Sarissa Condemns Poor Corporate Governance at Alkermes

Rhea-AI Summary

Sarissa Capital Management expresses serious concerns over the corporate governance of Alkermes (NASDAQ: ALKS), claiming the board is heavily influenced by CEO Richard Pops, who they allege has caused significant shareholder value destruction over 30 years. In a statement, Sarissa criticized the abrupt ending of discussions about director nominations and highlighted the board's neglect of shareholder interests. Despite Alkermes achieving over $1 billion in revenue from 2017-2021, the company consistently operated at a net loss while underperforming the IBB index by 130%.

Positive

• None.

Negative

• CEO Richard Pops has led Alkermes to significant shareholder value destruction over 30 years.
• The company has operated at a net loss despite generating over $1 billion in revenue from 2017-2021.
• Alkermes' share price has underperformed the IBB index by approximately 130% from 2016 to 2021.
• The board appears to lack genuine independence and has not engaged with one of its largest shareholders, Sarissa.

Alkermes governance among worst that Sarissa has seen

Alkermes’s board appears to be manipulated by CEO who has destroyed shareholder value for years

Independent directors appear to give nominating and governance only lip service

GREENWICH, Conn.--(BUSINESS WIRE)-- Sarissa Capital Management LP (“Sarissa”) today made the following statement regarding Alkermes plc (NASDAQ: ALKS):

Sarissa is disappointed that our discussions with Richard Pops, CEO of Alkermes, regarding the nominations of directors was abruptly ended by the company’s sudden announcement of its slate of nominees for the upcoming annual meeting. We were shocked that this occurred because no independent director has reached out or talked to us. This behavior represents some of the worst corporate governance that we have seen in our many years of advocacy for sound corporate governance and for companies to be run in the interests of shareholders.

Pops has presided over tremendous shareholder value destruction since becoming CEO of Alkermes over thirty years ago. Notably, in the last five years (2017-2021), despite growing revenues and having revenues over $1 billion, Alkermes has consistently operated at a net loss. During the same period, Alkermes has underperformed the IBB by approximately 130%¹.

Despite the company’s history of poor performance under Pops, the board in its oversight role appears not to take its independence and fiduciary duties seriously. Despite Sarissa being one of Alkermes’ largest shareholders and our history of shareholder value creation, the governance committee made no effort at all to speak with us or our candidates.

The independent directors' recommendation of a board slate for election should take into account the views of shareholders. Accordingly, governance committees generally feel they have a duty to understand why a shareholder wants to nominate directors and at least speak to those candidates.

At Sarissa, we have nominated directors to many companies, and we cannot think of any instance in which independent directors did not speak directly with us. We believe it is possible the entire process at Alkermes was controlled by Pops who manipulated the rest of the board members. Independent directors should run the nomination process and determine the board slate.

As Alkermes and shareholders are aware, we have a proven track record of creating shareholder value. We will not stand by to witness this offense on corporate governance, the egregious neglect of shareholder interests and Pops destroying further shareholder value.

¹ Estimated by subtracting the percentage change of Alkermes’ share price from the percentage change of IBB price from 12/30/16 to 12/30/21

View source version on businesswire.com: https://www.businesswire.com/news/home/20220527005250/en/

Michael Hoak

ir@sarissacap.com

Source: Sarissa Capital Management LP

FAQ

What are Sarissa Capital's concerns about Alkermes' governance?

Sarissa Capital is concerned that Alkermes' board is manipulated by CEO Richard Pops, which they believe undermines shareholder interests.

How has CEO Richard Pops affected Alkermes' shareholder value?

According to Sarissa, Richard Pops has presided over significant shareholder value destruction over his 30-year tenure.

What financial performance issues has Alkermes faced?

Alkermes has consistently reported net losses while generating over $1 billion in revenue from 2017 to 2021.

How does Alkermes' performance compare to the IBB index?

Alkermes has underperformed the IBB index by approximately 130% from the end of 2016 to the end of 2021.