Penwest, of Paterson, NY, has a shareholders' meeting coming up: on June 22.
Penwest is best known for a proprietary drug-delivery technology.
The dissident slate has made the following case: The company's most valuable asset is the revenue stream on Opana ER that it receives from Endo, a licensee. The value of that single revenue stream has exceeded the net cap of the company for most of the last year. This indicates, to the dissidents, that company is acting as a drag on value. The dissidents would significantly reduce "headcount and other overhead expenses, which we believe continue to be maintained at levels that are in excess of what is required. Following the Annual Meeting, if our Nominees are elected, we intend to conduct a rapid, detailed review of the Company’s current employee base with the view towards eliminating all positions that are not funded by ongoing drug delivery collaborations or not necessary for the Company’s new operating plan."
How has the company responded? Its materials note that in an earlier proxy fight, Tang and Edelman (the former of Tang Cap, the latter of Perceptive Life Sciences) had a far more drastic proposal: they demanded a winddown of the company. So the incumbents think it a moral victory that Tang-Edelman no longer make that demand. Still, it is wrongheaded (they add) to demand headcount reduction.
"Don't reward this disruption of the progress we are making."
Showing posts with label pharmaceutical industry. Show all posts
Showing posts with label pharmaceutical industry. Show all posts
Monday, June 7, 2010
Wednesday, June 2, 2010
Genzyme and the FDA
The Food and Drug Administration (FDA) has entered into a consent decree with Genzyme Corp. (GENZ), a Cambridge, Mass. based biopharm concern that has been one of the unwelcome objects of the attentions of activist investor Carl Icahn.
Icahn now owns just under 5% of the equity of the company, after having doubled his holdings in the first quarter. This is what I said about Genzyme in January.
In recent days, Genzyme has trumpeted two words from the FDA. First, that it has approval to market Lumizyme (its trademark product, chemically known as alglucosidase alfa) for patients with late-onset Pompe disease. Here's more on Pompe disease.
Second, that it has entered into a consent decree with the FDA, ending a dispute over the company's Allston manufacturing plant. The company said that this gives it "further clarity and certainty in our ongoing improvements to our manufacturing and quality systems at our Allston Landing facility."
Icahn, though, portrays the consent decree as bad news for stockholders, not good. It will bring with it tighter FDA scrutiny. The FDA, he writes in a recent "Dear Fellow Shareholder" letter, "has seemingly lost faith in the company's ability to make important drugs for patients. Why should shareholders not look to recharge the board with strong managerial talent and fresh ideas that can ask the right questions and demand performance?"
The meeting has been set for June 16.
Icahn now owns just under 5% of the equity of the company, after having doubled his holdings in the first quarter. This is what I said about Genzyme in January.
In recent days, Genzyme has trumpeted two words from the FDA. First, that it has approval to market Lumizyme (its trademark product, chemically known as alglucosidase alfa) for patients with late-onset Pompe disease. Here's more on Pompe disease.
Second, that it has entered into a consent decree with the FDA, ending a dispute over the company's Allston manufacturing plant. The company said that this gives it "further clarity and certainty in our ongoing improvements to our manufacturing and quality systems at our Allston Landing facility."
Icahn, though, portrays the consent decree as bad news for stockholders, not good. It will bring with it tighter FDA scrutiny. The FDA, he writes in a recent "Dear Fellow Shareholder" letter, "has seemingly lost faith in the company's ability to make important drugs for patients. Why should shareholders not look to recharge the board with strong managerial talent and fresh ideas that can ask the right questions and demand performance?"
The meeting has been set for June 16.
Sunday, May 23, 2010
Penwest Pharmaceuticals
Tang Capital Management LP and Perceptive Life Sciences Master Fund Ltd. have put forward their nominees for election to the board of Penwest Pharmaceuticals Co. (Nasdaq: PPCO), at the annual meeting scheduled for June 22, in Danbury, CT. Here are five more-or-less relevant facts in the backdrop of that election.
1. The dissidents' nominees are: Roderick Wong, Said Zarrabian, and John G. Lemkey.
2. Tang and Perceptive Life Sciences together control approximately 41.3% of the common stock outstanding. They charge that the Company's "most valuable asset is the royalty stream on Opana ER that it receives from licensee Endo Pharmaceuticals," and that "the net present value of this income stream alone has exceeded the market capitalization of the Comnpany for most of the past year and that this disparity has existed primariuly because the Company is spending the cash flow generated by this income stream on activities that we believe will not generate a positive return on investment."
3. What is Opana ER? It is a pain killer that apparently occupies much the same market space as Oxycontin. Opana ER "contains oxymorphone, which is a morphine-like opoid agonist against a Schedule II controlled substance, with an abuse liability similar to other opoid analgesics." I got that off the webpage of the licensee Endo Pharmaceuticals, which is headquartered in Chadds Ford, PA.
