Rumor Alert: AstraZeneca PLC CEO to Become Teva's New Leader
July 13, 2017
By Alex Keown, BioSpace.com Breaking News Staff
LONDON – Shares of AstraZeneca plunged more than 4 percent in late-afternoon trading Wednesday after rumors began to fly that Chief Executive Officer Pascal Soriot was abandoning the company for the top spot at Israel-based Teva Pharmaceutical .
The rumors, first reported by Israel-based financial news group Calcalist, said Soriot had accepted the top spot at Teva—a company that has been without a CEO since earlier this year. In February, Teva CEO Erez Vigodman abruptly left his position after serving three years in that role. For his part, Soriot has been CEO of AstraZeneca for five years.
Neither Teva nor AstraZeneca has confirmed nor denied the deal. An AstraZeneca spokesperson told Reuters that the company does not “comment on rumor and speculation.”
If the report has merit, Soriot’s departure could be a signal of looming bad news for AstraZeneca—a company that Soriot pledged to turn around into a company with $45 billion in annual revenue by 2023. The company is awaiting results from its highly anticipated Mystic lung cancer trial. The Phase III lung cancer trial assesses progression free survival and overall survival endpoints in patients with PDL1-expressing tumors for both durvalumab monotherapy and the combination of durva + treme, as well as in ‘all comers’ for the combination of durva + treme, versus SoC chemotherapy. If the readouts are significantly positive, analysts have suggested the treatment could be worth an estimated $2.5 billion in annual revenue.
If those results are not positive, Soriot said earlier this year that poor results could trigger companies to begin looking at acquiring the company, much like Pfizer sought in 2014.
If Soriot does leave, that might not mean the Mystic trial failed. Leerik analyst Seamus Fernandez said in a note reported by Endpoints that if the blinded trial is broken, results would have to be communicated immediately. Fernandez did say, though, that a Soriot departure signaled terrible optics for the London-based company and would leave AstraZeneca “rudderless in the wake of several other recent departures.”
For Teva’s part, the company has also faced its share of struggles. Not only has it been operating without a CEO since February, the company is facing the loss of patent protection for tis top-branded drug, Copaxone, which is used to treat multiple sclerosis. The drug accounts for about 16 percent of Teva’s sales, but is facing a patent challenge from a generic drug developed by Novartis. Patents protecting the drug expired in 2015. The company was able to side-step some of the potential losses by changing dosing levels, but that is now being challenged by a generic version developed by Mylan.
In August 2016, the U.S. Patent and Trademark Office ruled that two patents on Teva’s MS drug Copaxone were unpatentable, which paves the way for other generic drugmakers. Additionally, the company has been embroiled in in legal action with Mexican drugmaker Rimsa and in December paid out $519 million to settle parallel civil and criminal charges that it allegedly violated the Foreign Corrupt Practices Act when it paid bribes to foreign government officials in Russia, Ukraine, and Mexico between 2002 and 2012.
If Soriot is tapped for the Teva CEO spot, it would represent a big change at the company that has made it a point to have Israelis helm the company.
Another change that Teva would have to make if Soriot is indeed the new CEO is executive compensation. When Vigodman left Teva, he was earning $5.7 million annually, which made him among the lowest-paid CEOs among companies that have a market value of at least $20 billion. In its report, Calcalist said Soriot was expected to earn about twice as much as Vigodman and was also expected to snag a signing bonus of about $20 million, according to Reuters.
Shares of Teva have been climbing since reports surfaced and are up about 2.5 percent to $32.90 in premarket trading. Shares of AstraZeneca fell from a Wednesday high of $34.11 to close at $32.92. In premarket trading, shares of AstraZeneca are down slightly from the closing price, trading at $32.78.