By Svea Herbst-Bayliss
NEW YORK (Reuters) -Activist investor Sarissa Capital may have cleared a stumbling block in its push for board seats at Alkermes (NASDAQ:ALKS) when one of its candidates resigned from the board of a company that has a commercial relationship with the drugmaker.
The hedge fund's founder, Alex Denner, 53, one of three Sarissa candidates running for seats on Alkermes' 11-member board, on Monday said he would give up his board seat at biotech company Biogen (NASDAQ:BIIB).
The move eliminates "any claim of conflict whatsoever," Sarissa wrote to Alkermes shareholders on Tuesday.
But Denner's move created headlines for Biogen not only because the long-serving director is leaving unexpectedly, but also because he nominated his replacement, Susan Langer, 32, who is his live-in romantic partner.
Alkermes licensed multiple sclerosis drug Vumerity to Biogen for commercialization, and some analysts worried that it would be problematic for Denner to potentially sit on both companies' boards.
Sarissa owns 8.45% of Alkermes, which is valued at $5.2 billion. This is the third time Sarissa has mounted a challenge. In 2021, Sarissa and Alkermes reached an agreement to add a new director. Last year Sarissa dropped a board challenge, and this year it has nominated three candidates.
The hedge fund is criticizing the performance of Alkermes' stock, which has lost 38% over the last five years. But it has gained 49% since a value enhancement plan establishing profitability targets was announced in late 2020, and is up 21% since January.
Alkermes is urging shareholders to stick with its current directors and not elect any Sarissa candidates. The company said Denner, who earned advanced degrees in mechanical engineering, does not bring relevant skills to the board, and that it already has an investor representative on its board after settling with hedge fund Elliott Management in 2020.
Alkermes shareholders will vote on directors on June 29 in what is one of the year's five biggest boardroom challenges.
Biogen's annual meeting, which had been scheduled for Wednesday, has been postponed to June 26.
A Biogen representative confirmed that the board knew about the relationship between Denner and Langer. Denner, who has served on the Biogen board since 2009 and headed the nominating and governance committee, had nominated Langer.
Biogen did not disclose the relationship when it announced the board moves on Monday.
Langer, whose father, Bob Langer, co-founded vaccine maker Moderna (NASDAQ:MRNA), began her career at Biogen, a $45 billion pharmaceutical company, after graduating from college. She was previously head of corporate strategy at Biogen. Her age and lack of public board experience have raised some concerns about her nomination in the governance community, analysts said.
Biogen's longtime chairman, Stelios Papadopoulos, will leave this year when reaching the mandatory retirement age and will be replaced by board member Caroline Dorsa.
Biogen directors Richard Mulligan and William Jones are also leaving and no replacements were announced for their seats.