Activist investor Elliott Management on Tuesday renewed its push for Alexion Pharmaceuticals to put itself up for sale, saying an “escalating series of missteps” — including its purchase of Achillion Pharmaceuticals earlier this year — have eroded investor confidence in the biotech giant.
The New York-based hedge fund said in a letter to Alexion board Chairman David R. Brennan that it was growing increasingly frustrated by the mismatch between the company’s “attractiveness and uniqueness” and its share price.
“Alexion is a great company, but it cannot reach its full potential as a listed, standalone company,” Elliott wrote in the letter, which it also released publicly. “Selling the company is the best and (at this point) the most viable pathway forward to solve its prolonged market issues.”
The letter Tuesday is the latest volley in what has become a public disagreement between Elliott and the New Haven-born biotech, which so far has resisted growing pressure from the hedge fund to actively explore a sale.
Elliott said it had been heeding Alexion CEO Ludwig Hantson’s request for more time to prove its strategy to turn things around. But it now believes the company’s “go-it-alone, trust us approach” is unlikely to change the market’s negative view of the company.
“We believe that this board is in urgent need of fresh perspectives and a new direction,” the investor said.
Elliott, one of the world’s largest activist funds, said it decided to go public with its concerns after the “harsh, negative market reaction” last week to Alexion’s deal to acquire California biotechnology company Portola Pharmaceuticals. Elliott said the announcement erased roughly $1.7 billion from the company’s market capitalization in a single day.
The Portola deal was one of several recent “missteps” Elliott criticized in the letter. It said investors also were skittish about the surprise departure of former Chief Financial Officer Paul Clancy in September and the company’s $930 million purchase of New Haven-born Achillion. That deal closed in January.
Elliott said that even if Achillion were a good strategic fit given its work on a complementary therapy to Alexion’s blockbuster Soliris, the “timing and communication” made it seem like a defensive move to eliminate competition.
In a statement late Tuesday morning, Alexion responded that it “maintains an active dialogue with shareholders and welcomes input and feedback as we execute on our transformation strategy.”
“We will review the letter issued by Elliott today in due course and expect to continue our constructive dialogue with all of our investors, including Elliott,” the statement said.
Elliott said there were many potential acquirers who would benefit from buying a company of Alexion’s “strength and profile.”
“Alexion provides a number of pharmaceutical companies with a unique value proposition, especially those instrumental in combating rare diseases,” Elliott said.
Read the full text of Elliott’s letter to Alexion here.
Natalie Missakian can be reached at news@newhavenbiz.com
