Alkermes hands a board seat to Alex Denner's Sarissa after facing renewed proxy pressure to 'refresh' directors
It’s been several months since Alkermes chief Richard Pops won over activists at Elliott Advisors with a grand plan to shake up the company. Now, facing new pressure from Alex Denner at Sarissa Capital, the CEO is making good on his promise to “refresh” the board of directors.
Following “constructive dialogue” with Sarissa — which owns a 5% stake in Alkermes — the company said on Friday that it’s allowing the activist fund to tap a new director to the board. It’s the latest move in a board refreshment program Alkermes initiated two years ago, which has since seen the appointment of four independent members.
“Alkermes has attractive and underappreciated assets that can drive meaningful value creation,” Denner said in a statement. “We look forward to working with the Board to focus on optimal capital allocation and operational excellence and to create shareholder value.”
$ALKS stock was up 1.03% early Monday morning, pricing in at $22 apiece.
Alkermes has recently experienced a series of setbacks, including a complete response letter in November for their top prospect, the anti-psychotic combo drug ALKS-3831. The company resubmitted its NDA in January and was handed a June 1 action date.
In December, Pops laid out a commitment to push the company’s net income to 30% by 2024, while bringing its top programs to market and auctioning off “non-core assets.” The plans pleased activists at Elliott, which announced it was “confident that the Company is committed to creating shareholder value.”
Mizuho’s Vamil Divan said Alkermes’ Friday announcement doesn’t change much but highlights the pressure on Pops to deliver for shareholders.
“We were impressed by Alkermes’ performance in 1Q21 and continue to see multiple areas of upside for ALKS shares, including nemvaleukin, Lybalvi, and Vumerity,” Divan wrote in a note. “The activist involvement in the story is not fundamental to our bullish view, but should provide some support and likely a floor to the stock.”
Two of Alkermes’ long-standing board members are set to retire this year, according to Divan, one of whom will be replaced by a member nominated by Sarissa, and another of whom will be replaced through Alkermes’ talks with Elliott.
Denner — the Carl Icahn protégé known for forcing out old CEOs and forcing through new buyouts — was recently behind an activist attack at Ironwood Pharmaceuticals, which ultimately got him a seat on the board. Ironwood successfully kept Denner off the board for two years before finally caving in November.
“We value the opinions and input of Sarissa Capital and our other shareholders in identifying qualifications for new directors to help advance our business strategy to create shareholder value,” Pops said in a statement.