an analyst said in an interview.

Meanwhile, stocks were mixed on Friday.

The Dow Jones Industrial Average gained 12.89 points, or 0.15%, to close at 8,763.13.

The Standard & Poor's 500 index lost 2.37 points, or 0.25%, to 940.09, and the Nasdaq Composite index fell 0.60, or 0.03%, to end at 1,849.42.

Icahn tackles Amylin, Biogen

Cambridge, Mass.-based pharmaceutical company Biogen said preliminary results from Wednesday's annual shareholders meeting show Icahn secured one seat, two directors were re-elected and preliminary results were "too close to call" for a fourth seat.

Icahn had sought four seats on the 13-member board.

Biogen said the final vote tally is expected within a few weeks.

The proxy fight was a heated battle for control of the company's future. Icahn said on May 11 that Biogen should split up its cancer and neurology drug operations into two companies.

Hamed Khorsand, an analyst with BWS Financial Inc., said in an interview Friday that one seat isn't a huge win for Icahn.

"It's more about investors telling management they're frustrated because the stock hasn't gone anywhere," he said. "Investors are warning management that if they don't start putting up returns and growing the company, then why not let Icahn do what he wants to do."

Khorsand said Biogen's drug pipeline is one of the most undervalued on Wall Street.

"Icahn basically wants a return on his investments and he's looking for the best way to do that," he said. "Investors want the same thing but they're just not as radical in wanting to break up the company."

Carol Werther, an analyst with Summer Street Research Partners, told Prospect News on Friday that Icahn's "definitely making progress."

But with the lack of credit for Biogen's pipeline, "I don't know what price he thinks he can get and who would want to buy it," she said. "Longer term, the company's prospects are quite good, but near term they're going to have competition beginning next year."

Besides, Biogen basically was shopped around more than a year ago, she said.

"Big pharma took a close look at them, and they did not get bought," Werther said.

Icahn also was successful on May 27 in securing a seat on the board of directors of San Diego biopharmaceutical company Amylin Pharmaceuticals after a proxy fight.

Amylin markets its diabetes drug, Byetta, in a partnership with Eli Lilly and Co. The long-acting version of the drug is awaiting approval from the Food and Drug Administration.

Most market observers cite the lack of drug approval as a major deterrent to a sale.

Icahn was lucky with the sale of ImClone Systems Inc. to Indianapolis-based Eli Lilly last year, Werther said.

"Both Amylin and Biogen are going to be trickier situations," she said. "We don't know when the long-acting products are going to be approved, and Biogen is facing competition next year."

Biogen shares lost $1.03, or 1.94%, to close Friday at $52.12.

Eli Lilly shares gained 39 cents, or 1.13%, to close at $34.77.

Amylin's stock closed up 1 cent, or 0.09%, at $11.10.

NRG sets battle date

NRG said shareholders of record as of June 15 will be allowed to vote at the annual meeting.

Exelon has nominated four directors to the board and has a hostile stock offer underway for the Princeton, N.J.-based energy utility.

Chicago-based Exelon has bid 0.485 of an Exelon share for each share of NRG in a deal valued at about $5.15 billion. The exchange offer expires on June 26.

NRG said Friday that the board "continues to believe that Exelon's hostile proposal significantly undervalues the company, is subject to numerous unfulfilled conditions, including financing, Exelon shareholder approval and regulatory approval."

Paul Fremont, an analyst with Jefferies & Co., told Prospect News on Friday that Exelon will have to make a move after the shareholders meeting.

"If they are unsuccessful in getting their split of directors, they either have to materially alter their offer or they basically can walk away," Fremont said. "If they walk away, they've expended a lot of energy for no tangible benefits. There's still a lot of uncertainties associated with this offer at this point."

NRG shares closed down 11 cents, or 0.49%, at $22.26 on Friday.

Exelon's stock rose 19 cents or 0.39%, to $48.46.

Cougar gives go-ahead

Los Angeles-based Cougar Biotechnology said Friday that its board unanimously agreed in favor of Johnson & Johnson's $43.00-a-share buyout offer.

On Friday, New Brunswick, N.J.-based Johnson & Johnson launched the cash tender offer, which expires July 2.

The $893.7 million transaction first announced on May 21 is expected to close during the third quarter of 2009.

The deal must receive antitrust clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Howard Liang, an analyst with Leerink Swann LLC, told Prospect News on Friday that the deal looks all set with the exchange offer underway.

Cougar Biotechnology shares fell 6 cents, or 0.14%, to close Friday at $42.87.

Johnson & Johnson's stock rose 9 cents, or 0.16%, to $55.93.

Mentioned in this article:

Amylin Pharmaceuticals, Inc. Nasdaq: AMLN

Biogen Idec Inc. Nasdaq: BIIB

Cougar Biotechnology, Inc. Nasdaq: CGRB

Eli Lilly and Co. NYSE: LLY

Exelon Corp. NYSE: EXC

Johnson & Johnson NYSE: JNJ

NRG Energy, Inc. NYSE: NRG

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