After overhauling Amarin’s board earlier this year, activist investor Sarissa Capital has set its sights on Alkermes.
In a new letter to shareholders, the group is pressing Alkermes investors to vote for Sarissa’s board nominees and to vote against the company's planned compensation packages.
Sarissa owns more than $400 million in Alkermes stock and believes the company is “significantly undervalued and not run optimally,” the firm said in its letter. It’s attempted to discuss Alkermes' cost structure and corporate governance with management for "several years" and is now “trying hard” to avoid a proxy contest, the letter said.
“We have proposed excellent candidates and cannot understand why the company is prepared to spend such a tremendous amount of time and shareholder money to keep us off the board,” Sarissa wrote. “We will clearly add a shareholder perspective that currently does not exist in the boardroom.”
Sarissa believes Alkermes’ longtime CEO Richard Pops could be blocking its advances. Since Pops' appointment in 1991, Sarissa believes the CEO has overseen “tremendous shareholder value destruction” and has run the company at an “almost consistent” net loss. To Sarissa, that points to a “fundamental” problem with the company’s business model.
Alkermes agreed to let Sarissa appoint a new director to the board in 2021 after “constructive” talks between the two sides. But Sarissa says engagement with the company can’t be categorized as such. Last year, Alkermes rejected all of the investor group’s board nominees with no notice, according to Sarissa.
For its part, Alkermes says it has engaged “extensively” with Sarissa and believes that its nominees are “not additive to our current board,” the company said in an investor presentation.
Alkermes says that after its 2020 “board-led transformation,” in which it “refreshed” 70% of its board, the company has improved its operations significantly.
Under Alkermes' planned compensation packages (PDF) for 2022, Pops will collect more than $10 million for his leadership of the company last year. Chief Financial Officer Iain Brown will net $3.3 million in total compensation for 2022, while Chief Legal and Compliance Officer David Gaffin is set to earn $4.3 million. R&D chief Craig Hopkinson, M.D., is due to receive more than $4.5 million in 2022 pay, while Chief Operating Officer Blair Jackson will net $4.47 million.
Meanwhile, Sarissa recently came out a winner in its spat with Amarin, where shareholders voted to remove the chairman and add seven new members to the board. As the company’s top shareholder, Sarissa now retains control of the board after a public feud in which Amarin said the investor had “no new plans and no new ideas.”
For its part, Alkermes just days ago boosted its 2023 revenue forecast to a range of $1.55 billion to $1.68 billon. That came after the company won an arbitration battle with Johnson & Johnson over the licensing of Alkermes’ NanoCrystal technology used in several lucrative drugs.