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Icahn To Go Behind-The-Scenes At Biogen Idec

Wednesday, 21 May 2008 | 4:41 PM ET

I got back sooner than I expected from my assignment and when the plane landed and I fired up my BlackBerry an email from Bear Stearns biotech analyst Mark Schoenebaum stuck out from the bunch that came flooding in.

Yeah, Schoenebaum is still there. On a recent conference call with clients that he invited me to listen to, Schoenebaum announced that he'll soon be working at another, as yet unidentified, firm. And as is apparently his quirky way, he played a recording of "Taps" at the start of the call because he thought might be his last at Bear. It wasn't. Anyway, I digress.

So, Carl Icahn is grabbing headlines this week over his new battle with Yahoo and how Boone Pickens is backing him up now, too. But Icahn has his finger in a lot of pies. He's still in a proxy fight with Biogen Idec where he's trying to get his people on the Board at the upcoming shareholder meeting on June 19th. But in the meantime, Icahn is trying to find out what went on inside the biotech company when, at his urging, it put itself on the market last year, the stock soared, and then came crashing back to earth when BIIB announced it couldn't find a buyer.

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To that end (and props to Schoenebaum for staying on top of this), Icahn's lawyers went into a Delaware court yesterday to get Biogen Idec to turn over internal documents and communications from the auction process. And Icahn won.

According to the transcript, Delaware Chancery Court Judge William Chandler, who I covered several years ago when he oversaw the fight between Walter Hewlett and Carly Fiorina over HP's acquisition of Compaq, said he comes down "slightly" in favor of Icahn. He ruled from the bench that Icahn has a right to see the documents to "demonstrate unequivocally...whether there was some deliberate effort here to manipulate the process or to create a process that was doomed to fail from the outset."

Judge Chandler also ordered Icahn to keep the stuff confidential and/or to come to some kind of agreement with the company about what should stay top secret and what can be made public--(er, leaked to the media?). But if they can't come to terms on that the judge wants them back in court.

In a research note to clients this afternoon, Schoenebaum writes, "If, indeed, a 'smoking gun' document exists, yesterday's court decision should help Icahn's team obtain it. However, even if such a document exists, it is not certain that the judge would allow it to be made public. In order to broadly influence the shareholder vote, we believe it would need to be made public well ahead of the June 19th shareholder meeting.

Thus, we believe the Judge's decision has only modestly changed the probability that Icahn's director slate is nominated." Schoenebaum also points out that Institutional Shareholder Services hasn't made a call yet on Icahn's proxy fight and that ISS' recommendation could also be a deciding factor. Bear Stearns says it makes a market in BIIB and/or is associated with a market maker.

Between Yahoo and Biogen Idec you might say the billionaire activist investor has his hands full. But another one of Icahn's babies will also be making news over the next couple of weeks. At the end of this month ImClone Systems (Icahn is Chairman) will be the headliner at this year's American Society of Clinical Oncology meeting where IMCL will be releasing highly anticipated test results on Erbitux for lung cancer. Doctors, analysts and investors are anxious to hear how much time the drug might have added to patients' lives and about the severity or frequency of side effects.

Questions? Comments? Pharma@cnbc.com

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