Alexion CEO, CFO make a sudden exit as internal fraud probe explodes into a crisis
What began a few weeks ago as a delay in its quarterly filing as the result of an internal investigation into a whistle-blower’s allegations on Soliris sales has erupted into an ugly public scandal today at Alexion $ALXN, with both the CEO and CFO out the door.
CEO David Hallal has resigned “for personal reasons,” the company said in a statement. And his departure is effective now. CFO Vikas Sinha is also out “to pursue other opportunities.”
But don’t expect analysts to accept any of that as an explanation. Smoke began to curl out of the executive suite at Alexion weeks ago when the company said it was launching an internal probe over unspecified accusations of fraud in the sale of Soliris, one of the world’s most expensive therapies. Alexion also delayed release of its third quarter numbers.
Alexion’s shares dropped 18% on the news Monday morning as investors turned skittish over the implications.
In the statement out this morning, Alexion said:
The previously announced Audit and Finance Committee investigation is nearing completion. At this point in time, the Audit and Finance Committee’s investigation has not identified any facts that require the Company to update its previously reported historical results. The Company continues to assess these matters from an accounting, disclosure and internal controls perspective, and expects to file the Form 10-Q for the period ended September 30, 2016 in January 2017 or earlier.
The outgoing execs are being replaced by David Brennan — the ex-AstraZeneca CEO who was booted out himself after failing to convince the board that he could turn the faltering pharma giant around quickly — who’s now interim CEO of Alexion. Former Honeywell CFO David J. Anderson is taking Sinha’s spot.
The news was unexpected, acknowledged Alexion Chairman Leonard Bell in a listen-only call this morning, adding that “I can appreciate that change can be difficult.” He went on to sell the company’s pipeline and commercial ops, without adding any clues as to what is actually happening at Alexion. Brennan says he was excited about temporarily stepping to the helm, with plans to work at the task full time as the company sought out a new CEO. The late third quarter 10Q will be ready in January, he added, with the 4th quarter numbers following in February.
Brennan will be paid at a rate of $6 million a year for the task, which comes with a $5,000 monthly housing allowance. And outgoing CEO Hallal gets $3.6 million paid out over two years, according to an 8-K.
With two high-level departures and a serious lack of information about what’s actually going on in the company, Alexion tried to reassure its investors that the fundamentals are all fine, pointing to its portfolio of marketed drugs. But in this environment, where uncertainty of any kind can trigger an instant rout, Alexion’s crisis mode has created a deep sense of unease on Wall Street.