By Toni Clarke
BOSTON (Reuters) - Billionaire investor Carl Icahn said on Thursday he is seeking approval from shareholders of ImClone Systems Inc. to remove six directors from its board, including the chairman and the interim chief executive, and bring in one of his own nominees.
Icahn, who holds a 13.85 percent stake in ImClone, and three of his associates were elected to the 12-person board earlier this month, and Icahn promptly called for the New York-based biotechnology company's chairman, David Kies, to resign. Kies refused and the board reelected him chairman.
Despite the rebuff, Icahn has turned up the pressure and Kies on Thursday fired back.
"Despite our best efforts to avoid this kind of distraction by giving Mr. Icahn disproportionate representation on the board, he has chosen to proceed with this attempt to take control of the company," Kies said.
He added that it would be "a significant mistake to dismiss half of the directors elected by shareholders less than ten days ago" and urged shareholders to take no action until they receive further information from the company regarding Icahn's proposals.
Nevertheless CAM North America, which holds an 11 percent stake in ImClone, came out in support of Icahn on Thursday.
In a U.S. regulatory filing, CAM North America said it sent a letter on behalf of itself and certain affiliated advisors to Kies to communicate its support for Icahn's proposed actions.
"It's an ugly battle within the board. That's not helpful to ImClone's stability in the marketplace," said Cowen & Co. analyst Eric Schmidt.
Separately, the company announced that its finance chief, Michael Howerton, has resigned and would be replaced by Ana Stancic, who had been ImClone's chief accounting officer.
ImClone said in a statement that Howerton's departure was "not a reflection on the financial condition of the company or any issues related to financial controls."
The reelection of Kies came after ImClone ostensibly invited Icahn and several of his associates onto the board to help stabilize a company that faces almost immediate fierce competition to its sole product, the cancer drug Erbitux.
On Wednesday, the U.S. Food and Drug Administration approved a rival cancer drug from Amgen Inc. called Vectibix. Amgen is expected to price its drug at a 20 percent discount to Erbitux, which is marketed by Bristol-Myers Squibb Co.
"This management team has been a revolving door and today we see the CFO resigning -- the fourth senior executive to leave in the past 12 months," Cowen's Schmidt said. "I think if they had a stable organization they'd have a better chance" to compete with Amgen.
Each of Icahn's proposals is contingent on the other. That is, he won't seek to remove the six board members unless shareholders agree to approve the Icahn nominee, Dr. Peter Liebert, chief of pediatric surgery at the Stamford Hospital in Stamford, Connecticut.
Liebert is also director of Cadus Corporation , a drug discovery company controlled by Icahn.
Icahn urged shareholders to vote for the proposal by signing a consent solicitation. A consent solicitation allows stockholders to act by written consents to proposed stockholder actions in lieu of voting in person or by proxy at an annual meeting.
"We believe the current board as constituted and the current management team are not pursuing the most effective plan to protect and enhance your investment in ImClone," Icahn said in a document filed with regulators.
Among the six board members Icahn is seeking to remove are Kies and Joseph Fischer, the interim chief executive officer.
ImClone's shares fell 24 cents to close at $28.51 on Nasdaq.
(Additional reporting by Karey Wutkowski, John Poirier, Bill Berkrot and Ransdell Pierson)
