Talk about a blow to the ego. The shares may have since succumbed to the downdraft in the overall stock market, but when trading opened this morning Biogen Idec shot up around two percent. Investors were reacting to the news that the company's longtime CEO, Jim Mullen, is calling it quits.
A spokesman told the Boston Globe, BIIB's hometown paper, that Mullen's retirement has nothing to do with Carl Icahn. The billionaire activist investor waged a successful proxy battle last year that resulted in Icahn winning two seats on the board. It was a bizarre shareholder meeting where that fight came to a head. Over persistent objections by Icahn's people, Biogen Idec kept the polls open. At one point, they adjourned the meeting for a few hours, so BIIB could keep calling big investors to try to convince them to vote their shares for management. It didn't work. Eventually they closed the polls and ended the meeting, but announced that they didn't know the results yet. Meantime, outside, Icahn's biotech lieutenant Alex Denner was telling me in a live CNBC interview, that they'd won at least one seat, probably two. Where was Mullen? He slinked out the back door into a waiting black car. The optics of that, let alone the bad PR, were striking.
What I saw as Mullen's uncharacteristic behavior was a marked departure from his earlier media/investor relations. For example, when the news first broke several years ago about a potentially fatal problem with his company's new multiple sclerosis drug, Tysabri, Mullen took charge of the crisis and went public. He talked openly with investors, doctors and reporters. In good times and bad he had become a regular on CNBC. But then something changed. As best as I can tell he hasn't been on our air in a few years and as far as I'm aware I don't think I pissed him off to make him stay away.
JPMorgan biotech analyst Geoff Meacham, for one, isn't buying the company line. In a research note to clients he writes, "We believe this (Carl Icahn's involvement with the company) likely played a key role in Mullen's decision (to retire.) Indeed, Mullen's board seat was up for re-election and Icahn's involvement could have led to Mullen losing his board seat." So, if Meacham is right, maybe Mullen saw the writing on the wall and is trying to save face after a 20-year career at BIIB. And apparently, I'm not the only one Mullen stopped talking to. Meacham goes on to say, "We think this is an incremental positive for Biogen, as a consistent area of investor pushback has been management's apparent lack of interest in engaging with the Street. We believe Biogen was in need of a shake-up at the top...." JPM makes a market in BIIB and has done and wants to do more banking for the firm.
I called Icahn's office. I was told he's traveling and that Denner wasn't around. Icahn, by the way, recently renewed his stake in Genzyme . Henri Termeer, the longtime CEO of that biotech, is also on the hot seat. As Ellen Licking with the "InVivoBlog" observed on Twitter, Mullen is the second veteran Boston/Cambridge biotech CEO casualty in the past year. First Joshua Boger at Vertex Pharmaceuticals stepped down, now Mullen. Licking asked, "Next up GENZ's Termeer?"
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