Activist investor Ib Sonderby is fast becoming a major annoyance to Elan management--and a hero to angry shareholders. And judging from his website, he will continue to plague the Irish drugmaker.
In a profile, Reuters notes that Sonderby, has created a pulpit for irate investors who have seen their shares fall to $4.90 from $37 over the past two years and increasingly see him as David to Elan's Goliath. "I am totally behind what he is doing," says Larry Feinberg, who runs Oracle Investment Management and holds some 6 million Elan shares. "I've gone from being upset at the corporate governance situation at Elan to being completely outraged!"
Sonderby has recently decried the 25 percent salary increase granted to Elan CEO Kelly Martin (photo), as well as cut-rate sale price for U.S. rights to the pain drug Prialt, which went to Azur Pharma International for $14.6 million.
And in his latest missive, Sonderby discusses a recent disclosure from Amarin regarding a transaction that occurred between it and Elan in 2009. "I was unaware of either the transaction or the disclosure, and was therefore troubled to learn that this was yet another example of a conflict of interests at Elan," he writes. Amarin, it must be noted, also disclosed the transaction in July 2009 and not only last month.*
Last month, according to Sonderby, Amarin issued a filing that Elan had paid it $700,000 to regain control of a product that the latter had out-licensed for free.
However, "[t]hese events would simply reflect a series of poor decisions by Elan's management were it not for Amarin's insistence, in their recent disclosure, on highlighting that Elan's Chief Financial Officer, Shane Cooke, is the brother of Amarin's then Chief Operating Officer, Alan Cooke," he adds. He goes on to write that U.S. companies are required to report insider dealings and conflicts of interest at an officer or director level, especially where family members are involved. He then questions Elan's claims that it practices a high level of corporate governance and asks the company's board to help him understand the transaction. Amarin did disclose this relationship in its 2008 annual report.*
Elan rejects Sonderby's claims, as Reuters reports. "Mr. Sonderby has never shown any real interest in a dialogue with the company," the drugmaker says in a statement. "Unfortunately, at this point, he appears more invested in spreading misinformation than in actual investing."
* Editor's Note: Article was updated to include information on Amarin's filing and the relationship between the Cooke brothers.