Activist investor Sarissa targets three Innoviva board seats

(Reuters) - Sarissa Capital Management LP said on Monday it plans to nominate three directors to Innoviva Inc's INVA.O board and criticized the drug company's cost structure as the two sides square off in a proxy contest.

Innoviva said last week that Sarissa Capital had nominated four candidates to replace a majority of the drug company’s directors. Sarissa, founded by Carl Icahn protege Alex Denner, said on Monday that Innoviva’s press release was “preemptive” and that it does not seek control of the company’s seven-member board.

Sarissa owns 2.72 percent of Innoviva, according to Thomson Reuters data.

Innoviva, which had 14 employees as of Dec. 31, according to its annual report, is a $1.4 billion company with a partnership with Britain's GlaxoSmithKline Plc GSK.L. The companies submitted an application in November to market their new three-in-one inhaled lung drug for U.S. approval.

Sarissa said on Monday that Innoviva overpays its officers and directors because it only manages drug royalties and does not market or sell any products.

“We expect our nominees, if elected, will work to instill in Innoviva much needed financial discipline and oversight,” Sarissa said.

The hedge fund’s nominees are George Bickerstaff, an investment banker and former chief financial officer for Novartis Pharma AG; Jules Haimovitz, a consultant and former director at Ariad Pharmaceuticals Inc; and Odysseas Kostas, a Sarissa analyst and a director at Enzon Pharmaceuticals.

Additional reporting by Divya Grover in Bengaluru; Editing by Savio D’Souza and Paul Simao