By Toni Clarke
BOSTON, Jan 5 (Reuters) - Investors welcomed the announcement that Biogen Idec Inc Chief Executive James Mullen will be leaving the company, with some saying he had lost credibility as a leader.
The move comes less than a month after the biotechnology company said its chairman would step down and just seven months after activist investor Carl Icahn succeeded in placing two members onto Biogen's board.
'We're happy,' said Scott Harrison, an analyst at Argent Capital, which has $850 million under management and owns 365,000 Biogen shares. 'There hasn't been a lot of confidence in Mullen's leadership, and this reminds folks that the moves made last year by Icahn are having some impact.'
Icahn was not alone in pushing for change at Biogen. In November, HealthCor Management LP, which owns about 3.65 million Biogen shares, slammed Mullen for selling more than $85 million of Biogen stock and collecting $63 million in compensation while doing little to enhance shareholder value.
'We anticipate that Mr. Mullen's successor will be more focused on improving Biogen's research and development productivity and efficiency,' HealthCor said in a statement. Mullen is set to retire on June 8.
Speculation is expected to pick up on whether the company, which makes the multiple sclerosis drugs Avonex and Tysabri, is preparing to sell itself. Biogen previously put itself on the market but found no buyers. Icahn accused the company of deliberately sabotaging the sale process.
Now that process could open up again.
'You have the perfect story in terms of activist shareholders, a stock whose valuation is very attractive, and stock underperformance that has just made investors more eager for change,' Harrison said. 'So whether it's an acquisition by another company or bringing in a new CEO from the outside, change will be good.'
Biogen said it has initiated a search for a new chief executive.
The scenario playing out at Biogen is not dissimilar to the way Icahn battled for control of ImClone Systems in 2006. After a bitter battle, in which the chairman and chief executive were forced out, Icahn took control of the company and ultimately sold it to Eli Lilly & Co for $6.5 billion.
After the ouster of its chief executive, Icahn's group ran ImClone through an executive committee as it sought a new chief executive.
The changes at Biogen come as the company struggles to overcome concerns about the safety of its most important product, the multiple sclerosis drug Tysabri, which has been associated with a potentially deadly brain infection known as PML.
The drug was temporarily withdrawn from the market in 2005 but reintroduced in 2006 with stricter safety warnings.
Biogen's shares fell 0.5 percent to close Tuesday at $53.38 on Nasdaq.
(Reporting by Toni Clarke, editing by Dave Zimmerman and Tim Dobbyn) Keywords: BIOGEN/ (toni.clarke@thomsonreuters.com; 617-856-4340; reuters messaging: toni.clarke.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BOSTON, Jan 5 (Reuters) - Investors welcomed the announcement that Biogen Idec Inc Chief Executive James Mullen will be leaving the company, with some saying he had lost credibility as a leader.
The move comes less than a month after the biotechnology company said its chairman would step down and just seven months after activist investor Carl Icahn succeeded in placing two members onto Biogen's board.
'We're happy,' said Scott Harrison, an analyst at Argent Capital, which has $850 million under management and owns 365,000 Biogen shares. 'There hasn't been a lot of confidence in Mullen's leadership, and this reminds folks that the moves made last year by Icahn are having some impact.'
Icahn was not alone in pushing for change at Biogen. In November, HealthCor Management LP, which owns about 3.65 million Biogen shares, slammed Mullen for selling more than $85 million of Biogen stock and collecting $63 million in compensation while doing little to enhance shareholder value.
'We anticipate that Mr. Mullen's successor will be more focused on improving Biogen's research and development productivity and efficiency,' HealthCor said in a statement. Mullen is set to retire on June 8.
Speculation is expected to pick up on whether the company, which makes the multiple sclerosis drugs Avonex and Tysabri, is preparing to sell itself. Biogen previously put itself on the market but found no buyers. Icahn accused the company of deliberately sabotaging the sale process.
Now that process could open up again.
'You have the perfect story in terms of activist shareholders, a stock whose valuation is very attractive, and stock underperformance that has just made investors more eager for change,' Harrison said. 'So whether it's an acquisition by another company or bringing in a new CEO from the outside, change will be good.'
Biogen said it has initiated a search for a new chief executive.
The scenario playing out at Biogen is not dissimilar to the way Icahn battled for control of ImClone Systems in 2006. After a bitter battle, in which the chairman and chief executive were forced out, Icahn took control of the company and ultimately sold it to Eli Lilly & Co for $6.5 billion.
After the ouster of its chief executive, Icahn's group ran ImClone through an executive committee as it sought a new chief executive.
The changes at Biogen come as the company struggles to overcome concerns about the safety of its most important product, the multiple sclerosis drug Tysabri, which has been associated with a potentially deadly brain infection known as PML.
The drug was temporarily withdrawn from the market in 2005 but reintroduced in 2006 with stricter safety warnings.
Biogen's shares fell 0.5 percent to close Tuesday at $53.38 on Nasdaq.
(Reporting by Toni Clarke, editing by Dave Zimmerman and Tim Dobbyn) Keywords: BIOGEN/ (toni.clarke@thomsonreuters.com; 617-856-4340; reuters messaging: toni.clarke.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.