Ariad activists rabble for Berger's job and mount a proxy fight

Ariad Pharmaceuticals CEO Harvey Berger

Activist investor Alex Denner has made the rumors official: He wants Ariad Pharmaceuticals ($ARIA) CEO Harvey Berger out, and he's willing to mount a proxy fight to get his way.

In a filing with the SEC, Denner's Sarissa Capital said it had met with Ariad and strongly recommended "the board undertake measures to effect and facilitate the imminent retirement" of Berger. But the company refused to comply, and now Sarissa is nominating two candidates of its own to serve on Ariad's 8-member board, seeking to depose Berger, who also serves as chairman, and lead independent director Wayne Wilson in the company's coming elections. And Sarissa is reserving the right to make a third nomination before the Feb. 25 deadline.

Denner's group said it's "disturbed" by Berger's continued employment and by Ariad's decision to renew his contract in 2013, when safety issues forced its sole marketed drug off the market in a value-destroying debacle. Considering the "egregious terms" of terms of Berger's latest contract, Sarissa wants Ariad to disclose whatever backroom dealings might have led to the deal and "may ultimately initiate court proceedings to seek to remove one or more directors for cause based on potential breaches of their fiduciary duties," the firm wrote.

Sarissa Capital Management founder Alex Denner

Sarissa first took up a major stake in Ariad during that 2013 nadir, when Iclusig, which treats a form of chronic myeloid leukemia (CML), got banned from sale for a few months. The FDA eventually relented, paring back Iclusig's indication to cover only CML patients with the T315I mutation who had failed on other therapies and amending its label to include warnings about Iclusig's risk of blood clotting and heart failure. 

Berger, known for his bullishness and bluster on the company's behalf, has repeatedly said that Ariad is back on the path to growth. The biotech has since been scrambling to create value, selling off Iclusig's Asian rights to Japan's Otsuka in exchange for $77.5 million and flipping some R&D technology to Bellicum Pharmaceuticals ($BLCM) for $50 million. And Ariad's R&D operation is back at work on expanding Iclusig's indications, running midstage studies in stomach, lung, thyroid and blood cancers associated with certain gene mutations. AP26113, the company's other clinical asset, is in the midst of a Phase II study in non-small cell lung cancer patients.

Denner, who joined Ariad's board last year, was the head of healthcare for famed corporate raider Carl Icahn before he struck out on his own with Sarissa in 2011, and he has since found his way into spats with Otsuka and Vivus ($VVUS). Earlier this month, Sarissa took up a 5.8% stake in Aegerion Pharmaceuticals ($AEGR), another troubled biotech with an embattled CEO.

- read Sarissa's filing

Special Report: The 25 most influential people in biopharma 2012 - Alex Denner

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