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In his rush to save Genzyme (Nasdaq: GENZ ) from its train wreck, Carl Icahn may be stuck in the station.
The activist billionaire investor has nominated four people, including himself, to sit on Genzyme's board. Considering the year that Genzyme has had, including a recent announcement that the Food and Drug Administration wants a consent decree, it seemed Icahn had the upper hand in the proxy fight.
There's just one problem. Two of Icahn's nominees also sit on Biogen Idec's (Nasdaq: BIIB ) board, and the Securities and Exchange Commission frowns on directors sitting on competing boards. In fact, it's illegal when certain conditions are met. Biogen and Genzyme don't have as much overlap as, say, diabetes specialists Amylin Pharmaceuticals (Nasdaq: AMLN ) and Novo Nordisk (NYSE: NVO ) do, but they do have competing products -- Genzyme's Campath and Fludara and Biogen's Rituxan all treat blood cancers.
The threshold for competition is fairly low -- just 2% of sales at one company and 4% at the other. Google (Nasdaq: GOOG ) , Apple (Nasdaq: AAPL ) , and Amazon.com (Nasdaq: AMZN ) have recently played the board-room shuffle as the companies have expanded into one another's space.
It's unclear if Genzyme and Biogen meet the competition requirements because Genzyme doesn't break out revenue from Campath and Fludara. But even if they don't meet the definition of competitors now, that could change in the next few years. Genzyme is testing Campath in two phase 3 trials as a treatment for multiple sclerosis, which is in Biogen's wheelhouse because it sells both Avonex and Tysabri for MS.
It seems that Icahn's biggest obstacle may not be convincing shareholders that change is needed, but that two of his nominees are capable of helping with the turnaround without a conflict of interest.
Stay tuned, Fools. This proxy fight has a long ways to go before it reaches its final destination.