Activists threaten to push for a sale of Alexion if execs can't jack up stock price
The stock price is climbing north for Alexion Pharmaceuticals $ALXN this morning following news that activist investors are pressuring the company to outline plans for growth. If Alexion doesn’t deliver, the board can expect to see a push for a major shakeup — including calls for a potential sale.
It’s Elliott Management, a New York City hedge fund with $34 billion under management, that’s putting the squeeze on Alexion. The activist group wants to see action, from offering more aggressive financial performance guidance to perhaps even selling the company outright. The order is to boost the share price by the end of the month, or it will begin a proxy fight for seats on the board.
First reported by The New York Times late Thursday, the news of the investor pressure comes from two people “with direct knowledge of the matter who were not authorized to speak publicly.”
Alexion is dangerously dependent on its blood disorder drug Soliris for future income, which has investors sweating. At $542,640 a year, Soliris remains one of the 10 most expensive therapies on the planet. But that doesn’t mean Alexion shouldn’t be diversifying. It also doesn’t help that the company’s $8.4 billion takeover of Synageva in 2015 hasn’t quite paid off. Alexion has written off much of the value of Synageva’s drug Kanuma.
Over the past year, Alexion has undergone a sea of change, punting the previous CEO and CFO in the wake of a sales scandal and bringing in a new regime. The new people in charge, including Alexion’s fresh CEO Ludwig Hantson, have decided to downsize R&D and reorganize the company’s pipeline. It also announced in September that it planned to cut 20% of its workforce and move the company from Connecticut to Boston.
Since the news about Elliott Mannagement’s demands broke, Alexion’s stock has climbed roughly 8 percent in pre-market trading, bringing the company’s market cap to $23.9 billion.