Sarissa Urges Alkermes Shareholders to Vote the Universal Blue Card to Upgrade Alkermes for the Benefit of Shareholders - Seite 2

Generating over $1 billion in revenue for five years and operating at a loss for all five years indicates a fundamental problem with the business model. In addition to issues with poor governance, expense management and capital allocation, Alkermes is basically a patchwork of subscale businesses. The revenue potential of the commercial products is restrained by subscale and expensive efforts. The manufacturing business is undersized and, in addition to the mishaps and delays over the years, may very well be unprofitable. Research and development is inefficient and expensive with the company’s extended efforts in cancer not building on the company’s expertise in psychiatry. (Admitting the inefficiency of its endeavor into oncology, the company announced at the prodding of Sarissa and other investors its intention to spin the oncology business – a good first step but certainly too little, too late.) Expenses are exorbitant as a percent of revenue (~113% for the year ended 2022) and outsized relative to Alkermes’ peers even before accounting for the fact that roughly a third of revenue is typically derived from royalties that should fall directly to the bottom line.

Despite the consistent under-performance and destruction of shareholder value, Mr. Pops has continued to preside over the company with little accountability to shareholders. Richard Pops has been handsomely rewarded to destroy shareholder capital for over thirty years. Alkermes went public in 1991. Since the Nasdaq Biotechnology Index’s creation in 1993, Alkermes has underperformed the NBI by 1,602% (calculated by subtracting total return of NBI index from Alkermes total return from 11/01/1993 to 06/02/2023. Source: Bloomberg). In the last 15 years alone, Alkermes has underperformed the NBI by 314% and Richard Pops has been rewarded with over $150 million in compensation.

To compound our concern is the poor governance we have encountered at Alkermes for over two years as we have attempted to engage constructively with the company. For the most part, these interactions have been dominated by Richard Pops with little or no involvement of independent directors until very recently, contrary to good corporate governance. Last year the board unanimously rejected all of our director nominees without any notice to us and, more importantly, without any meeting or interactions with the Alkermes NomGov committee or any other independent directors. This lack of independent director engagement and the failure of the independent board members to fulfill their legal duties to preside over board composition matters is an example of the company’s poor corporate governance that vests far too much power and influence in a very long-tenured CEO and Chairman who has no interest in allowing Sarissa in the boardroom, despite Sarissa being one of Alkermes’ largest shareholders with a stellar track record of success.