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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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In the Pipeline

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June 3, 2009

Will The Gentleman With the Pitchfork Please Speak Up?

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Posted by Derek

A few blocks from where I'm sitting, Biogen is having its shareholders meeting today. And since Carl Icahn is still trying very hard to gain leverage in the company's board, it seems to be turning into quite a spectacle over there. (More details).

They're supposed to reconvene at 2 PM for more voting. But from the sound of it, people are adjourning to go out and buy machetes and tire irons. We'll how things come out. . .

Comments (8) + TrackBacks (0) | Category: Business and Markets | Current Events


1. Hap on June 3, 2009 11:29 AM writes...

I didn't think Icahn needed a pitchfork - I thought the horns and red eyes made his identity clear enough.

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2. NH_chem on June 3, 2009 12:49 PM writes...

Once has to wonder what kind of effect this has on the motivation of those at Biogen. I would bet that the scientists are working hard but it is hard not to worry about one's future with all this Icahn crap going on around you.

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3. Sili on June 3, 2009 1:12 PM writes...

So you're saying that his product isn't shittier than it can still be pitched by hand rather than bulldozer? That's as good as a vote of confidence.

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4. HellicalZz on June 3, 2009 1:39 PM writes...

Executives of all public firms, not just biotechs, need to understand that public funds are not blank checks but ownership rights. Employees need to appreciate this as well. Carl Icahn is an unpleasant but I would argue necessary reminder that shareholders expect value and returns in exchange for their funds.

I would never argue that he has long term interests at heart, or that he is the embodiment of shareholder activism (lets face it, he's in it to maximize his own returns in short order). Still, the threat of activism via the Ichans of the world is important to the function of public markets.


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5. bringchange on June 4, 2009 7:35 AM writes...

Ichan's statement "the place is run like a country club" is bang on! A statement true of the entire industry, and one of the major reasons for it's lack of success. The elitist, "collegial" mindset by which pharma and biotech companies have been run in the past is ridiculous. The vast majority of scientists are useless, unproductive, and lazy. They make far too big a deal about the fact that they know a few things that the general public doesn' know. The truth is that intelligent, ambitious people don't even go into science. This is the reason so many are out on the street with their thumb up their a## right now

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6. processchemist on June 4, 2009 8:01 AM writes...

"The truth is that intelligent, ambitious people don't even go into science"

The truth is that none ef the existing drugs came out from outside the scientific community.
Ops, I'm feeding a troll...

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7. Hap on June 4, 2009 9:22 AM writes...

The point of stock is to support an idea in return for part-ownership. The idea of keeping the owners honest in how they follow through (and preventing them from taking your money and lounging on the beach) is sound, but the model has shifted to "we don't want to/can't afford to wait for you to follow through on your idea to cash out". If stockholder gain comes at the expense of the company and its idea, sorry, the shareholders lose. If you want quick income, there's lots of people with the "CEO income from home signs" on roadsides on the way to work I'm sure would be willing to help you out.

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8. srp on June 5, 2009 6:11 PM writes...


No. By saying that the investor has to wait some period of time before exercising control, you are proposing a different sort of security from common stock. Such securities can be built (I suppose convertible bonds with a minimum time until conversion would work) and certainly there exist capital structures with voting and non-voting classes of stock. But that isn't what Biogen promised to its investors--it sold them common stock with normal voting rights.

The deeper question is why public firms' capital structure is typically dominated by common stock. I suspect it is because "wait[ing] for you to follow through on your idea" turns out to be a value-destroying policy compared to letting investors use interim information to impose course corrections. Anecdotally, some firms that have used restricted voting rights to protect the "long-run stewardship" of founding families have run into severe trouble--Wang Corporation and the New York Times come to mind.

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