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.


Im­age: Get­ty

 

 

George Yancopoulos (Regeneron)

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