UPDATE 2-HealthCor slams Biogen CEO for outsize pay package

* HealthCor criticizes Biogen CEO paycheck, stock sales

* Calls on company to initiate sustained buyback program

* Says company should cut R&D expenses

(Updates with company comment, share price)

By Toni Clarke

BOSTON, Nov 20 (Reuters) - Biogen Idec Inc (BIIB.O: 行情) shareholder HealthCor Management LP has slammed the biotech company's chief executive for selling more than $85 million of Biogen stock and collecting $63 million in compensation while doing little to enhance the value of the company.

In a letter to CEO James Mullen and the company's board, HealthCor criticized what it says is a disconnect between Mullen's compensation and Biogen's stock performance.

Shares of Biogen, which makes the multiple sclerosis drugs Avonex and Tysabri, are trading in the same range as they were in early 2004. During that time, HealthCor said Mullen has sold roughly half his eligible holdings in Biogen.

"James Mullen has made considerable personal profits while running Biogen Idec and has egregiously continued to sell down his personal holdings in the Company, while investors have been left holding the bag," HealthCor wrote in its letter.

Jennifer Neiman, a spokeswoman for Biogen, said Mullen's stock sales were part of a predetermined stock-selling program and his compensation reflects the fact that in 2008 Biogen exceeded its sales and earnings forecasts.

HealthCor's criticism comes as Biogen struggles to overcome concerns about the safety of its most important drug, Tysabri, which has been associated with a potentially deadly brain infection known as PML.

Biogen stopped publicly announcing new cases of PML at the end of July, raising questions about its disclosure policies. Earlier this month the company, with its partner Elan Corp Plc (ELN.I: 行情) of Ireland, amended the drug's prescribing information to reflect the risk of PML increasing with time.

The drug was temporarily withdrawn from the market in 2005 after being linked with PML. It was reintroduced in July 2006 with stricter safety warnings, but concerns continue to hold back sales.

HealthCor, which owns 3.65 million shares, or 1.3 percent of Biogen, said it has repeatedly called on the company to commit to return cash to shareholders through a long-term stock buyback program of $500 million to $1 billion a year. It said it believes a sustained share repurchase program would be a more accretive use of cash than any near-term acquisitions.

While Biogen recently announced an intended $1 billion share repurchase program, it would not commit to a specific timeframe or additional purchases after that, HealthCor said.

"We believe this "intention" is inadequate, representing further stalling on behalf of the Board and a continuation of the pattern of inaction we have seen over the past year," it said.

HealthCor also said Biogen has failed to maximize its earnings and cash generation potential by focusing too much of its resources on research and development, "an area where the company has had little recent success."

Neiman said Biogen is in fact reducing its R&D spending. On its latest quarterly earnings call it said it had curtailed late-stage clinical trial programs for lumiliximab, its experimental treatment for chronic lymphocytic leukemia, and galiximab, for follicular lymphoma, another blood cancer.

HealthCor is not the first shareholder to attack the company and its management. Earlier this year dissident shareholder Carl Icahn managed to place two directors on Biogen's board following a contentious proxy battle.

Icahn has also accused Cambridge, Massachusetts-based Biogen of sabotaging its own announced attempt to find a buyer.

Biogen's shares were up 55 cents, or 1.2 percent to $46.40 in afternoon trading on Nasdaq. (Reporting by Toni Clarke; editing by Gunna Dickson and Gerald E. McCormick)