SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ¨ Filed by a Party other than the Registrant x
Check the appropriate box:
| ¨ | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ¨ | Definitive Proxy Statement |
| x | Definitive Additional Materials |
| ¨ | Soliciting Material Pursuant to §240.14a-12 |
Biogen Idec Inc.
(Name of Registrant as Specified In Its Charter)
Carl C. Icahn
Alexander J. Denner
Richard C. Mulligan
Thomas F. Deuel
David Sidransky
Mayu Sris
Eric Ende
Jeffrey Meckler
Icahn Partners LP
Icahn Partners Master Fund LP
Icahn Partners Master Fund II LP
Icahn Partners Master Fund III LP
High River Limited Partnership
Barberry Corp.
Hopper Investments LLC
Icahn Offshore LP
Icahn Onshore LP
Icahn Capital LP
IPH GP LLC
Icahn Enterprises Holdings L.P.
Icahn Enterprises G.P. Inc.
Beckton Corp.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
| x | No fee required. |
| ¨ | Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11. |
| 1) | Title of each class of securities to which transaction applies: |
| 2) | Aggregate number of securities to which transaction applies: |
| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) | Proposed maximum aggregate value of transaction: |
| 5) | Total fee paid: |
| ¨ | Fee paid previously with preliminary materials. |
| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) | Amount Previously Paid: |
| 2) | Form, Schedule or Registration Statement No.: |
| 3) | Filing Party: |
| 4) | Date Filed: |
On May 19, 2009, the Participants (as defined below), distributed a presentation to stockholders of Biogen Idec Inc. The presentation is attached hereto as Exhibit I and is incorporated herein by reference. In addition, on May 19, 2009, the Participants distributed a memorandum to stockholders of Biogen Idec Inc. The memorandum is attached hereto as Exhibit II and is incorporated herein by reference.
ON MAY 15, 2009, THE PARTICIPANTS FILED A DEFINITIVE PROXY STATEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION. SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY CARL C. ICAHN, ALEXANDER J. DENNER, RICHARD C. MULLIGAN, THOMAS F. DEUEL, DAVID SIDRANSKY, MAYU SRIS, ERIC ENDE, JEFFREY MECKLER, ICAHN PARTNERS LP, ICAHN PARTNERS MASTER FUND LP, ICAHN PARTNERS MASTER FUND II LP, ICAHN PARTNERS MASTER FUND III LP, HIGH RIVER LIMITED PARTNERSHIP, BARBERRY CORP. , HOPPER INVESTMENTS LLC, ICAHN OFFSHORE LP, ICAHN ONSHORE LP, ICAHN CAPITAL LP, IPH GP LLC, ICAHN ENTERPRISES HOLDINGS L.P. , ICAHN ENTERPRISES G.P. INC., BECKTON CORP. (COLLECTIVELY, THE “PARTICIPANTS”) AND CERTAIN OF THEIR RESPECTIVE AFFILIATES FROM THE STOCKHOLDERS OF BIOGEN IDEC INC. FOR USE AT ITS ANNUAL MEETING, BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION. THE DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY ARE AVAILABLE TO STOCKHOLDERS OF BIOGEN IDEC INC. FROM THE PARTICIPANTS AT NO CHARGE AND ARE ALSO AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION’S WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING D.F. KING & CO., INC. BY TELEPHONE TOLL FREE AT 1 (800) 769-4414.
| Biogen Idec Investor Presentation May 2009 EXHIBIT I |
| 2 Special note regarding presentation • This presentation includes information based on data found in filings with the SEC,
independent industry publications and other sources. Although we
believe that the data is reliable, we do not guarantee the accuracy or
completeness of this information and have not independently verified any such information. We have not sought, nor have we received, permission from any
third-party to include their information in this presentation.
• Many of the statements in this presentation reflect our subjective belief.
Although we have reviewed and analyzed the information that has informed our
opinions, we do not guarantee the accuracy of any such beliefs. • Sections of this presentation refer to the experience of our nominees for director at
Biogen Idec Inc. during their tenure as directors of ImClone Systems
Inc. We believe their experience at ImClone was a success and resulted
in an increase in shareholder value that benefited all shareholders. However, their success at ImClone is not necessarily indicative of future results at Biogen Idec if our nominees were to be elected to the Biogen Idec Board of Directors. • All stockholders of Biogen Idec are advised to read the definitive proxy statement, the
gold proxy card and other documents related to the solicitation of proxies
by the Participants from the stockholders of the Company for use at the 2009
annual meeting of stockholders of the Company because they contain important
information. The definitive proxy statement and form of proxy along with other relevant documents, are available at no charge on the SEC’s website at
http://www.sec.gov or by contacting D.F. King & Co., Inc. by telephone
toll free at 1-800-769-4414 or by visiting their website at http://www.dfking.com/BIIB. In addition, the Participants will provide copies of
the definitive proxy statement without charge upon request.