4. Penwest and Endo recently settled a lawsuit they had filed against an Israeli company, Teva Pharmaceutical. The terms of the settlement will allow Teva to begin selling a generic version of Opana ER beginning September 15, 2012.
5. The board of Penwest already includes two members who were put their by the efforts of these same two groups -- Tang and Perceptive Life -- at last year's meeting. I wrote about that here. The three new nominees, plus those two incumbents, would constitute a majority.
1. The dissidents' nominees are: Roderick Wong, Said Zarrabian, and John G. Lemkey.
2. Tang and Perceptive Life Sciences together control approximately 41.3% of the common stock outstanding. They charge that the Company's "most valuable asset is the royalty stream on Opana ER that it receives from licensee Endo Pharmaceuticals," and that "the net present value of this income stream alone has exceeded the market capitalization of the Comnpany for most of the past year and that this disparity has existed primariuly because the Company is spending the cash flow generated by this income stream on activities that we believe will not generate a positive return on investment."
3. What is Opana ER? It is a pain killer that apparently occupies much the same market space as Oxycontin. Opana ER "contains oxymorphone, which is a morphine-like opoid agonist against a Schedule II controlled substance, with an abuse liability similar to other opoid analgesics." I got that off the webpage of the licensee Endo Pharmaceuticals, which is headquartered in Chadds Ford, PA.
4. Penwest and Endo recently settled a lawsuit they had filed against an Israeli company, Teva Pharmaceutical. The terms of the settlement will allow Teva to begin selling a generic version of Opana ER beginning September 15, 2012.
5. The board of Penwest already includes two members who were put their by the efforts of these same two groups -- Tang and Perceptive Life -- at last year's meeting. I wrote about that here. The three new nominees, plus those two incumbents, would constitute a majority.
Wednesday, May 5, 2010
Bristol-Myers Squibb
The board of directors of Bristol-Myers Squibb, (NYSE: BMY) the New York based drug maker, has authorized the repurchase of $3 billion of its common stock. The decisioin reflects a cash-healthy balance sheet.
Also, at Bristol-Myers' annual meeting yesterday, two dissident shareholder proposals were soundly defeated.
Also Tuesday, stockholders at Bristol-Myers' annual meeting overwhelmingly rejected a couple of shareholder proposals. A total of 90 percent voted against a proposal that would require the company to identify, in any future proxy statements, every executive whose compensation exceeds $500,000 a year. A total of 75 percent voted against a proposal that would require Bristol-Myers to increase its public reporting on its use of animals in research and product testing, as well as on its efforts and future goals toward eliminating use of research animals.
There wasn't much market movement on any of this news, presumably because the rest of the market was taking such a beating yesterday that even a slight rise (which BMY did manage) constitutes an accomplishment.
BMY, or its precursor firms, have an impressive history, dating back to 1858, when Edward Robinson Squibb (1819-1900) started his own pharmaceutical laboratory in Brooklyn, New York. During the US civil war, Squibb invented the pannier -- a compact wooden chest that battlefield medics could use for easily carrying around the medicines used to treat casulaties.
Separately, William Bristol and John Myers formed a company in Clinton, New York in 1887.
Those two companies merged in 1989.
In 2002, BMY was involved in an accounting scandal. They were apparently "channel stuffing" and had to restate their results three years back. They agreed to pay $150 million to settle the matter, while neither admitting nor denying guilt.
Onward!
Also, at Bristol-Myers' annual meeting yesterday, two dissident shareholder proposals were soundly defeated.
Also Tuesday, stockholders at Bristol-Myers' annual meeting overwhelmingly rejected a couple of shareholder proposals. A total of 90 percent voted against a proposal that would require the company to identify, in any future proxy statements, every executive whose compensation exceeds $500,000 a year. A total of 75 percent voted against a proposal that would require Bristol-Myers to increase its public reporting on its use of animals in research and product testing, as well as on its efforts and future goals toward eliminating use of research animals.
There wasn't much market movement on any of this news, presumably because the rest of the market was taking such a beating yesterday that even a slight rise (which BMY did manage) constitutes an accomplishment.
BMY, or its precursor firms, have an impressive history, dating back to 1858, when Edward Robinson Squibb (1819-1900) started his own pharmaceutical laboratory in Brooklyn, New York. During the US civil war, Squibb invented the pannier -- a compact wooden chest that battlefield medics could use for easily carrying around the medicines used to treat casulaties.
Separately, William Bristol and John Myers formed a company in Clinton, New York in 1887.
Those two companies merged in 1989.
In 2002, BMY was involved in an accounting scandal. They were apparently "channel stuffing" and had to restate their results three years back. They agreed to pay $150 million to settle the matter, while neither admitting nor denying guilt.
Onward!
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