Another Stake in Biotech For Icahn
Investor Buys 1.16% Of MedImmune
By Michael S. Rosenwald
Washington Post Staff Writer
Friday, February 16, 2007; Page D01
Billionaire investor Carl C. Icahn, who often aggressively pursues significant changes at companies in his portfolio, has acquired a sizable stake in MedImmune just as pressure to sell the firm mounts from a dissident shareholder.
MedImmune of Gaithersburg, the nation's eighth-largest biotech firm, has been struggling to salvage a disastrous launch of its nasal flu vaccine FluMist at the same time that it has tried, without much success, to boost sales of its flagship respiratory drug Synagis.
Wall Street has become impatient, and after the company last week reported disappointing sales for both products, its share price fell 9 percent. The poor results caused Matrix Asset Advisors, which holds a 0.71 percent stake in MedImmune, to urge the firm's board for the third time to put the company up for sale.
Matrix thinks the company's value to shareholders would be maximized if it were sold to a drugmaker willing to pay a premium for its current and future products. MedImmune's board has dismissed the appeals, but Icahn's investment, given his track record, is likely to bring a new focus on such efforts and on the performance of MedImmune chief executive David M. Mott.
Geoffrey C. Porges, an analyst with Sanford C. Bernstein & Co., said Matrix "no longer has to be the lone voice of reason and pressure and now I think the demands for change at MedImmune will not just have more credibility, but more force."
David A. Katz, president of Matrix Asset Advisors, said he welcomed Icahn's involvement.
"This will ultimately be the tipping point that moves the company, we believe, toward changing its strategic direction this year, probably toward selling the business," Katz said. "It will also pique the interest of potential acquirers to weigh in with the company."
Icahn, who, according to Forbes magazine, is worth about $10 billion, owned 2.8 million MedImmune shares as of Dec. 31, according to a filing his investment firm made Wednesday with federal regulators. That makes him MedImmune's 19th-largest shareholder, with 1.16 percent of the company's shares.
Porges and Katz both noted Icahn's role in forcing changes, sometimes uncomfortably, at companies he targets. When he became a director last year at ImClone Systems, a biotech company on hard times, he demanded that the firm "peacefully pass the baton to a successor," adding: "If you fail to do so, you will have thrown down the gauntlet and we will have to react accordingly." A little more than a month later, ImClone named Icahn chairman.
Icahn, who has recently pressured Time Warner and Motorola for changes, has some experience with Washington area companies. In 2002, he took control of XO Holdings of Reston by buying most of the telecommunications company's debt. But he did not find quick success. Late last year, XO said it would remain independent after failing to find a buyer. And though Icahn criticized Time Warner's management, chairman and chief executive Richard D. Parsons remains at the helm.
Icahn did not return calls seeking a comment yesterday. Jamie Lacey, a spokeswoman for MedImmune, said the company had seen Icahn's filing with federal regulators but she declined to comment. News of Icahn's investment helped send MedImmune shares up $1.91, to $33.16.
"I think the street is reacting with a huge sigh of relief -- that finally the much-needed changes in management strategy and even ownership are a real possibility," Porges said.
MedImmune has taken significant steps to rejuvenate sales in the past year. The company dismissed Armando Anido, its top sales and marketing executive, and replaced him with Peter S. Greenleaf, a former senior executive with a unit of medical giant Johnson & Johnson.
The firm is also working to win approval of a new version of FluMist that it hopes will be approved for children under age 5.
MedImmune also has on deck a new version of Synagis, which prevents certain respiratory infections in babies and is one of one of biotechnology's most successful products. But last week, the company said it was delaying filing for federal approval of the new version, called Numax, until the second half of 2007 instead of the first half.
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