|
 3 Agenda • Situation Overview - Strategic failures - Operational failures - Business development failures - Research & development failures • Our Qualifications & Proposals - Biographies of our nominees - ImClone Systems case study - Proposals for Biogen Idec |
 4 We strongly believe Biogen Idec needs better management • Biogen Idec has a collection of valuable assets - AVONEX for relapsing multiple sclerosis and TYSABRI for MS and Crohn’s disease,
$2.8B of 2008 sales - RITUXAN for B-cell non-Hodgkin’s lymphoma and rheumatoid arthritis, $1.1B
of 2008 sales - Promising pipeline (BG-12, Lixivaptan, ADENTRI, etc.) and biologics manufacturing
facilities • Board and management have failed to achieve the full potential of Biogen Idec - Biogen – IDEC merger has not created much value - Management has failed shareholders strategically and operationally - Weak business development and research & development efforts inhibit company’s
prospects • Quality of board and management especially crucial today - R&D organization needs to be reinvigorated; Strategic review of pipeline needs to be
conducted - Cost structure needs to be examined and partner relations need to be revitalized
- Product sales growth likely to slow - Board needs to evaluate possibility of separating assets in order to enhance value
- Management not aligned with shareholder interests • Electing our directors could maximize shareholder value - Our slate will press hard for management accountability and will provide experienced oversight - Our nominees’ experience with ImClone Systems useful to Biogen Idec - Specifically, we recharged partner relations, optimized the cost structure and rebuilt the pipeline Better management of Biogen Idec assets will enhance value for all shareholders |
 5 We believe leadership has failed on many dimensions Strategic • Biogen – IDEC merger has not created much value • Announced merger synergies never materialized • Management turnover makes consistent strategy and execution difficult Operational • Avonex lost US market leadership • Failed to manage Avonex product lifecycle • AMEVIVE never lived up to management’s stated projections • TYSABRI goals also overly aggressive • Five year stock performance has trailed peer group Business Development • Is Biogen Idec defending its MS franchise? • Is it defending the oncology franchise? • Management has signed only a few licensing deals over last five years Research & Development • Research and development productivity worst in peer group • Lack of R&D focus apparent when comparing employee base with peers • Pipeline has failed to show meaningful progress • Biogen Idec has launched no new drugs since 2004 • Pipeline lacks strategic focus • PEGYlation is hardly a breakthrough |
 6 Biogen and IDEC supposedly merged to accelerate growth & create shareholder value Source: Company documents Key products Pipeline Therapeutic focus 2002 financials Year founded Employees Biogen, Inc. • Avonex for relapsing MS • Amevive for chronic plaque psoriasis • Anti-inflammatory products in Amevive and Antegren (now Tysabri) • 6 product candidates in human trials • Focus on neurology and dermatology • Growing expertise in oncology • Revenues of $1,148M • Net income of $242M • 1978 • 2,700 people worldwide IDEC Pharmaceuticals • Rituxan for non-Hodgkin’s lymphoma • Zevalin for non-Hodgkin’s lymphoma • Rituxan for new indications • 4 product candidates in human trials • Focus on oncology and rheumatology • Growing expertise in autoimmune and inflammatory diseases • Revenues of $404M • Net income of $148M • 1985 • 1,000 people worldwide Headquarters • Cambridge, MA • San Diego, CA Strategy Operational Bus. Dev. R&D “Bringing our companies together
accelerates both companies' strategic plans and creates a biotechnology leader with the products, pipeline, infrastructure
and financial resources to grow faster and create sustainable shareholder
value beyond what either company could achieve separately.” James Mullen, Chairman and CEO of
Biogen |
 7 However, merger has failed to create much value Note: Current price from April 2009; Change in equity value is growth from Q4 2003 to
