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NEW YORK (Reuters) -Alkermes beat back activist investor Sarissa Capital Management’s boardroom challenge on Thursday when shareholders re-elected all of the biotechnology company’s directors in one of the year’s most closely watched votes.
Sarissa, one of Alkermes (NASDAQ:ALKS)’ biggest investors with an 8.5% stake, criticized how management is running the company and how the stock price is performing, and urged investors to elect its three candidates to speed up profitability and replace the CEO, who has been at the helm since 1991.
But investors stuck by the company, which is valued at $5.4 billion, and returned all directors to their seats on the 11-member board.
The stock price was down 2% at $32.02 with the broader market largely flat.
“This outcome is a reflection of our strong performance and robust corporate governance practices,” Nancy Wysenski, the company’s lead independent director said in a statement.
Shareholders broadly ignored the recommendation of influential proxy advisory firm Institutional Shareholder Services (ISS) which had urged them to elect one of Sarissa’s candidates, Dr. Sarah Schlesinger who has public company board experience.
Glass Lewis, ISS’s smaller rival, recommended shareholders back all Alkermes directors.
Alkermes had previously refreshed the board with new directors several times in recent years and has had success in developing and bringing new drugs to market. But it also saw costs climb with selling, general and administrative expenses spending as a percent of sales trending higher than rivals.
For Sarissa, which first invested in Alkermes in 2019, this was the third time it ran or threatened to run a proxy contest at the company.
As the fight dragged on, it was complicated when Alex Denner, a prominent biotech investor and seasoned board director, quit his seat at Biogen (NASDAQ:BIIB) earlier this month, possibly to remove obstacles to being elected to the Alkermes board.
Biogen shareholders this week elected Denner’s romantic partner, Susan Langer, to fill his seat on the Biogen board after the board had nominated her.
Both ISS and Glass Lewis referenced the Biogen matter in their recommendations on how to vote at Alkermes.
Glass Lewis wrote the developments at Biogen “represent, at a minimum, poor optics.” ISS wrote that shareholders would be best served by electing a direct shareholder representative and that Denner would have been preferable but added this was “no longer a tenable solution” and recommended only for Schlesinger.
A representative for Sarissa did not have an immediate comment.
