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Vaccine maker stocks fall as Trump chooses RFK Jr. to lead HHS

Harsh — Fri, 15 Nov 2024 01:08:57 +0000

Robert F. Kennedy Jr. in Phoenix on Aug. 23, 2024.

Thomas Machowicz | Reuters

Shares of vaccine makers fell Thursday as President-elect Donald Trump nominated Robert F. Kennedy Jr., a prominent vaccine skeptic, to lead the Department of Health and Human Services.

The stocks fell in the final hour of trading as reports emerged about Trump’s expected pick. Moderna‘s stock closed more than 5% lower on Thursday, shares of Novavax fell more than 7% and Pfizer‘s stock ended more than 2% lower.

Shares of BioNTech, the German drugmaker that helped develop a Covid vaccine with Pfizer, closed more than 6% lower. British drugmaker GSK, which makes flu shots and several other vaccines, closed roughly 2% lower.

Shares of those companies dipped further in extended trading as Trump confirmed his pick in a post on his platform Truth Social.

Health policy experts have said a second Trump term could allow Kennedy to elevate anti-vaccine rhetoric, which could deter more Americans from receiving Covid shots and routine immunizations that have for decades saved millions of lives and prevented debilitating illnesses.

Pfizer, Moderna and Novavax are still recovering from falling Covid vaccination rates in the U.S., which have dented their profits over the past two years.

Kennedy’s track record as a vaccine skeptic is extensive. He has long made misleading and false statements about the safety of shots, such as claiming they are linked to autism despite numerous studies going back decades that debunk the association.

Kennedy is the founder of the nonprofit Children’s Health Defense, the most well-funded anti-vaccine organization in the country.

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Trump says he will give RFK Jr. a major health role if he wins the White House. Here's what that means for patients, drugmakers

Harsh — Tue, 05 Nov 2024 20:43:43 +0000

Republican presidential nominee, former U.S. President Donald Trump welcomes Robert F. Kennedy Jr. to the stage at a Turning Point Action campaign rally at the Gas South Arena on October 23, 2024 in Duluth, Georgia.

Anna Moneymaker | Getty Images News | Getty Images

Donald Trump has made one clear promise about who could help take up the government’s health reins if he wins the presidency: notorious vaccine skeptic and conspiracy theorist Robert F. Kennedy Jr.

The former president said last week that Kennedy, who ended his own independent White House campaign earlier this year and endorsed Trump, will have a “big role” in health care in his administration. Last month, Trump said he would let Kennedy “go wild” on health, food and drug regulation.

Follow: Election 2024 live updates: Trump and Harris await Presidential election results

It’s unclear what exactly Kennedy’s role would look like, but the possibility is already raising alarm bells in the broader health community. Some health experts said elevating Kennedy, even in an informal Trump administration position, could potentially lead to severe consequences for patients, drugmakers and the nation’s public health overall.

“I think it would be a world turned upside down,” Dr. Paul Offit, a vaccine expert at Children’s Hospital of Philadelphia who has been an open critic of Kennedy, told CNBC. “Things would not be grounded in scientific truth, just grounded in whatever he or his acolytes believe. It would be a free-for-all. It would be uncertainty and instability. It would be chaos.”

He said “chaos” could potentially look like lower vaccination rates, increases in preventable disease and greater distrust in federal health agencies, such as the Food and Drug Administration and the Centers for Disease Control and Prevention.

That could exacerbate the nation’s existing public health challenges, such as declining childhood vaccination rates for several preventable diseases, some experts say. The U.S. also has the lowest life expectancy at birth, the highest rate of people with multiple chronic diseases, and the highest maternal and infant death rate among other high-income nations, according to a 2023 report by the Commonwealth Fund, an independent research group.

Kennedy, who does not have any medical or scientific credentials, believes drug companies and the federal health agencies that regulate them are making Americans less healthy. He has suggested that some vaccines should be taken off the market — a stance that Trump did not rule out Monday.

The former environmental lawyer may also bring uncertainty to the pharmaceutical industry, which relies on federal health agencies to greenlight new products, keep old ones on the market, and, in some cases, fund research and development. It will likely be difficult for Kennedy to change the drug approval process, but experts said he could gain a new platform to politicize certain treatments he opposes and tout others that aren’t proven to be safe and effective.

Top leadership roles, such as the FDA commissioner, require confirmation by the Senate, which some experts noted could pose a hurdle for Kennedy. But Kennedy has met with Trump transition officials and could take a broad White House “health czar” position that would not need Senate confirmation, The Washington Post reported Saturday.

Regardless of what the position looks like, Kennedy will likely gain a “new podium to spread his views,” said Drew Altman, president and CEO of health policy organization KFF.

“It’s giving one of the chief architects for health misinformation a national podium backed by the president,” Altman told CNBC. “Many more people will hear what he has to say, believe it and act on it. That could pose a risk to their health.”

