- Citing "risky and ill-informed changes" that Caligan Partners wants to implement, Amag Pharmaceuticals has asked its investors to reject the hedge fund's bid to install four members on the company's board of directors.
- Caligan last week asked Amag investors to help it put four members on the board using a mechanism called a "consent solicitation" that can occur outside the normal process of annual shareholder meetings and board elections.
- Amag has just begun the commercial launch of its fifth product, Vyleesi, a pill for low sexual desire in women. Caligan contends Amag's current board has "overseen substantial value destruction." The company's shares fell to a 16-year low in June.
Caligan increased its Amag stake to 10.3% in August and began preparing for its bid to take four of the nine seats on the company's board earlier this month.
A letter sent to investors last week outlined its complaints against current management, specifically the pricey $683 million acquisition of Cord Blood Registries in 2015 and later sell-off for $530 million.
"Over the short, medium, and long term, the only corporate action AMAG’s incumbent Board has definitively accomplished is destroying shareholder value," the letter read.
Caligan is using "consent solicitation," a process by which activist investors can seek to make material changes to a corporation outside the normal setting of an annual shareholder meeting and election of directors. It requires that a majority of shares vote in favor of the change through a mail-in vote.
Today, Amag's board sent a letter to shareholders asking for support for a "consent revocation" filing, calling Caligan "self-serving and reckless." They pointed to execution of a five-year plan that has seen Amag diversify from the anemia drug Feraheme (ferumoxytol) and premature birth preventive Makena (hydroxyprogesterone caproate injection) into a six-product company.
"The AMAG board and management team acknowledge that these types of transformations can impact financial performance and share price in the short-term," the letter read. "However, this transformation supports the potential to generate significant and durable revenue growth, aligned with AMAG’s vision to identify new and better ways to help support patients and families along the path to health."
The company had a recent setback in its efforts to maintain current revenue. In March, a confirmatory trial failed to show that Makena effectively prevented preterm births. Sales of the injection have shrunk by more than two-thirds between 2018 and 2019, falling to $62 million for the first six months of this year.