April 2009 Source: Bloomberg; Company documents Biogen - IDEC merger closed Nov. 2003 Strategy Operational Bus. Dev. R&D Change in equity value Q4 2003 equity value Genentech Gilead Sciences Celgene Biogen Idec $101B $43B $18B $15B 0 25 50 75 100 Current equity value ($M) |
 8 Announced merger synergies never materialized Note: 2003 operating expenses based on first nine months of 2003 annualized (pre-merger); $75M target synergies based on $300M cumulative target for 2004-2007 Source: Company documents Expenses exceeded target by $276M Strategy Operational Bus. Dev. R&D IDEC Biogen Biogen Idec Biogen Idec 2003 Target synergies 2004 Target 2004 Actual $1,065M -$75M $990M $1,266M 0 500 1,000 $1,500M Biogen Idec operating expenses ($M) 2004 2005 2006 2007 $276M $402M $413M $711M 0 200 400 600 $800M Biogen Idec operating expenses in excess of target ($M) |
 9 Management turnover makes consistent strategy and execution difficult Note: Bold & shading denotes turnover since 2003 Source: Company documents Position / Department • Chairman • CEO • CFO • COO • Research & development Officer in 2003 • William Rastetter • James Mullen • Peter Kellogg • William Rohn • Nabil Hanna (Research) • Burt Adelman (Development) Officer Today • Bruce Ross • James Mullen • Paul Clancy • Robert Hamm • Cecil Pickett Lack of management continuity helps contribute to lack of consistent strategy Strategy Operational Bus. Dev. R&D |
 10 We believe leadership has failed on many dimensions Strategic • Biogen – IDEC merger has not created much value • Announced merger synergies never materialized • Management turnover makes consistent strategy and execution difficult Operational • Avonex lost US market leadership • Failed to manage Avonex product lifecycle • AMEVIVE never lived up to management’s stated projections • TYSABRI goals also overly aggressive • Five year stock performance has trailed peer group Business Development • Is Biogen Idec defending its MS franchise? • Is it defending the oncology franchise? • Management has signed only a few licensing deals over last five years Research & Development • Research and development productivity worst in peer group • Lack of R&D focus apparent when comparing employee base with peers • Pipeline has failed to show meaningful progress • Biogen Idec has launched no new drugs since 2004 • Pipeline lacks strategic focus • PEGYlation is hardly a breakthrough Strategy Operational Bus. Dev. R&D |
 11 AVONEX lost US market leadership to COPAXONE, others also grew market share Note: Data for US; Market share based on number of prescriptions Source: Deutsche Bank AVONEX lost 14% market share and ceded US market leadership to COPAXONE Strategy Operational Bus. Dev. R&D AVONEX BETASERON COPAXONE REBIF 0 10 20 30 40 50% MS Rx market share % Apr-05 42% 14% 29% 15% Mar-09 28% 15% 37% 20% Change % -14% 1% 8% 5% |
 12 Biogen Idec has failed to manage Avonex product lifecycle Source: FDA; Company documents ? Strategy Operational Bus. Dev. R&D MedImmune Genentech Genentech Roche Amgen Amgen Biogen Idec 2 4 6 10 11 12 0 5 10 15 20 Years until Second Generation launch Second Generation First Generation Synagis Respigam TNKase Activase Nutropin Depot Nutropin Mircera NeoRecormon Neulasta Neupogen Aranesp Epogen/Procrit PEG-IFNB Avonex |
 13 AMEVIVE never lived up to management’s stated projections Source: North Carolina Biotechnology Center, Feb. 2003; Company documents After failing to achieve April 2003 projections, management sold AMEVIVE for $60M in March 2006 Strategy Operational Bus. Dev. R&D 2003 2006 $85M $40M $500M $12M 0 100 200 300 400 $500M AMEVIVE sales ($M) April 2003 Projections Actual |
 14 TYSABRI goals also overly aggressive Source: Reuters, Feb. 2009; Company documents In Sep. 2007, management expected 100K patients on TYSABRI by 2010 year-end; In Feb. 2009, management said it would be “difficult” to achieve the original 100K projection Strategy Operational Bus. Dev. R&D Actual Sep. 2007 Projections 2009 2010 37K 100K 0 20 40 60 80 100K TYSABRI patients (K) |
 15 Five year stock performance has trailed peer group Note: BTK represents AMEX Biotechnology Index Source: Bloomberg; Company documents Biogen Idec has underperformed peers Strategy Operational Bus. Dev. R&D Genentech Gilead Sciences Celgene Biogen Idec BTK Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 0 100 200 300 400 500 Stock performance Change % 61% 205% 177% -24% 10% |