Kennedy’s team did not immediately respond to CNBC’s request for comment.

Real-world data from the CDC indicates that routine vaccination rates for kindergarten children ticked down during the pandemic and have yet to rebound. If Kennedy manages to push those rates even lower, vaccine-preventable diseases like polio and measles could potentially make a comeback, experts noted.

For the companies that manufacture shots, an increase in anti-vaccine rhetoric could potentially translate to lower revenue. Drugmakers such as Pfizer and Moderna are still recovering from falling Covid vaccination rates in the U.S., which have dented their profits over the last two years.

Kennedy may also affect the pharmaceutical industry’s ability to respond to another pandemic if given the power to determine how much federal funding should go toward vaccine development, some experts say. He told NBC News last year that he wouldn’t prioritize the research, manufacturing or distribution of shots if faced with another pandemic, falsely adding that “vaccines have probably caused more deaths than they’ve averted.”

Kennedy’s track record as a vaccine skeptic is extensive: He has long made misleading and false statements about the safety of shots, such as claiming that they are linked to autism despite numerous studies going back decades that debunk the association. Kennedy is the founder of the nonprofit Children’s Health Defense, the most well-funded anti-vaccine organization in the country.

“He misinforms to the point that children suffer or die, and also stands back and doesn’t take any responsibility for it,” Offit said.

He pointed to Kennedy’s misinformation about the safety of the measles, mumps and rubella vaccine, which was linked to a severe measles outbreak in Samoa in 2019 that left dozens of children dead.

a post on X that the “FDA’s war on public health is about to end” and hinted at plans to gut the agency of workers who don’t agree with his views.

He accused the agency of its “aggressive suppression of psychedelics, peptides, stem cells, raw milk, hyperbaric therapies, chelating compounds, ivermectin, hydroxychloroquine, vitamins, clean foods, sunshine, exercise, nutraceuticals and anything else that advances human health and can’t be patented by Pharma.”

Kennedy has previously claimed that hydroxychloroquine and ivermectin work against Covid, even though several studies say they do not. Hydroxychloroquine is an immunosuppressive drug, while ivermectin is used to treat infections caused by parasites.

“He has embraced a lot of therapies that have been unproven for certain uses and some have been discredited,” Kanter said.

CDC. More than 40% of school-aged children and adolescents have at least one. Chronic diseases such as heart disease, cancer, diabetes and obesity are also a major driver of health-care costs in the U.S., accounting for about 90% of the $4.1 trillion annual health-care expenditure, the CDC said.

Kennedy could spearhead “Operation Warp Speed for childhood chronic disease” under a Trump administration, sources close to the former president’s campaign told NBC News last week. That refers to the title of the Covid vaccine development and distribution project during Trump’s first term.

It’s unclear what the new program or Kennedy’s role would look like, but the focus on chronic illnesses aligns with his so-called Make America Healthy Again platform.

The initiative — a riff on Trump’s Make America Great Again slogan — aims to remove chemicals from food production, combat the “root” causes of chronic diseases and eliminate conflicts of interest in medical research, among other priorities that largely have bipartisan support. Environmental factors such as air pollution and diet contribute to chronic health conditions, but Kennedy has pushed unfounded claims around certain food ingredients and minerals.

Last week, Kennedy also proposed advising all U.S. water systems to remove fluoride from drinking water, falsely claiming that it is “an industrial waste” linked to several medical conditions, such as thyroid disease and and neurodevelopmental disorders. Trump has since said that idea sounds “OK to me.”

But fluoride is a naturally occurring mineral found in soil, water and plants. Adding low levels of fluoride to drinking water is widely considered one of the greatest public health achievements of the 20th century for its role in preventing tooth decay.

USC’s Kanter also said “there is a danger of oversimplifying complicated health problems” and attributing them to a few “root causes,” especially when they aren’t backed by science. Chronic diseases are complex conditions that can be caused by multiple factors, such as a patient’s genetics and socioeconomic status, according to Kanter.

Kennedy’s nonprofit falsely links vaccines to chronic diseases, citing misleading articles and studies that show unvaccinated populations have fewer chronic conditions than their vaccinated peers.

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Bristol Myers Squibb tops earnings estimates and hikes outlook, helped by Eliquis and new drugs

Harsh — Thu, 31 Oct 2024 18:21:55 +0000

The Bristol Myers Squibb research and development center at Cambridge Crossing in Cambridge, Massachusetts, US, on Wednesday, Dec. 27, 2023.

Adam Glanzman | Bloomberg | Getty Images

Bristol Myers Squibb on Thursday reported third-quarter earnings and revenue that blew past Wall Street’s expectations thanks to its blockbuster blood thinner Eliquis and a portfolio of drugs it expects to deliver long-term growth.

