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NEW YORK (Reuters) – Proxy advisory firm Institutional Investor Services urged Alkermes (NASDAQ:ALKS) shareholders to elect one of three director candidates proposed by activist hedge fund Sarissa Capital, arguing more outside pressure on management is needed right now.
ISS said Sarah Schlesinger, a physician with experience serving on public company boards, should be elected to Alkermes’ 11-member board at next week’s annual meeting. She should replace board member Richard Gaynor, a physician who serves as president of BioNTech US, the report said.
“A dissident nominee is needed on the board to add urgency and pressure on management to change,” ISS wrote in the report, adding “shareholders’ interests would be best served by adding a direct shareholder representative to the board.”
ISS however did not back Sarissa’s two other nominees, including the hedge fund’s co-founder Alex Denner.
Alkermes said Schlesinger, who has been nominated by Denner to sit on other boards, is not independent of the hedge fund.
ISS praised Alkermes, valued at $5.3 billion, for having refreshed its board with new directors several times over the last years and for its success in developing and bringing new drugs to market. But it criticized the company’s costs, saying SG&A spending as a percent of sales has been higher than rivals and has been growing.
Sarissa, which owns 8.45% of Alkermes, has challenged the company before. In 2021, the hedge fund and Alkermes reached an agreement to add a new director. Last year Sarissa dropped a board challenge, and this year it nominated three candidates.
This year’s campaign is drawing outsized attention because of Denner’s moves. Last week, he abruptly stepped down from the Biogen (NASDAQ:BIIB) board, possibly to avoid a conflict of interest between the two companies which have a commercial relationship.
But ISS wrote it recommended against Denner because a conflict still exists after Biogen recommended his seat be filled by Susan Langer, who has been identified by Biogen as Denner’s romantic partner.