 16 We believe leadership has failed on many dimensions Strategic • Biogen – IDEC merger has not created much value • Announced merger synergies never materialized • Management turnover makes consistent strategy and execution difficult Operational • Avonex lost US market leadership • Failed to manage Avonex product lifecycle • AMEVIVE never lived up to management’s stated projections • TYSABRI goals also overly aggressive • Five year stock performance has trailed peer group Business Development • Is Biogen Idec defending its MS franchise? • Is it defending the oncology franchise? • Management has signed only a few licensing deals over last five years Research & Development • Research and development productivity worst in peer group • Lack of R&D focus apparent when comparing employee base with peers • Pipeline has failed to show meaningful progress • Biogen Idec has launched no new drugs since 2004 • Pipeline lacks strategic focus • PEGYlation is hardly a breakthrough Strategy Operational Bus. Dev. R&D |
 17 Business development vital to future prospects •Companies must defend and strengthen franchises within core therapeutic areas •It seems Biogen Idec has done very little to defend or strengthen its oncology and MS franchises - Competitors active in both therapeutic areas •Lack of business development limits future growth prospects Strategy Operational Bus. Dev. R&D |
 18 Is Biogen Idec defending its MS franchise? Source: InVivo Deals database •Biogen Idec has not participated in any of the approximately dozen multiple sclerosis business development opportunities over the last year •Competitor MS deals in 2008 included: Acquirer Merck Serono Novartis Merck Serono Teva Eli Lilly Counterparty Apitope Technology Peptimmune Bionomics AGM Antisense Therapeutics BioMS Medical Strategy Operational Bus. Dev. R&D |
 19 Is it defending the oncology franchise? Source: InVivo Deals database •Biogen Idec has executed only one of the approximately 150 cancer business development opportunities over the last year •Competitor oncology deals in 2008 included: Acquirer Bristol Myers Roche Pfizer Merck Sanofi Aventis Counterparty Exelixis ThromboGenics Aureon Laboratories Celera Dyax Corp. Strategy Operational Bus. Dev. R&D |
 20 Management has completed only five product in- licensing deals in five years Source: Company documents Date • August 2005 • October 2006 • July 2007 • October 2008 • September 2006 Partner • Protein Design Labs • UCB • CardioKine • Genentech • mondoBiotech Product • fontolizumab • daclizumab • volociximab • CDP323 • lixivaptan • GA101 • aviptadil Consideration • $40M upfront • $100M investment in Protein Design Labs stock • $30M upfront • $50M upfront • $31M upfront • $13M upfront Only five product licensing deals over last five years Strategy Operational Bus. Dev. R&D |
 21 We believe leadership has failed on many dimensions Strategic • Biogen – IDEC merger has not created much value • Announced merger synergies never materialized • Management turnover makes consistent strategy and execution difficult Operational • Avonex lost US market leadership • Failed to manage Avonex product lifecycle • AMEVIVE never lived up to management’s stated projections • TYSABRI goals also overly aggressive • Five year stock performance has trailed peer group Business Development • Is Biogen Idec defending its MS franchise? • Is it defending the oncology franchise? • Management has signed only a few licensing deals over last five years Research & Development • Research and development productivity worst in peer group • Lack of R&D focus apparent when comparing employee base with peers • Pipeline has failed to show meaningful progress • Biogen Idec has launched no new drugs since 2004 • Pipeline lacks strategic focus • PEGYlation is hardly a breakthrough Strategy Operational Bus. Dev. R&D |
 22 Biogen Idec research and development productivity worst in peer group Note: 5 and 10 year charts represent cumulative gross profits and R&D spending
