CORRECTED – UPDATE 3-Icahn seeks to nominate 3 to Biogen board

(Corrects sixth paragraph to show Richard Young was not
nominated by Icahn last year)

* Two of the three were part of Icahn’s ImClone team

* Biogen: evaluating in best interest of all holders

* Biogen’s shares fall 1.1 percent
(Adds background, history, context)

By Toni Clarke

BOSTON, Jan 28 (BestGrowthStock) – Biogen Idec Inc (BIIB.O: )
received notice from billionaire investor Carl Icahn that he
intends to nominate three people to its board as he seeks to
expand his influence at one of the world’s biggest biotech

Cambridge, Massachusetts-based Biogen, which makes the
multiple sclerosis drugs Avonex and Tysabri, said on Thursday
it will evaluate the nominees and the proposal and make a
recommendation “in the best interests of all shareholders.”

Two of Icahn’s three nominees — Thomas Deuel and Eric
Rowinsky — were part of the Icahn team that took control in
2006 of biotechnology company ImClone Systems, which Icahn sold
Eli Lilly & Co (LLY.N: ) in 2008 for $6.5 billion.

Icahn’s ImClone team was led by Alexander Denner, who was
elected to Biogen’s board last year, along with Richard
Mulligan, a professor of genetics at Harvard Medical School and
a former member of ImClone’s Scientific Advisory Committee.

“I see this as Icahn’s deliberate intention to take control
of the board,” said one portfolio manager, who owns 244,000
Biogen shares but asked to remain anonymous for compliance
reasons. “He’s taken a page out of the book of ImClone.”

Icahn’s third nominee is Richard Young, a professor of
biology at the Massachusetts Institute of Technology.

There are four seats on Biogen’s board up for election this
year. Icahn also proposes to amend amend the company’s bylaws
to fix the number of directors at its current 12 seats.

Icahn Partners LP and affiliates reported owning 16.1
million shares, or 5.56 percent of the outstanding shares.


In 2007, under pressure from Icahn, Biogen put itself up
for sale but failed to find a buyer. Icahn accused the company
of deliberately sabotaging the sale process by making it
difficult for potential buyers to talk to key Biogen partners.

The following year, Icahn launched an unsuccessful attempt
to place three directors on the company’s board. Last year,
however, investors voted in Denner and Mulligan, and Icahn is
clearly determined not to let go.

He has floated the idea of splitting Biogen into two
companies – one focused on neurology, the other on cancer,
since Biogen also makes the cancer drug Rituxan. But if that
idea falls flat, he may push again for a sale.

Biogen generated more than $4 billion in revenue in 2008,
driven by Avonex, which accounts for half its revenue, and
Tysabri, its newer multiple sclerosis drug that is widely
considered to be the most effective on the market but whose
growth has been slowed due to safety concerns.

Tysabri was temporarily withdrawn from the market in 2005
after being linked with progressive multifocal
leukoencephalopathy, or PML. It was reintroduced in July 2006
with stricter safety warnings, but 31 cases of the disease have
been reported, and the company says the risk of developing PML
increases with time.

As more patients approach the two-year treatment mark, the
risk exists that more cases of PML will be reported,
potentially leading physicians to put their patients on a “drug
holiday” and crimping sales. Tysabri is expected to generate
more than $1 billion in 2009.


When Biogen put itself for sale in 2007, the company blamed
the lack of interest by big pharmaceutical companies on their
fear that sales of Tysabri could implode. That may still weigh
heavily, at least for now, but there are also signs big drug
companies are interested.

Last year Johnson & Johnson (JNJ.N: ) paid $885 million for
an 18.4 percent stake in Irish drugmaker Elan Corp Plc (ELN.I: )
in a move some saw as an indirect expression of interest in
Biogen. Biogen and Elan jointly market Tysabri and each has an
exclusive right to acquire the other’s 50 percent share of the
drug if there is a change of control at their opposite number.

An agreement between J&J and Elan, subsequently struck down
by a court, would have put J&J in prime position to acquire
Biogen without competition from rival bidders.

Of the four Biogen board seats up for election, Chief
Executive James Mullen is set to retire and will not stand.
Neither will Bruce Ross, the company’s former chairman.

The other two board seats are occupied by Brian Posner,
previously CEO of ClearBridge Advisors LLC, and Nancy Leaming,
the retired CEO of Tufts Health Plan.

Posner was part of Icahn’s slate of nominees to the board
of Yahoo in 2008.

Biogen’s shares were down 1.1 percent to $53 in afternoon
trading on Nasdaq, amid broad losses for stocks.

Stock Today

(Reporting by Toni Clarke, editing by Gerald E. McCormick and
Tim Dobbyn)

CORRECTED – UPDATE 3-Icahn seeks to nominate 3 to Biogen board