Three meetings

1. Amylin-Icahn update.

Meeting today.

2. Target-Ackman update

Meeting tomorrow.

3. Biovail-Melnyk update

Also a meeting tomorrow, though resolution already seems accompished.

Since last we visited Biovail

What has been going on at our favorite Canadian pharma company?

When last we visited, in May, there had just been a shake-up in management, and the re-constituted board was trying to disassociate itself from the company founder, Eugene Melnyk.

Things get curioser. On June 25, the company claimed that the new board had received "overwhelming support from shareholders" at that day's annual meeting.

Mr. Melnyk, though, responded with a statement that there was no effective vote because there had been no quorum. He has brought an action in the Ontario Superior Court asking for a declaratory judgment to that effect.

The board responded that Mr. Melnyk had withdrawn his own proxies at the last minute in an effort to deprive the meeting of a quorum, showing "a deliberate intent to circumvent the democratic process by which shareholders rejected his nominees."

The stock price has held up fairly well despite such drama. There's been a some decline over the last month, from $10.50 to about $9.80. But that skill means that it has held its value better than the stocks on the TSE 300, Canada's answer to the Dow.

Best of luck to the new board in their litigation and in facing their other challenges. L'chaim.

Three quick notes

1. The internet and proxy votes.

A story in today's WSJ tells us that since the SEC has allowed companies to use e-proxy rather than old-fashioned paper and ink proxy ballots, voting rates have declined.

The authors of the story seem unclear what the psychology here is. Possible explanations include the aversion of older shareholders to anything internet-driven. Presumably as they die off, (or as the more flexible of them catch on) the numbers will go back up.

Or it could be a pointless statistical fluke. Correlation isn't causation.

2. Biovail shake-up.

There's a new chief executive and a new chairman of the board at Biovail, the company that was once featured on Sixty Minites as an example of short-seller-driven stock price manipulation. Bill Wells is the new CEO, Douglas Squires the new chairman.

Also, Bill Bristow has left the board of directors, "effective immediately," the company said on April 21, "due to his ongoing personal relationship with Eugene Melnyk."

In the eyes of the present leadership, apparently, the company's earlier problems which I discussed in early March weren't the consequence of speculators and paid-for false research reports after all. They were the consequence of the flawed leadership of company founder Eugene Melnyk.

3. SEC to Grassley: Let it be.

At some point about three years ago the SEC was investigating the broker-dealer Bear Stearns over the way it priced and valued about $63 million of collateralized debt obligations. But last year the investigation was quietly dropped. I'd like to that that someone at the SEC simply decided that whatever Bear was doing wrong had turned out to be self-punishing given the events of last month. But the chronology doesn't really work out there, does it?

Senator Grassley doesn't want to let the matter go. On April 2, he wrote the SEC asking for information on their investigation.

SEC chairman Christopher Cox replied last week: “The commission does not disclose the existence or non-existence of an investigation or information generated in any investigation unless made a matter of public record in proceedings brought before the Commission or the courts."

Short paraphrase: "Oversight, Schmoeversight."

Melnyk and a Comeback

On February 28, Eugene Melnyk wrote the board of directors of the company he founded, Biovail, indicating that he's unhappy with their current direction.

He was the chairman of that board until last June, when he quit as part of a settlement with Canadian regulators over insider trading allegations.

Eight months of idleness appears to have been wearying, though. Melnyk, who owns 18.2 million shares (about 11% of the outstanding) writes: "I am at this juncture formally informing the Board that I have decided to explore, and am exploring, various options available to me in connection with my interest in Biovail, including the possibility of joining with a partner or partners to acquire the remaining shares of Biovail, selling all or a portion of my current Biovail shares to a third party, continuing to hold my shares for investment, or seeking changes to the composition of the Board of Directors."

Biovail is a pharmaceutical company specializing in making time-release versions of medicines (or, as their website puts it, "drug-delivery technologies.")

Between May and mid-July of last year, Biovail stock was trading in the neighborhood of $25. There was a sharp downward move in July, when the US FDA refused to approve a once-daily salt formulation of an anti-depressant. In August it found a floor at $16.

It fell trough that floor in December, when it announced it expected to settle a class-action lawsuit in the federal courts by making a payment of $85 million. The settlement, as is customary, includes no admissionof wrong-doing.

The stock price didn't find its new floor until mid January 2008, when it reached $12. It has rebounded a bit since then. But so far as I can tell, Melnyk believes that his successor has been inadequately aggressive as a litigant, leading to his 'decision to explore options.'

My own guess? (Just a guess folks, and don't take anything I say as investment advice -- if you do, you're an idiot!) My guess is that Biovail is better off without him, and ought to resist any "options" he explores that might put him back in a decision to make decisions. Melnyk was part of the problem, he isn't part of the solution. They can work their way through the tough times they've encountered.

"Once you went away, I was petrified/ Kept thinking I would never live without you by my side ... I will survive/ I will survive."