Source: Company documents Strategy Operational Bus. Dev. R&D Gilead Sciences Genen- tech Amgen Genzyme Biogen Idec 5.9X 4.1X 4.0X 3.6X 3.2X 3.0 4.0 5.0 6.0X 5 year gross profit / 5 year R&D Gilead Sciences Genen- tech Amgen Genzyme Biogen Idec 5.0X 3.9X 3.9X 3.5X 3.1X 3.0 4.0 5.0 6.0X 10 year gross profit / 10 year R&D |
 23 Lack of R&D focus apparent when comparing employee base with peers Note: Employees as of December 2008; Genentech estimate based on estimated retention costs Source: Company documents; Industry estimates Strategy Operational Bus. Dev. R&D Other employees R&D employees Celgene Genentech Amgen Gilead Sciences Biogen Idec 2,441 11,186 16,900 3,441 4,700 0 20 40 60 80 100% Employees R&D % of total 55% 51% 46% 40% 16% |
 24 Failure to advance pipeline Note: Bold & shading denotes no apparent progress since 2006 Source: Company documents Compound BG-12 Galiximab Lumiliximab Ocrelizumab Lixivaptan ADENTRI BIIB014 Daclizumab CDP323 Ocrelizumab Volociximab HSP90 GA101 Aviptadil Therapeutic Area • Relapsing MS • Relapsed NHL • Relapsed CLL • RA • Hypnoatremia • CHF • Parkinson’s • MS • MS • MS • NSCLC • Oncology • NHL • PAH 2006 • Phase 3 • Phase 3 • Phase 2/3 • Phase 2 • Phase 2 • Phase 2 • Phase 2 • Phase 2 • Phase 1 • Phase 2 • Phase 2 • Phase 1 • Phase 1 • Phase 2 Today • Phase 3 • Phase 3 • Phase 2/3 • Phase 3 • Phase 3 • Phase 3 • Phase 2 • Phase 2 • Phase 2 • Phase 2 • Phase 2 • Phase 2 • Phase 2 • Phase 2 Pipeline has made little progress Strategy Operational Bus. Dev. R&D |
 25 Biogen Idec is the only major biotech company with no new drugs since 2004 Source: FDA Strategy Operational Bus. Dev. R&D Genzyme Amgen Gilead Genentech Celgene Biogen Idec 3 2 2 1 1 0 0 1 2 3 Drug launches since 2004 Drugs Mozobil Renvela Myozyme Vectibix Nplate Letairis Atripla Lucentis Revlimid |
 26 During that same period, 23 new oncology drugs have been launched Source: CenterWatch Strategy Operational Bus. Dev. R&D 2004 2005 2006 2007 2008 2009 YTD 6 2 4 6 4 1 0 1 2 3 4 5 6 Oncology drug launches Drug Alimta Avastin Clolar Erbitux Sensipar Tarceva Arranon Nexavar Gardasil Sprycel Sutent Vectibix Evista Hycamtin Ixempra Tasigna Torisel Tykerb Degarelix Mozobil Sancuso Treanda Afinitor |
 27 Pipeline seems to lack strategic focus Source: Company documents Autoimmune / Inflammation Cardiovascular Hemophilia Antiviral Neurosciences Oncology Biogen Idec Genentech Gilead Sciences Celgene Strategy Operational Bus. Dev. R&D |
 28 PEGylation is hardly a breakthrough Note: Enzon launched Adagen in 1990 Source: FDA • PEGylation was a mature, established technology in the 1990’s; Adagen approved in
1990 • 19 years after launch of first PEGylated protein, Biogen Idec still has not launched
PEG-IFNB ? Strategy Operational Bus. Dev. R&D Enzon Johnson & Johnson Schering Plough Roche Amgen Biogen Idec 4 5 11 12 12 0 5 10 15 20 25 Years since launch of first PEGylated Protein Drug Oncaspar Doxil PegIntron Pegasys Neulasta PEG-IFNB |
 29 CEO Mullen paid well Note: Equity compensation = stock + option grants as valued in relevant proxy Source: Company documents Other Equity Bonus Salary 2004 2005 2006 2007 2008 $15.2M $16.2M $12.3M $9.0M $10.1M 0 5 10 15 $20M CEO compensation ($M) Year end stock price $66.61 $45.28 $49.19 $56.92 $47.63 |
 30 James Mullen sold ~$85M of stock since merger at average price of ~$59 per share Source: Company documents * Represents stock sales by James Mullen 0 20 40 60 80 Biogen Idec stock price ($) 0 10 20 30 40 $50M Proceeds ($M) |
| 31 Are board and management aligned with you? •In our opinion, management ran a flawed auction process last year - Board severely limited due diligence opportunities - Refused to allow bidders access to Elan until bidders submitted a firm and binding offer - At least one bidder was denied its request to speak with Elan which may have caused that bidder to walk away from the process - Board minutes that Biogen provided to us under court order last year show what we consider to be a poorly designed process that lacked active Board oversight •Same management and Board that ran the 2007 sales process continue to run the company today. How would they treat a bidder in 2009? Is shareholder value a priority for this Board?
