Judge sided with Icahn that the board changed its outlook by refusing to engage BMS’ M&A attempt.

Activist shareholder Carl Icahn’s proxy war with the board of Amylin Pharmaceuticals received a boost yesterday when a Delaware judge fast-tracked a hearing on his lawsuit to replace the company’s directors. Delaware Chancery Court Judge John Noble scheduled for May 10 a hearing on delaying Amylin’s annual meeting, set to take place five days later.

In a 12-page opinion, Judge Noble said Icahn adequately alleged that the board “radically changed its outlook for the company” by refusing to engage Bristol-Myers Squibb (BMS). That opinion sided with Icahn’s argument in court papers that he would have proposed a slate of dissident shareholders in time for the annual meeting had he and other Amylin shareholders known that the board was altering its strategy.

Icahn, Amylin’s third-largest shareholder with 14.4 million shares—an 8.9% stake in the drug developer—sued the company after it refused to extend its deadline for nomination of board members to be considered at the annual meeting.

Icahn’s legal war with Amylin began after the company rejected a $3.5 billion, $22 per share takeover offer from BMS. Icahn has criticized the Amylin board for failing to disclose the BMS offer while agreeing to a public offering last month of 10% of company shares at $15.62 per share, with options for the company’s top executives that could be exercised at $16.02 per share.

“We continue to believe that Mr. Icahn’s lawsuit is without merit and will defend ourselves accordingly,” Amylin said Monday in a statement. “Amylin’s Board is fully aware of its fiduciary duties and is committed to always acting in the best interests of all stockholders.”

This is not Icahn’s first legal wrangle with Amylin over directors. In 2009, Icahn and hedge fund Eastbourne Capital Management placed two nominees they supported on the Amylin board: Alexander Denner, a former Icahn employee nominated by Icahn; and Kathleen Behrens, a former managing director of RS Investments nominated by Eastbourne.

More recently, Amylin has not commented on news reports that the company has begun reaching out to potential buyers. Citing unnamed sources, Reuters first reported that Amylin had hired Credit Suisse and Goldman Sachs as financial advisers, and the law firm Skadden Arps as its legal adviser.

If Amylin is indeed looking for a buyer, several biopharma giants would be interested, analysts have said. Tim Anderson, an analyst with Sanford C. Bernstein, told Bloomberg last month that AstraZeneca (AZ) may see Amylin as an appealing source of additional diabetes assets given AZ’s “subscale presence in diabetes” and need for “late-stage/approved assets to help fill in the gaps left open by a lagging pipeline and ongoing future patent expiries.”

AstraZeneca’s sole diabetes drug is among its top eight performers in sales: Onglyza™ generated $211 million in sales last year, of which $156 million (about 74%) came from the U.S., followed by $34 million (16%) from Western Europe. In March 2011, Onglyza became the first dipeptidyl peptidase IV (DPP-IV) inhibitor available for use in Europe in treating adults with type 2 diabetes who have moderate or severe renal impairment.

But in one recent setback, AstraZeneca in January received a Complete Response Letter from FDA for its submission for dapagliflozin, a drug for type 2 diabetes in adults being developed along with BMS. The drug fared better in Europe, where the EMA validated an MAA for dapagliflozin as a once-daily oral therapy for type 2 diabetes in adults.

AstraZeneca characterized its 2011 results as “mixed.” The company recorded a $435 million impairment charge following a pair of disappointments: The end of clinical trials after Phase II studies with olaparib (AZD2281) for ovarian cancer and the failure of two Phase III trials with TC-5214, a CNS disease collaboration with Targacept.

On the bright side, during 2011 AstraZeneca launched Caprelsa (vandetanib) for thyroid cancer in the U.S., received a positive opinion for the drug from the EU’s CHMP, and won FDA approval of Brilinta for acute coronary syndromes. The EU also approved Axanum for cardiovascular events, Komboglyze for diabetes, and influenza vaccine Fluenz, while both Nexium and Faslodex were launched in Japan.

Bloomberg has also quoted unnamed “people familiar with the matter” as saying both Merck & Co. and Japanese-owned Takeda Pharmaceutical were both carrying out due diligence on possible partnerships with Amylin.

To read the story from Bloomberg, click here.
To read the story from Reuters, click here.

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