Amylin gives up two board seats; AOL spinoff buzz increases; Cougar lacks counter bids

By Cristal Cody

Tupelo, Miss., May 27 - Carl Icahn and Eastbourne Capital Management, LLC each won a seat on the board of directors of Amylin Pharmaceuticals, Inc. on Wednesday after a bitter proxy fight, but that doesn't mean an imminent sale is likely, an analyst told Prospect News.

Also on Wednesday, speculation grew that Time Warner Inc.'s board will meet Thursday to discuss the spinoff of AOL LLC, and the timing is right for a move, an analyst said in an interview.

In other deals, a market source expects that Johnson & Johnson's $970 million bid for Cougar Biotechnology, Inc. will be the one and only offer.

Meanwhile, stocks ended down on Wednesday. The Dow Jones Industrial Average lost 173.47 points, or 2.05%, to close at 8,300.02.

The Standard & Poor's 500 index fell 17.27 points, or 1.90%, to 893.06, and the Nasdaq Composite index dropped 19.35 points, or 1.11%, to end at 1,731.08.

Icahn gains seat

Amylin said in a statement that based on voting estimates, it lost two of its seats to Icahn and Eastbourne, while shareholders voted to elect 10 of its nominees to the board at the annual shareholders meeting on Wednesday.

Icahn's proposal to reincorporate the company from Delaware to North Dakota was defeated, Amylin said.

A preliminary count of the votes is expected next week, Amylin said.

Icahn and Eastbourne Capital combined their nominees to avoid a change of control that would trigger the company's poison put.

"We want to thank Amylin shareholders for supporting us in effecting change to the Amylin board and sending a strong message that the past results are not acceptable," Richard J. Barry, Eastbourne's founder and portfolio manager, said in a statement. "We look forward to working constructively with the new board of Amylin."

Amylin's main product is its diabetes medicine Byetta, which is marketed with Indianapolis-based Eli Lilly and Co. The long-acting version of the drug is awaiting approval from the Food and Drug Administration.

Market observers cite concerns over whether the new drug will be approved after the original Byetta was linked to cases of acute pancreatitis in 2008.

Jon Lecroy, an analyst with Natixis Bleichroeder Inc., said in an interview Wednesday that the chances of an impending sale under Icahn's influence are small, at least for the near term.

"Their next drug, the long-acting Byetta, is at the FDA now," he said. "I would think that until that gets approval, Eli Lilly wouldn't be interested in buying them at this point. Icahn typically has a track record of selling stocks a lot higher. But right now, the future hinges on the approval of this next drug for them."

Carol Werther, an analyst with Summer Street Research Partners, told Prospect News that proxy fights are increasing in the biotechnology sector.

"In the last year or so, I've seen a lot more activist shareholders," she said. "Even before the stock market crashed, the financing window had closed for biotechnology. A lot of biotechnology firms were cutting staff and cutting spending because most of the companies do not have the product sales. They are very dependent on raising money to support clinical trials. That has sparked a lot of shareholder activism in this group."

Shares of Amylin, a San Diego-based biopharmaceutical company, closed up 62 cents, or 5.61%, at $11.68 on Wednesday.

Eli Lilly's stock dropped $1.18, or 3.39%, to $33.67.

AOL spinoff buzz

Time Warner spokesman Keith Cocozza told Prospect News the New York-based media and entertainment company is not commenting on the speculation about AOL nor "giving guidance" on whether the board is meeting.

Time Warner first hinted at an AOL separation when the company filed a consent solicitation statement with the Securities and Exchange Commission on April 6 to amend bondholder covenants that could restrict the sale of AOL or its assets.

Time Warner and AOL merged in 2001.

Collins Stewart plc analyst Thomas Eagan, who values AOL's combined business units at $4 billion to $5 billion, said in an interview Wednesday that the timing is right for a spinoff.

Time Warner's "stock has depreciated to some degree about the prospect of that, but I think if they would actually announce something, it would be a positive for the stock," he said.

Eagan has a "buy" recommendation on the stock with a $30.00 price target.

Time Warner shares fell 32 cents, or 1.37%, to close at $23.00. Shares have traded from $17.81 to $50.70 over the past year.

J&J's third buy

Johnson & Johnson's acquisition of Cougar Biotechnology is "unlikely to raise significant competition concerns," a market source said Wednesday.

Johnson & Johnson said May 21 that it plans to acquire the Los Angeles-based biopharmaceutical firm for $43.00 a share.

The transaction only needs regulatory clearance under the Hart-Scott-Rodino Antitrust Improvements Act and is expected to close in the third quarter of 2009.

The bid is predicted to be the final offer because Johnson & Johnson has a track record of not budging on its price, the source said.

"There is a low probability of an increased offer by J&J or a counter-bid by a third party," the market source said. "Potential counter bidders are unlikely to enter into a bidding war for a $1 billion biotech company."

The deal is New Brunswick, N.J.-based Johnson and Johnson's third acquisition in less than six months.

The company bought Mentor Corp. for $31.00 a share in January and Omrix Biopharmaceuticals Inc. for $25.00 a share in December.

Johnson & Johnson's stock lost $1.04, or 1.88%, to close Wednesday at $54.22.

Shares of Cougar Biotechnology rose 10 cents, or 0.23%, to $42.84.

Mentioned in this article:

Amylin Pharmaceuticals, Inc. Nasdaq: AMLN

Cougar Biotechnology, Inc. Nasdaq: CGRB

Eli Lilly and Co. NYSE: LLY

Johnson & Johnson NYSE: JNJ

Time Warner Inc. NYSE: TWX

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