|
 32 Who is most aligned with your interests? Source: Company documents Icahn Parties Board & management Class 3 directors up for election 16,075,256 778,198 14,700 0 5,000,000 10,000,000 15,000,000 20,000,000 Biogen Idec shares owned |
 33 Agenda • Situation Overview - Strategic failures - Operational failures - Business development failures - Research & development failures • Our Qualifications & Proposals - Biographies of our nominees - ImClone Systems case study - Proposals for Biogen Idec |
 34 Our nominees helped deliver results at ImClone Name • Alex Denner • Thomas Deuel • Richard Mulligan • David Sidransky Education • M.S., M.Phil., Ph.D. from Yale University • S.B. from Massachusetts Institute of Technology • M.D. from Columbia University • A.B. from Princeton University • Ph.D. from Department of Biochemistry at Stanford University School of Medicine • B.S. from Massachusetts Institute of Technology • M.D. from Baylor College of Medicine • B.A. from Brandeis University Relevant experience • Managing Director, Icahn Partners • Director, Adventrx Pharmaceuticals • Former Portfolio Manager, Viking Global Investors • Former Portfolio Manager, Morgan Stanley • Former Director and Chairman of Executive Committee, ImClone Systems • Professor of Molecular and Experimental Medicine and Cell Biology, Scripps Research Institute • Professor Emeritus, Harvard Medical School • Former Director, Division of Growth Regulation at Beth Israel Hospital • Former Professor of Medicine and Biochemistry and Head of Oncology Services, Washington University School of Medicine • Former Director, ImClone Systems • Mallinckrodt Professor of Genetics, Harvard Medical School • Director of Harvard Gene Therapy Initiative • Former Professor of Molecular Biology, Massachusetts Institute of Technology • Founder, Somatix Therapy Corporation • Member of Scientific Advisory Board, Cell Genesys • Former Director and Member of Executive Committee, ImClone Systems • Director of Head and Neck Cancer Research Division, Johns Hopkins University School of Medicine • Chairman, Champions Biotechnology • Former Member of Scientific Advisory Board for MedImmune, Telik, Roche and Amgen • Former Director, ImClone Systems |
 35 ImClone shares dramatically outperformed during new executive committee tenure Note: Executive committee of Alex Denner and Richard Mulligan formed Oct. 2006; ImClone
Systems sold to Eli Lilly in Nov. 2008 Source: Bloomberg Oct-06 Nov-08 $31.00 $70.00 0 20 40 60 $80 ImClone Systems share price ($) Change % 126% Oct-06 Nov-08 $44.94 $40.64 0 20 40 60 $80 Biogen Idec share price ($) Change % -10% |
 36 Long term focus to build ImClone shareholder value Note: Graph represents month-end stock and index prices Source: Bloomberg Alex Denner becomes chairman of executive committee ImClone receives and rejects takeover bid ImClone acquired by Eli Lilly for $70 per share July 31, 2008 ImClone receives $60 offer from Bristol-Myers Squibb Bristol-Myers Squibb & ImClone expand ERBITUX development Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 0 20 40 60 $80 ImClone stock price ($) 0 500 1,000 1,500 2,000 S&P 500 Index |
| 37 New executive committee enhanced value at ImClone • New executive committee, including Alex Denner and Richard Mulligan, formed in October 2006 • Embarked on a comprehensive review of the company’s operations which led to
the following courses of action: - Recharged partner relations - Optimized cost structure - Rebuilt product pipeline - Changed culture - Settled litigation |
| 38 Recharged ImClone partner relations and optimized cost structure Note: CRO’s = Contract Research Organizations • Recharged partner relations - Partnership with Bristol-Myers Squibb had deteriorated due to prior management
neglect - Initiated dialogue and led negotiations, ultimately leading to new agreement with
Bristol- Myers Squibb that expanded Erbitux’s development with no
change to ImClone economics - From 2005 to 2007, ERBITUX sales grew by 41% annually and ImClone royalty revenue
grew by 37% annually • Optimized cost structure - ImClone cost structure had not been appropriate for company needs - Executive committee reallocated costs, shifting SG&A spending by expanding sales force for tactical reasons while reducing overhead costs - Margin expansion and capex reduction led to substantial free cash flow growth
- Increased spending on R&D and salesforce was funded through savings on corporate
costs (re-negotiating with CROs, transportation costs, smarter purchasing, etc.) |
 39 Rebuilt pipeline, changed culture and settled litigation • Rebuilt product pipeline - Industry had poor perception of ImClone pipeline and research and development
efforts - Executive committee conducted top-down review of pipeline Significantly increased investments in particularly promising candidates such as
