UPDATE 2-HealthCor slams Biogen CEO for outsize pay package
November 21st, 2009 | by admin |* HealthCor criticizes Biogen CEO paycheck, stock sales
* Calls on company to initiate sustained buyback program
* Says company should cut R&D expenses
(Updates with company comment, share price)
By Toni Clarke
BOSTON, Nov 20 (Reuters) - Biogen Idec Inc (BIIB.O )shareholder HealthCor Management LP has slammed the biotechcompany’s chief executive for selling more than $85 million ofBiogen stock and collecting $63 million in compensation whiledoing little to enhance the value of the company.
In a letter to CEO James Mullen and the company’s board,HealthCor criticized what it says is a disconnect betweenMullen’s compensation and Biogen’s stock performance.
Shares of Biogen, which makes the multiple sclerosis drugsAvonex and Tysabri, are trading in the same range as they werein early 2004. During that time, HealthCor said Mullen has soldroughly half his eligible holdings in Biogen.
“James Mullen has made considerable personal profits whilerunning Biogen Idec and has egregiously continued to sell downhis personal holdings in the Company, while investors have beenleft holding the bag,” HealthCor wrote in its letter.
Jennifer Neiman, a spokeswoman for Biogen, said Mullen’sstock sales were part of a predetermined stock-selling programand his compensation reflects the fact that in 2008 Biogenexceeded its sales and earnings forecasts.
HealthCor’s criticism comes as Biogen struggles to overcomeconcerns about the safety of its most important drug, Tysabri,which has been associated with a potentially deadly braininfection known as PML.
Biogen stopped publicly announcing new cases of PML at theend of July, raising questions about its disclosure policies.Earlier this month the company, with its partner Elan Corp Plc(ELN.I ) of Ireland, amended the drug’s prescribing informationto reflect the risk of PML increasing with time.
The drug was temporarily withdrawn from the market in 2005after being linked with PML. It was reintroduced in July 2006with stricter safety warnings, but concerns continue to holdback sales.
HealthCor, which owns 3.65 million shares, or 1.3 percentof Biogen, said it has repeatedly called on the company tocommit to return cash to shareholders through a long-term stockbuyback program of $500 million to $1 billion a year. It saidit believes a sustained share repurchase program would be amore accretive use of cash than any near-term acquisitions.
While Biogen recently announced an intended $1 billionshare repurchase program, it would not commit to a specifictimeframe or additional purchases after that, HealthCor said.
“We believe this “intention” is inadequate, representingfurther stalling on behalf of the Board and a continuation ofthe pattern of inaction we have seen over the past year,” itsaid. Continued…
