Activist Going Back After Biogen Idec (BIIB, CELG, GILD, GENZ, AMGN)

November 20, 2009 · Filed Under Financial, multiple sclerosis 

Biogen Idec Inc. (NASDAQ: BIIB) is not exactly new to the world of activist investors as there have been problems inside the company for years.  An SEC filing this morning was filed by a fund called HealthCor Management, L.P. located in New York.  It turns out that the fund is not a new entrant here, but the revelations are rather specific rather than broad and non-specific compared to other activist complaints.  More importantly, the fund has CC’d in the following entities:

  • PRIMECAP Management
  • ClearBridge Advisors LLC
  • Barclay’s Global Investors UK
  • Fidelity Management & Research
  • Icahn Capital LP
  • Goldman Sachs Group
  • State Street Corporation
  • Vanguard Group Inc.
  • Capital Research Group Investors
  • Invesco Ltd.

Yep, you knew Carl Icahn was going to be in there.  After all, the most recent Icahn holdings still showed Icahn holding a significant number of shares.

What is interesting is the data that HealthCor provided.  It is calling for a specific buyback plan of $500 million to $1 billion worth of stock PER YEAR.  It noted that Biogen Idec outspends and is expected to outspend all of its major large-cap biotech peers.

The activist group here compared the statistics (most of which include items) to Celgene Corporation (NASDAQ: CELG), Gilead Sciences Inc. (NASDAQ: GILD), Genzyme Corp. (NASDAQ: GENZ), Amgen Inc. (NASDAQ: AMGN), and Genentech-Roche.

R&D MARGINS (HISTORICAL AND CONSENSUS)
2007A  2008A 2009E  2010E 2011E
CELG             24%   24%   26%    24%   24%
GILD             12%    12%   12%    13%   13%
GENZ           18%    17%   18%    16%   16%
AMGN           21%    19%   18%    18%   18%
DNA             20%    20%   20%    20%   19%

AVERAGE   19%    18%   19%    18%   18%

BIIB             29%    26%   27%    27%   26%

HealthCor also noted that Biogen has failed to maximize its earnings and cash generation potential.  There is a complain that CEO James Mullen has sold approximately $85 million worth of stock.

Now that the market has stabilized, there are likely to be more activist filings made in realm of underperforming biotech stocks.

JON C. OGG
NOVEMBER 20, 2009

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