1121B, A12, 11F8 and others Cancelled programs where the return on investment was poor - Pipeline cited as major strategic rationale for whole company acquisition • Changed culture - ImClone morale poor due to lack of strategic direction from prior management - Took steps to institute a new culture Emphasis on cash flow Investment in R&D Gave responsibility to scientists and clinicians • Settled litigation - Settled litigation including Yeda, Abbott and Repligen |
 40 From 2005 to 2007, ImClone royalty revenue grew by 37% annually Note: 2005 most recent full year prior to formation of new executive committee; 2007
most recent full year available; Collab. reimb. represents collaborative
agreement reimbursements; Manuf. represents manufacturing revenues Source: UBS, January 2008; UBS, April 2008; Company documents EU USA 2005 2007 $678M $1,348M 0 500 1,000 $1,500M WW ERBITUX sales ($M) 05-07 CAGR 29% 57% 41% Collab. reimb. Manuf. License fees & milestones Royalties 2005 2007 $383M $591M 0 200 400 $600M ImClone revenue ($M) 05-07 CAGR 37% 3% 39% 5% 24% |
 41 Tighter cost controls contributed to higher free cash flow Note: 2005 most recent full year prior to formation of new executive committee; 2007
most recent full year available; EBIT excludes one-time charges; FCF represents free cash flow; Capex represents capital expenditures; FCF = EBITDA - Capex Source: Company documents EBIT COGS Royalties SG&A Research & development 2005 2007 100% 100% 0 20 40 60 80 100% ImClone % of revenue EBIT margin % 23% 27% 2005 FCF EBITDA growth Capex reduction 2007 FCF $16M $93M $74M $183M 0 50 100 150 $200M ImClone FCF ($M) |
 42 Increased R&D investment to improve pipeline and future competitive position Note: 2005 most recent full year prior to formation of new executive committee; 2007
most recent full year available Source: Company documents 2005 2007 $145M $194M 0 50 100 150 $200M ImClone R&D spend ($M) R&D % of sales 38% 33% 05-07 CAGR 16% Other Pancreatic Non-small cell lung Head & neck Colorectal 2005 2007 34 44 0 10 20 30 40 50 ImClone product candidates |
 43 Increased R&D investment improved pipeline Phase 1 Phase 2 Phase 3 1121b: 2005 status 2008 status A12: 2005 status 2008 status 11F8: 2005 status 2008 status 18F1: Pre-clinical 2008 status UCB: 2005 status Exited |
 44 We believe ImClone and Biogen Idec situations analogous Partner relations Cost structure Product pipeline Strategic direction Litigation ImClone Systems • Relationships with Bristol Myers Squibb were strained • Renegotiated agreement with BMS, leading to increased support and sales • Cost structure was not appropriate for company needs • Reallocated costs, led to margin expansion and free cash flow growth • Pipeline poorly regarded by industry • Conducted review and increased investments in certain candidates • Pipeline key rationale for acquisition • Strategic direction lacking and morale poor as a result • Installed new leadership and established clear strategic priorities • Settled litigation including Yeda, Abbott, and Repligen Biogen Idec • Relationships with Genentech, Roche and Elan could be improved • Excluding Rituxan, operating margins below peers • Pipeline has not advanced significantly over last five years • Poor product lifecycle management • Strategic direction unclear as focus diffused over too many therapeutic areas • Adverse Genentech arbitration settlement is valuation overhang Electing our directors with directly relevant experience could help Biogen Idec |
| 45 We have several proposals •Board should study potential splitting of Biogen Idec into neurology-focused and cancer-focused companies •Examine cost structure •Prioritize, improve focus, and re-invigorate R&D efforts •Improve partner relationships |
 46 Board should evaluate whether separating assets will enhance value • NF Co. had $2,926M of 2008 sales • NF Co. assets include the following: - Key products include AVONEX and TYSABRI - Related pipeline such as BG-12, Lixivaptan, ADENTRI and other neurology and cardiovascular product candidates - Biologics manufacturing plants in North Carolina, Massachusetts and Denmark - Majority of existing research & development infrastructure and sales force - Collaboration with Elan on TYSABRI • NF Co. will benefit from improved focus on core neurology competency Neurology-Focused Company • CF Co. had $1,172M of 2008 sales • CF Co. assets include the following: - Key products include RITUXAN and FUMADERM - Related pipeline such as galiximab, lumiliximab, ocrelizumab and other oncology and autoimmune product candidates - Collaboration with Genentech in the US, Zenyaku and Chugai in Japan and Roche in the rest of the world • CF Co. will benefit from improved focus on core oncology competency Cancer-Focused Company Separating Biogen assets could enhance shareholder value as management focus should improve |
 47 Separated assets have different growth profiles Source: Goldman Sachs, March 2009; Company documents CF Co. NF Co. 2004 2005 2006 2007 2008 2009E 2010E $2,212M $2,423M $2,683M $3,172M $4,098M $4,402M $4,451M 0 1,000 2,000 3,000 4,000 $5,000M Biogen Idec revenue ($M) |
