Two former Pfizer executives announced late Wednesday night that they won’t support efforts by activist investor Starboard Value to shake up the giant drugmaker.
“We have decided not to be involved,” former Pfizer CEO Ian Read and former CFO Frank D’Amelio said in the statement issued by Guggenheim Securities, a longtime adviser to Pfizer on mergers and acquisitions. “We are fully supportive of Pfizer Chairman and CEO Albert Bourla, senior management and the board, and we are confident that over time they will deliver shareholder value.”
Starboard on Thursday alleged that Read and D’Amelio were coerced into issuing the statement. People within Pfizer or company representatives “purportedly threatened to commence costly litigation against them, claw back prior compensation, and cancel unvested performance stock units,” Starboard managing member Jeffrey Smith said in a letter to Pfizer’s board. Guggenheim didn’t immediately respond to a request for comment about the new allegations. Pfizer declined to comment.
The back-and-forth comes days after The Wall Street Journal reported Starboard had accumulated a $1 billion stake in Pfizer and planned to press for changes to revive flagging profitability at the drugmaker.
Starboard approached Read and D’Amelio and they offered to help. “Both Mr. Read and Mr. D’Amelio expressed concerns about the trajectory of the business,” Smith wrote Thursday. Financial Times reported that Read and D’Amelio had reached out to four current Pfizer directors to encourage them to listen to Starboard as well.
Pfizer is a ripe target for the activist investor after the company’s triumphant success in producing the first COVID-19 vaccine was undone by plummeting sales after the pandemic. The company’s shares are currently trading at about half the value they reached in late 2021, when Pfizer was raking in billions of dollars from the vaccine.
Starboard believes Pfizer spent far too much of the windfall from COVID-19 on acquisitions, Financial Times reported, citing unidentified people briefed on Starboard’s thinking. Starboard’s Smith said Thursday that Bourla has agreed to a meeting on Oct. 16 that may also include board members. The investor also asked for a special committee to investigate any potential coercion of Read and D’Amelio.
Starboard has engaged in a number of different battles over the years, including challenging Bristol Myers Squibb’s acquisition of Celgene in 2019. More recently, it’s asked shareholders to take on the Murdoch family by collapsing the dual-class share structure at News Corp. Starboard is also pushing for change at Match Group, the online dating company.
It’s not yet clear what Starboard wants from Pfizer. The drugmaker’s struggles go beyond falling COVID-19 vaccine sales. The company fell behind in the race to enter the hot new market for obesity drugs, recently had to pull a sickle cell disease drug from the market and gave up on a gene therapy for Duchenne muscular dystrophy after disappointing study results.
Meanwhile, like a lot of major pharmaceutical companies, Pfizer is facing the looming threat of key patent expirations for top drugs including the blood thinner Eliquis. The company’s answer until now has been leaning into its cancer drug pipeline and undertaking a series of cost cuts.
In the letter Thursday, Smith said Starboard is “committed to working constructively” with the management and board “to create value for the benefit of all shareholders.”
