Activist Investor Seek Four Board Seats at Amag Pharmaceuticals

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(Bloomberg) -- Shares in Amag Pharmaceuticals Inc. jumped after activist investor Caligan Partners said it planned to ask shareholders to replace four of the company’s directors, including Chairman Gino Santini.

Caligan owns about 10.3% of the pharmaceutical company, which is launching the female libido drug Vyleesi. The New York-based hedge fund has been pushing for changes at Amag Pharma, including calling for a strategic review, cost cuts and the international expansion of its Feraheme kidney drug, according to a statement Wednesday, confirming an earlier report by Bloomberg.

Shares in Amag Pharma rose 6.4% in trading Wednesday in New York to $11.96 at 9:36 a.m., giving the company a market valuation of $406 million.

“We believe urgent change is needed at AMAG to reverse the sharp share price decline caused by the company’s misguided strategic priorities,” David Johnson, co-founder and managing partner at Caligan, in the statement.

A representative for Amag Pharma, which is based in Waltham, Massachusetts, wasn’t immediately available for comment.

Caligan, which Johnson co-founded with former Carl Icahn associate Sam Merksamer, believes Amag Pharma is undervalued and its portfolio of assets could be worth at least $30 a share, according to a presentation posted on a website dedicated to Caligan’s campaign at the company. The investment firm argues that the company’s shares have tumbled despite almost $1.4 billion spent on non-Feraheme research and development since 2012, the presentation states.

Its shared had fallen 26% year to date through Tuesday’s close.

Caligan is calling for a strategic review of its businesses that could result in splitting up the company, selling rights to some products or exploring partnerships, including for its women’s health segment, according to people familiar with the matter. It also contends the company’s spending is out of line with its peers, the people said, asking not to be identified because the matter is not public.

Amag Pharma’s bylaws don’t allow shareholders to call a special meeting to vote for Caligan’s nominees. Instead, the hedge fund is seeking written consent from more than 50% of Amag Pharma shareholders to replace the four directors, the firm said.

Caligan’s nominees are: former Boehringer Ingelheim USA Corp. Chief Executive Officer Paul Fonteyne; Alexander Wang Inc.’s ex-CEO, Lisa Gersh; Caligan’s David Johnson; and Kenneth Shea, a Guggenheim Securities LLC senior adviser. The investment firm is putting forth Fonteyne as a potential candidate for chairman, the people said.

©2019 Bloomberg L.P.

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