What human rights activist Starboard’s stake means for Pfizer | Wilnesh News

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Happy Tuesday! PfizerThe troubles may have finally come to a head.

According to recent reports, former executives at the pharmaceutical giant are backing activist investor Starboard Value’s push to turn around the troubled company.

Starboard owns about $1 billion in the drugmaker and has reached out to former Pfizer CEO Ian Read and former chief financial officer Frank D’Amelio and D’Amelio have both expressed interest in supporting the activist investor’s efforts to restructure the company, CNBC previously reported report. As of Tuesday evening, Pfizer’s market value was about $165 billion.

Reid and D’Amelio conveyed Starboard’s proposal to several members of the company’s board on Sunday, according to the Financial Times report Monday, citing sources familiar with the conversations. However, details of the turnaround plan are scant.

Reed served as Pfizer’s chief executive from 2010 to 2018, and D’Amelio served as Pfizer’s chief financial officer from 2007 to 2021.

Here’s why it matters: Reid and D’Amelio’s reported involvement is a rare example of former executives actively fighting for the future of one of the world’s largest pharmaceutical companies.

Investors have been calling for changes at Pfizer, which has seen its shares fall more than 30% in the past two years. Company owned Try to recover Its coronavirus business, which saw record revenue during the peak of the pandemic, has declined rapidly.

Pfizer Chief Executive Albert Bourla has faced increasing pressure to improve the company’s performance after several business missteps over the past two years, including disappointing data on an experimental obesity drug. Disappointment, a slower-than-expected rollout of respiratory syncytial virus vaccines, and the high cost of vaccine development.

Pfizer has invested heavily in oncology, notably its $43 billion acquisition of cancer drug developer Seagen, to regain its footing. But the deal could take years to pay off. Meanwhile, Pfizer pulled out a key last month sickle cell disease drugs From the global market – this is the core content of its approximately US$5 billion acquisition of Global Blood Therapeutics in 2022.

Starboard’s turnaround has raised questions about Bourla’s fate at the company.

“We have felt investor dissatisfaction with CEO Albert Bourla since at least early 2023,” BMO Capital Markets analyst Evan Seigerman wrote in a research note on Monday.

However, he said, “While it may seem easy to pin the blame on one person, it rarely results in a quick turnaround.”

Other analysts also said activist investors may not be able to solve the problem quickly.

“We await future developments, but we do not believe enhancing shareholder value will be easy,” Leerink Partners analyst David Risinger wrote in a research note on Monday.

Risinger said that’s because the company faces “revenue growth constraints” over the next five years, driven primarily by patent expirations on its best-selling drugs and pressure from competitors. Pfizer has also taken significant cost-cutting measures, he added. The company announced last fall it would cut $4 billion in costs and in May revealed another multi-year plan to cut spending by about $1.5 billion by 2027.

Risinger pointed out that Pfizer’s debt level is also relatively high, with debt levels of $57.5 billion as of June 30. reduce.

We will continue to follow Starboard’s turnaround, so stay tuned for our coverage.

Please feel free to send Annika any tips, suggestions, story ideas and data: annikakim.constantino@nbcuni.com.

shares his and her healthThe direct-to-consumer healthcare company closed up 10% on Monday after the company announced it would add its stock to the S&P SmallCap 600 Index.

Hims & Hers will replace Vector Group before the market opens on October 9, according to S&P Dow Jones Indices release Friday. Japan Tobacco is finished get On Monday, the company operates tobacco and real estate businesses.

Hims & Hers, which offers treatments for weight loss, sexual health, hair loss and other ailments, has gained nearly 120% year-to-date as of Monday’s close. However, the company’s stock price plummeted last week after the U.S. Food and Drug Administration announced there was no longer a shortage of the tezepatide shot.

Tirzepatide is the active ingredient in Eli Lilly’s GLP-1 weight loss drug Zepbound and diabetes drug Mounjaro. Hims & Hers does not offer the drugs through its platform, but Chief Executive Andrew Dudum told investors in August that the company hopes to launch compounded versions in the near future and branded versions as supply allows.

Compounded drugs are customized alternatives to brand-name drugs that can be produced when the brand-name treatment is available. shortage. Hims & Hers has been offering customers compounded versions of semaglutide, the active ingredient in Novo Nordisk’s GLP-1, called Wegovy and Ozempic.

“We do not currently offer tezepatide,” a Hims & Hers spokesperson told CNBC in a statement on Monday. “Whenever we introduce a treatment to our platform, our first consideration is how well it will work for the majority of our customers.” How easy it is to use and how it’s always available at a reasonable price.”

Hims & Hers is one of several digital health companies selling compounded GLP-1 drugs as a cheaper alternative at a time when consumer demand for weight loss and diabetes drugs is surging. But they’re not a foolproof way to grab a piece of the anti-obesity drug market, which some analysts estimate will reach $100 billion in annual revenue by 2030.

Zepbound and Mounjaro are both covered by patents in the United States, and Eli Lilly has not provided the active ingredients for either drug to outside groups. The FDA warned last week that outsourcing facilities are generally not allowed to prepare copies of approved drugs unless they are placed on a shortage list.

“When drug shortages are resolved, the FDA generally deems the drug ready for commercialization,” the agency says on its website. “The law allows certain amounts as long as compounding is not done ‘regularly or excessively’.”

Although Hims & Hers does not offer compound tilsiparatide, the FDA’s announcement was enough to scare investors. Hims & Hers shares closed down nearly 10% on Thursday.

Citi analysts said Hims & Hers would not be directly affected by the tezepatide news, but it does limit the company’s total addressable market. It also suggests shortages may be resolved faster than expected, they added.

“HIMS maintains that it will be able to continue compounding GLP-1 by changing form factors/formulations/doses to achieve individual clinical benefit after the shortage eases,” analysts wrote in a report on Thursday. ” We believe this will put HIMS in a legal battle over the coming months.”

Please feel free to send any tips, suggestions, story ideas and data to Ashley at ashley.capoot@nbcuni.com.