Icahn, Eastborne Pressure Amylin Pharma Board

BOSTON (Reuters) – A battle looks set to break out for control of Amylin Pharmaceuticals Inc (AMLN.O), maker of diabetes drug Byetta, as two big investors move to shake up the board.

Icahn Capital LP, controlled by billionaire investor Carl Icahn, and Eastbourne Capital Management LLC, have each announced they intend to nominate five members to Amylin’s 12- person board.

Eastbourne, which owns 12.5 percent of Amylin, said it does not believe its efforts to bring change to Amylin are in competition with those of Icahn’s group, which owns 8.3 percent.

Still, if Amylin rejects both proposed slates, a convoluted tussle could emerge between Icahn and Eastbourne’s respective slates.

Amylin said on Friday it is reviewing potential board members and will formally recommend a slate once the process has been completed.

San Diego-based Amylin makes Byetta in a 50-50 partnership with Eli Lilly & Co (LLY.N), making Lilly the most obvious buyer for Amylin should the company be sold. But Lilly recently acquired ImClone Systems, which was controlled at the time by Icahn, for $6.5 billion. Some analysts say that makes an acquisition by Lilly of Amylin less likely.

Eastbourne founder and portfolio manager Rick Barry said in a statement that his firm has been a long-term holder of Amylin based on its belief in the company’s products and potential, but he has lost confidence in the ability of Amylin’s current board or management to execute a strategy that is in the best interest of shareholders.

“Amylin is at a critical juncture and if the Board does not take action, shareholders will be left to bear unacceptable risks,” he said. “Should the Board fail to seek positive change on its own, we are committed to pursuing the election of our five highly qualified director nominees.”

Amylin’s shares have plummeted roughly 70 percent over the past six months amid concern Byetta, the company’s most important product, may increase the risk of pancreatitis — an inflammation of the pancreas that can be deadly.

Byetta, which was launched in 2005, is a GLP-1 class of drugs designed to stimulate the release of insulin in diabetics when glucose levels become too high. But sales have slowed following the disclosure it may have been linked with six deaths due to pancreatitis.

Amylin does not have a staggered board, meaning all directors will be up for election at the company’s annual meeting.

“An ability to elect at least five new members could swiftly change the direction of the company,” said Matthew Osborne, an analyst at Lazard Capital Markets, in a research note. “Recommending only five board members, versus a majority slate of seven or more, could avoid triggering a clause in Amylin’s debt that would require the company to pay, at par, the full amount of the debt.”

Osborne said the two activist shareholders could consolidate their recommendations to avoid triggering the clause, and that five may be enough to provoke change as some favorable board members could already be in place.

Amylin’s shares rose 14 cents, or 1.2 percent, to $11.70 in afternoon trading on Nasdaq.

By Toni Clarke
(Reporting by Toni Clarke, editing by Dave Zimmerman and Andre Grenon)