- Alexion finance chief Paul Clancy will step down from running the rare disease biotech's books, the company unexpectedly announced Tuesday, setting in motion a succession plan that will promote current head of business development Aradhana Sarin to chief financial officer.
- Clancy, who joined Alexion in June 2017 after serving as Biogen's CFO for a decade, was part of an executive team brought in to refocus the company after a damaging stretch in which senior management was blamed for improperly pressuring staff to meet sales targets.
- The departure took Wall Street analysts by surprise and Clancy does not appear to be retiring from industry, according to Stifel's Paul Matteis. Per a regulatory filing, the CFO informed Alexion Tuesday he will not renew his three-year employment agreement when it expires next year. While Clancy will step down as CFO following Alexion's third quarter results, he will serve as a "senior advisor" through mid-2020.
Alexion is losing an executive credited with helping the company rebuild trust with investors, and analysts aren't sure why. That's spurring some trepidation and led Alexion shares to open Wednesday trading down by more than 4%.
While Clancy was Alexion's CFO for just two years, the executive oversaw notable improvements in the company's operating margins, cash position and annual revenue growth. (Although not the value of Alexion's stock, which is worth about as much as when Clancy joined.)
"He has contributed materially to the rehabilitation of Alexion's reputation, and in no small measure ensured that the company’s stock became investable again after the difficulties of 2016," wrote SVB Leerink analyst Geoffrey Porges in a Sept. 18 note to clients.
Those difficulties led to expulsion of Alexion's former CEO and CFO and an admission that a corrosive "tone at the top" led to material weaknesses in the company's financial governance. Coming from Biogen, Clancy brought credibility and extensive experience running a large biotech's finances.
"By comparison, Dr. Sarin is largely an unknown quantity, reportedly a capable individual, but one with no C-suite experience, no significant public exposure to investors, and a reputation for active advocacy for transactions," Porges added.
Under Clancy, Alexion bought rare disease drugmakers Wilson Therapeutics and Syntimmune, while inking collaborations with several others — activity the company described as "unprecedented in our history" in a recent proxy filing.
Alexion's business development under Paul Clancy, Aradhana Sarin
|Company acquired or partner||Date||Price|
|Wilson Therapeutics (acquired)||April 2018||$855 million|
|Complement Pharma (partner)||June 2018||€14 million in milestones, option to acquire|
|Syntimmune (acquired)||September 2018||$400 million upfront, up to $800 million in milestones|
|Dicerna Pharmaceuticals (partner)||October 2018||$37 million upfront, up to $600 million in milestones|
|Caelum Biosciences (partner)||January 2019||Up to $500 million in equity investment and milestones, plus option to acquire|
|Affibody (partner)||March 2019||$25 million upfront, up to $625 million in milestones|
|Zealand Pharma (partner)||March 2019||$40 million upfront, up to $610 million in milestones|
SOURCE: Company statements
All deals were relatively small, contrasting with Alexion's ill-fated $8.4 billion buy of Synageva in 2015. Kanuma (sebelipase alfa), the drug acquired in that deal, never became a major contributor to Alexion sales, while other experimental candidates failed to pan out in development.
While business development under Clancy expanded Alexion's pipeline, the company remains reliant on its top-selling drug Soliris (eculizumab), an immunosuppresive drug that treats two rare diseases. It's one of the most expensive drugs in the world, and sales from January to June reached nearly $2 billion.
Soliris is also responsible for much of the scrutiny that's periodically fallen on Alexion.
Prior to Clancy's arrival, an internal investigation found senior management pressured staff to encourage customers order Soliris before they typically would — a practice the company labeled "inappropriate business conduct." A subsequent Bloomberg investigation put a spotlight on the company's aggressive marketing tactics.
CEO Ludwig Hantson, together with Clancy and a new executive team, were successful in calming the storm around Alexion (although the company's prices remain controversial). And the company recently won approval of a successor drug, called Ultomiris (ravulizumab), that's critical to growth moving forward, especially if Soliris sales slip.
Sarin, who will become CFO after the company reports third-quarter results, will be tasked with helping Hantson prepare Alexion for a post-Soliris future.
Clancy, meanwhile, will serve as a senior advisor through the middle of 2020, after which Leerink's Porges expects he'll take a position or board seat at another company in the industry.