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ISS backs Sarissa Capital in proxy fight with Innoviva

Institutional Shareholder Services supports the election of all three of Sarissa Capital Management LP's nominees to the board of Innoviva Inc. at the company's annual general meeting scheduled for April 20.

The proxy firm recommended company stockholders vote in favor of George Bickerstaff III, Jules Haimovitz and Odysseas Kostas at the meeting, agreeing that the problems at the company are a "compelling case for change."

ISS' support comes on the heels of the same recommendation from Glass Lewis & Co.

The proxy firm does not believe the management's claim that its "exorbitant" expenditures are justified, stating that the management has not been able to provide evidence that company decisions regarding operational expenses have driven or will drive shareholder value.

ISS believes that stock price will not sustain improvement unless changes are made to Innoviva's board and management, adding that part of the problem stems from a lack of transparency, which makes it difficult for shareholders to understand management's strategy and has probably been a factor that negatively influenced investor perception.

The advisory firm also recommended that shareholders vote against Innoviva's executive compensation.

Responding to the proxy firms' recommendations, Innoviva said it believes ISS and Glass Lewis showed a "fundamental lack of understanding" of the company's business model and how its partnership with GlaxoSmithKline PLC would be at risk by Sarissa's proposal to replace its chairman, CEO and business strategy.

The company further stated that the proxy firms ignored the contribution of Innoviva's team and how those contributions have driven growth in revenues, reduction in expenses, and shareholder value.

Innoviva believes stockholders should support its board, with its "increasingly successful" strategic plan, over Sarissa's "unqualified" nominees who are advocating for "short-sighted, high-risk cost cutting that has failed before." It urged shareholders to vote for its director nominees.

Sarissa, which has been engaged in a proxy battle with the company, previously sought a reduction in the compensation of Innoviva's CEO and board.