Sector News

Biotech activist Alex Denner’s next target: Ironwood Pharma

April 10, 2018
Life sciences

Ironwood Pharmaceuticals told shareholders Monday that it’s learned biotech activist investor Alex Denner of Sarissa Capital is seeking to join its board. The company said it was making Denner’s intentions public to be able to consider shareholders’ input before the board makes a recommendation.

Shareholders’ response? The stock closed up more than 10 percent Monday.

Denner, who ran biotech investments for Carl Icahn before founding Sarissa in 2012, said in an interview Monday that he’s seeking a board seat “to participate in discussions to maximize value for shareholders.”

Ironwood, in its announcement Monday morning, detailed the strength of its board already in place.

“Ironwood has a diverse, experienced and owner-oriented Board comprised of nine directors, eight of whom are independent,” the Cambridge, Massachusetts-based company said. “Collectively, the Board has significant experience that is critical to our business, including in capital allocation and finance, business strategy, customer and market insights, and senior leadership in both small, entrepreneurial companies and in large pharmaceutical organizations.”

Ironwood sells the irritable bowel syndrome drug Linzess, which drew net sales in the U.S. of $701 million in 2017. The company splits proceeds from the drug with partner Allergan. It’s also developing a pipeline of drugs for other maladies including gastroesophageal reflux disease (or GERD) and diabetic nephropathy.

Sarissa acquired a stake of 1.65 million shares in Ironwood in the fourth quarter of last year, according to the firm’s most recent regulatory filing.

Denner declined to comment further about his plans if he joins Ironwood’s board, but said he was surprised the company issued its announcement.

“I hope that we’re going to continue to have a pleasant and constructive conversation, as I believe we were having,” Denner said. “To the extent that they state in their press release that they’re concerned with what investors want, I’ve been told that more value has been created for Ironwood shareholders today than in any single day in history.”

Ironwood’s market value is $2.4 billion after Monday’s increase.

Wells Fargo analyst David Maris hailed Denner’s interest in the board as positive, “given his track record for value creation with other firms.” Maris also noted that Ironwood’s shares have “underperformed for some time,” despite an “earnest and capable” management team whose direction he said he likes.

Denner’s interest will inevitably raise questions about the company’s independence over time. At Sarissa and with Icahn, he’s orchestrated sales of a number of his biotech investments, including, most recently, Bioverativ to Sanofi for $11.6 billion in November, and Ariad to Takeda for $5.2 billion in January 2017. He also sits on the board of Biogen and the Medicines Co., where he recently gained board control.

He’s frequently advocated for smaller companies selling drugs in primary care settings to be partnered with or sold to larger companies. Of the Medicines Co., which is developing a drug for cholesterol, Denner said recently, “over time, I would say that it’s best that the company either partner or be part of a larger pharmaceutical company.”

He declined to comment further on what plans he may have for Ironwood.

Representatives for the company declined to comment beyond Monday’s statement. The company said shareholders aren’t required to take any actions now, and it hasn’t yet announced the date of its annual shareholder meeting.

By Meg Tirrell

Source: CNBC

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