Is AstraZeneca PLC Chief Executive Pascal Soriot staying or going?
Shares in the U.K.-based drug giant fell sharply Thursday after a news outlet in Israel reported late Wednesday he was moving to lead Teva Pharmaceuticals Ltd., an Israeli generics drugmaker that has been looking for a new chief for months.
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AstraZeneca has declined to comment on the report, calling it "speculation"--but it has stopping short of a denial, rattling investors. Shares in AstraZeneca were down 4.6% at GBP49.53 ($63.8) Thursday midmorning in London. Teva shares were up 5.7% at 116.40 shekels ($32.9).
Dr. Soriot has led the company since 2012. He played a leading role fighting off an unsolicited takeover approach by U.S. giant Pfizer Inc. two years later. As part of that defense, Dr. Soriot, who trained as a veterinarian and came over from rival Roche Holding AG, pledged AstraZeneca's reinvigorated research and development pipeline would super charge revenue over the next 10 years.
Three years into that commitment, Dr. Soriot is facing a crucial milestone this year. He had said 2017 would be the year sales would bottom out and start to grow strongly. Early results for a closely followed lung-cancer treatment are also expected within weeks. Those results could either bolster investor confidence in that turnaround, or sow further worry.
Investors this year have given Dr. Soriot a big vote of confidence. Shares have risen more than 20% year-to-date, as of Wednesday's closing price. He has presided over a series of high-level executive departures during his tenure. His own departure to Teva could be another big disruption.
Late Wednesday, Israel's Calcalist business news website reported Dr. Soriot had agreed to lead Teva. An AstraZeneca spokeswoman said it wouldn't comment on "market rumors and speculation." A Teva spokesman also said it doesn't comment on "market rumors."
Within weeks, AstraZeneca is expected to announce the outcome of a key clinical trial, dubbed Mystic, that will signal whether one of its biggest bets--on a new class of cancer drugs--is likely to pan out. Given that timing, "the most positive interpretation would be that he thinks he has effected a major corporate transformation during five years at AstraZeneca," said UBS analyst Jack Scannell in a note to clients. "A bearish interpretation could be that he has less confidence in the path that Astra has transformed itself to pursue."
For Teva, appointing Dr. Soriot would be the latest effort to bring about its own overhaul. Like other generic-drug makers, it faces a tough pricing environment and intensifying competition for copycat medicines that is squeezing the industry's margins. The company must also deal with $32 billion in debt and a sprawling supply chain accumulated through acquisitions.
The Israeli company has been searching for a new chief executive since February, when former boss Erez Vigodman departed the company for undisclosed reasons. Teva's longtime Chief Financial Officer Eyal Desheh exited last month.
Investors expressed surprise at the idea that Dr. Soriot, a veteran of the branded prescription drug industry, would consider moving into generics.
Andrew Baum, analyst at Citi, said he had "significant trouble reconciling the timing of the potential departure pre-Mystic and Dr. Soriot's skill set match with Teva."
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
July 13, 2017 07:44 ET (11:44 GMT)