Investors welcomed the upcoming departure of Biogen Idec Inc Chief Executive James Mullen, sending the company's shares higher in early trading on Tuesday.
The announcement of Mullen's retirement comes less than a month after the biotechnology company said he would step down, and just seven months after activist investor Carl Icahn succeeded in placing two members onto Biogen's board.
We're happy, said Scott Harrison, an analyst at Argent Capital, which has $850 million under management and owns 365,000 Biogen shares. There hasn't been a lot of confidence in Mullen's leadership, and this reminds folks that the moves made last year by Icahn are having some impact.
Icahn hasn't been the only one pushing for change at Biogen. In November, HealthCor Management LP, which owns about 3.65 million Biogen shares, slammed Mullen for selling more than $85 million of Biogen stock and collecting $63 million in compensation while doing little to enhance shareholder value.
Biogen's shares were up 1 percent at $54.18 on Tuesday morning, trading in the same range that they were in early 2004.
We anticipate that Mr. Mullen's successor will be more focused on improving Biogen's research and development productivity and efficiency, HealthCor said in a statement. Mullen is set to retire on June 8.
Speculation will now likely pick up as to whether the company is preparing to sell itself. Biogen has put itself on the market before, but found no buyers. Icahn accused the company of deliberately sabotaging the sale process.
Now that process could open up again.
You have the perfect story in terms of activist shareholders, a stock whose valuation is very attractive, and stock underperformance that has just made investors more eager for change, Harrison said. So whether it's an acquisition by another company or bringing in a new CEO from the outside, change will be good.
The changes at Biogen come as the company struggles to overcome concerns about the safety of its most important product, the multiple sclerosis drug Tysabri, which has been associated with a potentially deadly brain infection known as PML.
The drug was temporarily withdrawn from the market in 2005 but reintroduced in 2006 with stricter safety warnings.
(Reporting by Toni Clarke, editing by Dave Zimmerman)