Terrible optics: AstraZeneca shares take a hit following report that CEO Soriot is moving to Teva
You can insert this story in the WTF? file.
Wednesday afternoon Israel’s Calcalist reported that AstraZeneca CEO Pascal Soriot has agreed to take the CEO’s job at Teva, filling a role left open at a company that is in the middle of a major upheaval.
The Israeli financial news web site says that Soriot has personally signed off on the new job, accepting a $20 million bonus, according to a story from Reuters. And Haaretz followed up with its own confirmation that Soriot has agreed to take the Teva job, the second non-Israeli to take the position, though they are still discussing terms. The Haaretz report also included word of the $20 million bonus.
If true, Soriot would be leaving the pharma giant 5 years after he took over, and a long way from completing the turnaround that he vowed he would bring to AstraZeneca. In particular, the move would come as jitters continue to grow about AstraZeneca’s looming MYSTIC data, which have become a major catalyst for the company’s cancer group as they pursue a pivotal study focusing on a combination of durvalumab, the newly approved PD-L1 drug, and tremelimumab, a CTLA4 therapy.
Both Teva and AstraZeneca declined to comment to Reuters, saying they don’t respond to rumors. Investors, though, quickly weighed in, driving the pharma giant’s shares$AZN down more than 4% — carving billions off its market share — while boosting Teva $TEVA 2.5%.
The companies may want to make an exception on their no-comment rule. Soriot has been orchestrating AstraZeneca’s game plan for five long years, aimed at fulfilling a promise to almost double last year’s revenue. His departure now would be a tacit admission of failure, which will likely rock the company’s most loyal investors, many of whom questioned why Soriot would reject a buyout offer from Pfizer.
Seamus Fernandez at Leerink counts himself among the shocked. His comment:
Yesterday’s report from the Israeli daily business paper Calcalist that current AZN CEO Pascal Soriot may be leaving the company to head TEVA (NR) comes as a major surprise. We spoke with the company, who simply stated that it does not comment on rumors; however it did not outright deny the report. If true, the optics around his departure would be terrible ahead of the MYSTIC readout (Imfinzi [durvalumab; anti-PD-L1] + tremelimumab [anti-CTLA-4] in first-line (1L) non-small cell lung cancer [NSCLC]), which are expected any day now. While the news does not appear to be related to the MYSTIC outcome (as the company confirmed that if the blind were broken, the top-line results would have to be communicated almost immediately), his exit would leave AZN rudderless in the wake of several other recent departures.
Teva chairman Sol Barer has been looking for a new CEO, its fourth in the last 4 years, after the company found itself under the gun for a weak pipeline and shrinking generic drug sales. If Soriot, a Roche vet, takes over, he’ll find himself in much the same situation as he did in 2012, when he took over at AstraZeneca. For Soriot and Teva, it could be yet another shot at a do-over.
Teva gave the CEO’s job to Jeremy Levin in 2013, but he ultimately fell foul of the board and was forced out before he could restructure. Levin went on to found the biotech Ovid, which recently went public. Levin was replaced by Erez Vigodman, who was squeezed out earlier this year as the numbers came under pressure, leaving the company in search of a permanent replacement who could try once again to set things right.
Who would take over at AstraZeneca now is anyone’s guess. Big Pharma has seen more exits that entrances in the last few years, as top researchers and execs found new roles in biotech. Ironically Soriot reportedly just completed an angry showdown with Luke Miels, who left AstraZeneca to join GSK.