Carl Icahn is a billionaire financier, activist, and investor.  Most think of Icahn as an activist investor that wants to get inside and drive value without having to acquire the whole company to resell it later.  This strategy works and works well, so long as the right strategies and efforts are applied properly to each stock.  The underlying sector a company is in is critical too, and for some reason Carl Icahn has been trying to do this in biotech stocks.  We took the biotech filings from both Mr. Icahn’s own holdings and from Icahn Capital LP to see what Mr. Icahn thinks he has up his sleeves.

CARL ICAHN direct holdings, via several investment vehicles:

Adventrx Pharmaceuticals Inc. (AMEX: ANX) down 80% from highs

• $467,000.00 for 864,865 shares

Biogen-Idec (NASDAQ: BIIB) down about 25% from highs 

• $153.4M for 2,487,181 shares

Enzon Pharmaceuticals (NASDAQ: ENZN) down only 16% from highs

• $5.6M for 614,420 shares

ImClone Systems (NASDAQ: IMCL) down 18% from highs

• $494.9M for 11,669,544 shares

Telik Inc. (NASDAQ: TELK) down over 50% from highs

• $2.536M for 1,039,165 shares

ICAHN CAPITAL LP direct holdings:

Adventrx Pharmaceuticals Inc. (AMEX: ANX) down 80% from highs

• $1.8M for 3,459,459 shares

Amicus Therapeutics, Inc. (NASDAQ: FOLD) down 45% from highs

• $2.16M for 201,940 shares

Amylin Pharmaceuticals Inc. (AMLN) down 40% from highs

• $185.1M for 6,339,653 shares

APPLERA (NYSE: ABI) down 10% from highs

• $21.3M for 649,026 shares

Biogen-Idec (NASDAQ: BIIB) down about 25% from highs 

• $613.7M for 9,948,723 shares

Enzon Pharmaceuticals (NASDAQ: ENZN) down only 16% from highs

• $22.6M for 2,457,683 shares

Regenron Pharmaceuticals (NASDAQ: REGN) down about 28% from highs

• $48.1M for 2,508,001 shares

Telik Inc. (NASDAQ: TELK) down over 50% from highs

• $10.1M for 4,156,663 shares

*** percentage down from highs means the 52-week highs, so many are off much more than all-time or historical highs.

It may not be fair to refer to all of these as broken, because many aren’t.  What is interesting here is that if you follow biotech stocks and if you know these companies, most of these have fallen from their former glory.

Here is the problem with biotech stocks: They almost HAVE to be public to live up to expectations, so they very rarely go private because of the need for capital.  The mere nature of putting molecules and modified products into your body has risks, and many companies cannot control what happens or how people their meds after a while.  Biotech companies cannot control the FDA and they cannot control independent verification or investigative studies.  No company can control whether or not a competitor comes out with a greater product.  Biotechs are different in that investors would rather see a biotech spend cash to acquire another biotech rather than engage in a share buyback or pay out a dividend.  When was the last time you heard a broker or an investor discuss the high dividend check they expect from their biotech?  Me neither…

Mr. Icahn has a great track record of influencing companies.  He made a fortune off the move in Time Warner.  Motorola has so far been a flop and Yahoo! is just getting started.  But he didn’t become a billionaire by throwing darts nor by investing in mutual funds. 

But there is a real discourse here from biotechs to other sectors, and it would just seem much easier for Mr. Icahn to get better returns elsewhere.  It might be easier backing high-risk and high-reward biotech ventures from scratch instead of trying to fix existing biotechs with problems.

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Jon C. Ogg
May 16, 2008

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