 48 Separated assets viable as standalone companies Amgen Genentech Gilead Sciences Genzyme NF Co. Celgene CF Co. $15.0B $13.4B $5.3B $4.6B $2.9B $2.3B $1.2B 0 5 10 $15B 2008 revenue ($B) Equity value ($B) $51B $101B $43B $16B ? $18B ? |
 49 Overhead spending can be reduced Note: Peer group includes Genentech, Amgen, Gilead Sciences and Celgene Source: Company documents • In 2008, Biogen Idec spent 23% of sales on selling, general and administrative expenses - Median biotech company = 21% - Best in class company = 15% • Reducing overhead spending will improve cash flows - Applying median SG&A % of sales generates $46M of cost savings - Applying best in class SG&A % of sales generates $309M of cost savings Overhead assumptions Biogen Idec Median Best in class 23% 21% 15% 0 5 10 15 20 25 30% 2008 SG&A % of sales (%) |
| 50 We would push hard to reinvigorate R&D and improve productivity •Identify most promising products •Focus investment in key therapeutic areas •Rationalize pipeline products not part of overall strategy
|
 51 Electing our directors could help maximize shareholder value •Board and management have failed to achieve the full potential of Biogen Idec •Quality of board and management especially crucial today •Electing our directors could help maximize shareholder value Better management of Biogen Idec assets will enhance value for all shareholders |
| 52 We have shown that management has failed shareholders strategically and operationally, resulting in a company not well positioned for future challenges! |
EXHIBIT II
ICAHN CAPITAL LP
We believe Biogen Idec is a company with valuable assets that has failed to achieve its full potential. The company faces several challenges including an R&D organization that needs reinvigoration, a key product that has ceded market leadership and market share, and a cost structure that needs examination. Biogen Idec’s ability to successfully address these and other challenges would improve from the fresh perspective of our experienced and qualified director nominees who helped create substantial value at ImClone Systems.
We believe leadership has failed on many fronts:
| • | The Biogen – IDEC merger created little equity value – slide 7 |
| • | Avonex has lost US multiple sclerosis market leadership – slide 11 |
| • | Biogen Idec has failed to manage the Avonex product lifecycle – slide 12 |
| • | TYSABRI is not achieving management’s goals – slide 14 |
| • | Five year stock performance has trailed peer group – slide 15 |
| • | In the past five years, there have been few in-licensing deals – slide 20 |
| • | Research and development productivity worst in the peer group – slide 22 |
| • | Product pipeline has failed to show meaningful progress – slide 24 |
| • | Biogen Idec has launched no new drugs since 2004 – slide 25 |
Our proposals include:
| • | Board should study potential splitting of Biogen Idec into neurology-focused and cancer-focused companies |
| • | Examine cost structure and improve partner relationships |
| • | Prioritize, improve focus and reinvigorate R&D efforts |
Our experienced director nominees successfully helped effect change at ImClone Systems which resulted in substantial value creation. We believe the ImClone and Biogen Idec situations are analogous and drawing upon our nominees’ ImClone experience will benefit all Biogen Idec stockholders. Specifically, at ImClone, the board (including all four of our director nominees) recharged partner relations, optimized the cost structure, rebuilt the product pipeline, settled litigation, and improved the culture.
In summary, we believe current Biogen Idec leadership has failed to achieve the company’s full potential. The quality of board and management are especially crucial today. Electing our qualified and experienced directors could help maximize stockholder value.
ON MAY 15, 2009, THE PARTICIPANTS FILED A DEFINITIVE PROXY STATEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION. SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY CARL C. ICAHN, ALEXANDER J. DENNER, RICHARD C. MULLIGAN, THOMAS F. DEUEL, DAVID SIDRANSKY, MAYU SRIS, ERIC ENDE, JEFFREY MECKLER, ICAHN PARTNERS LP, ICAHN PARTNERS MASTER FUND LP, ICAHN PARTNERS MASTER FUND II LP, ICAHN PARTNERS MASTER FUND III LP, HIGH RIVER LIMITED PARTNERSHIP, BARBERRY CORP. , HOPPER INVESTMENTS LLC, ICAHN OFFSHORE LP, ICAHN ONSHORE LP, ICAHN CAPITAL LP, IPH GP LLC, ICAHN ENTERPRISES HOLDINGS L.P. , ICAHN ENTERPRISES G.P. INC., BECKTON CORP. (COLLECTIVELY, THE “PARTICIPANTS”) AND CERTAIN OF THEIR RESPECTIVE AFFILIATES FROM THE STOCKHOLDERS OF BIOGEN IDEC INC. FOR USE AT ITS ANNUAL MEETING, BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION. THE DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY ARE AVAILABLE TO STOCKHOLDERS OF BIOGEN IDEC INC. FROM THE PARTICIPANTS AT NO CHARGE AND ARE ALSO AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION’S WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING D.F. KING & CO., INC. BY TELEPHONE TOLL FREE AT 1 (800) 769-4414.