It seems the pharma industry has entered bizarro world — or least that is the case if a report from an Israeli news source turns out to be true.
According to an article last night on the Calcalist financial news website, current AstraZeneca CEO Pascal Soriot has accepted the top job at beleaguered Israeli drugmaker Teva Pharmaceuticals.
While neither AstraZeneca nor Teva would confirm the report to BioPharma Dive, the implications of the move are extreme, to say the least.
First off, the CEO job at Teva is essentially career kryptonite — Soriot would be the fifth CEO in as many years. And while many a strong character has tried to turn around the company, none have succeeded so far.
The saga began in 2012 when the company unexpectedly announced that Shlomo Yanai would be stepping down after only five years, to be replaced by Bristol-Myers Squibb alum Jeremy Levin. Under Yanai, the company’s revenues went from about $8 billion to $22 billion, largely due to some major acquisitions. But growth stalled and stock prices fell, pushing Yanai out.
Levin was touted as the right man to recharge the company as competition in the generics business got fiercer and prices continued to fall. He was also meant to tackle the looming problem of losing patent protection for Teva’s blockbuster multiple sclerosis drug Copaxone (glatiramer).
Levin was known for his role in diversifying the portfolio at Bristol-Myers Squibb and was expected to do the same for the branded portfolio at Teva.
But only a year later, Levin was out too, and it wasn’t quiet. Levin left the company in a huff amidst a very public and dramatic disagreement with the Israeli company’s board. Levin was criticized for the $2 billion cost-cutting plan and the loss of jobs in Teva’s home country.
After a year of floundering, Erez Vigodman took over — again praised as a turnaround specialist. More floundering. The $40 billion acquisition of the Actavis generics business sparked questions of whether Teva overpaid. Patent troubles. Debt pile-up. Negative growth. Needless to say, things did not get better. And Vigodman was out in February.
The company has since been run by Chairman of the Board Yitzhak Peterburg.
So why would the CEO of a seemingly successful big pharma take a job that no one in the industry wants?
Well the implication is that AstraZeneca isn’t as successful as Soriot has promised it would be. Ever since Pfizer tried —and failed — to take over the company, Soriot has been promising that the British pharma would hit $45 billion in revenues by 2023. This goal was always a long shot. But investors haven’t been so concerned with that — frankly, most of them don’t believe the big pharma was reaching with that goal anyway.
Soriot deserves credit for trying, though. AstraZeneca has been selling off "non-core assets" left and right in an effort to monetize older drugs while also getting some cash or royalty streams. It can be a smart move to bridge over patent losses, especially in a world where pharma companies are looking to narrow their therapeutic focus.
Investors do care very much, however, about the results of the company’s Phase 3 MYSTIC study.
The clinical trial is testing the company’s checkpoint inhibitor Imfinzi (durvalumab), both as a monotherapy and in combination with the CTLA4 inhibitor tremelimumab, in first-line non-small cell lung cancer. MYSTIC could make or break AstraZeneca.
It’s not often that one trial is this important to a big pharma, but AstraZeneca was a late-comer to the checkpoint inhibitor party and has been playing catch up with leaders in the space Merck & Co. and Bristol-Myers Squibb. First-line lung cancer is expected to be the largest market for these drugs and would give AstraZeneca the edge it needs to actually be a player in this market. Data is expected any day now.
Soriot is not expected to fair well if MYSTIC fails.
While reports suggest the payout for taking the Teva job would be significantly more than Soriot makes now, the Teva job is not a desirable one, and this could be a proactive move to save face ahead of a major trial blow-up.