The pharmaceutical giant also raised its full-year revenue guidance for the year, expecting sales to increase by around 5%. Bristol Myers previously said it projected sales to rise in the “upper end” of the low single-digit range.

The company also raised its 2024 adjusted earnings guidance to 75 cents to 95 cents per share, up from a previous forecast of 60 cents to 90 cents per share.

The results come as Bristol Myers moves to cut $1.5 billion in costs by the end of 2025 and funnel that money into key drug brands and research and development programs. The company in April said that will involve laying off more than 2,000 employees, culling some drug programs and consolidating its sites, among other efforts.

Shares of the company rose more than 4% on Thursday.

Here is what Bristol Myers reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $1.80 adjusted vs. $1.49 expected
Revenue: $11.89 billion vs. $11.28 billion expected

Bristol Myers posted net income of $1.21 billion, or 60 cents per share, for the third quarter. That compares with net income of $1.93 billion, or 93 cents per share, for the year-earlier period.

Excluding certain items, it reported adjusted earnings per share of $1.80 for the quarter.

The pharmaceutical giant’s revenue rose 8% from the same period a year ago to $11.89 billion.

The increase came from Eliquis and the company’s so-called Growth Portfolio of drugs, which includes a cancer drug called Opdivo. But revenue was partially offset by leukemia treatment Sprycel, which is facing generic competition due to its loss of exclusivity.

The company is preparing to offset the loss in revenue from top-selling treatments slated to lose exclusivity on the market, including Eliquis, Opdivo and Revlimid, a blood cancer treatment.

Sales of Eliquis could also take a hit in 2026, when a new price for the drug goes into effect for certain Medicare patients following negotiations with the federal government. The first round of those price talks, a key provision of President Joe Biden‘s Inflation Reduction Act, wrapped up in the summer.

Notably, the Food and Drug Administration approved Bristol Myers Squibb’s highly anticipated schizophrenia drug Cobenfy during the quarter. It is the first novel type of treatment for the debilitating, chronic mental disorder in more than seven decades.

Pfizer, is expected to lose market exclusivity by 2028.

Revlimid took in $1.41 billion in sales, down 1% from the same period a year ago. That surpassed analysts’ revenue expectations of $1.11 billion for the treatment, according to StreetAccount.

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Revenue from the company’s Growth Portfolio was $5.8 billion for the third quarter, up 18% from the year-earlier period.

That was driven in part by higher demand for anemia drug Reblozyl, which raked in $447 million in the third quarter, up 80% from the same period a year ago. Analysts surveyed by FactSet had expected that treatment to bring in $435 million in revenue.

Advanced melanoma treatment Opdualag, lymphoma treatment Breyanzi and Camzyos, a drug for a certain heart conditions, also helped fuel the Growth Portfolio’s revenue during the third quarter, according to the company.

Breyanzi and Camzyos posted sales above analysts’ expectations, while Opdualag fell short of estimates, according to StreetAccount.

Opdivo brought in $2.36 billion in revenue for the third quarter, up 4% from the year-earlier period. That fell under analysts’ estimate of $2.41 billion for the quarter, StreetAccount said.

Meanwhile, Abecma, a cell therapy for a rare blood cancer called multiple myeloma, drew $124 million in sales for the quarter. Analysts had expected $110 million in revenue.

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Pfizer tops earnings estimates, hikes full-year guidance as Covid products help sales

Harsh — Tue, 29 Oct 2024 17:37:24 +0000

The PAXLOVID antiviral medications nirmatrelvir co-packaged with ritonavir were developed by Pfizer to treat the virus.

Patrick T. Fallon | Afp | Getty Images

Pfizer on Tuesday reported third-quarter revenue and adjusted profit that blew past expectations as the company’s Covid vaccine and antiviral pill Paxlovid helped boost sales.

The pharmaceutical giant also hiked its full-year outlook and now expects to book adjusted earnings per share of $2.75 to $2.95, up from its previous guidance of 2.45 to $2.65 per share.

Pfizer now expects revenue in a range of $61 billion to $64 billion, up from a previous revenue forecast of between $59.5 billion and $62.5 billion. That includes roughly $5 billion in expected revenue from its Covid vaccine and $5.5 billion from Paxlovid.

The results are a much-needed win for Pfizer CEO Albert Bourla, who is facing new pressure from activist investor Starboard Value. The firm has a roughly $1 billion stake in the pharmaceutical company.

Still, shares of Pfizer fell more than 2% on Tuesday.

Here’s what the company reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $1.06 adjusted vs. 62 cents expected
Revenue: $17.7 billion vs. $14.95 billion expected

The company booked third-quarter net income of $4.47 billion, or 78 cents per share. That compares with a net loss of $2.38 billion, or 42 cents per share, during the same period a year ago. Excluding certain items, including restructuring charges and costs associated with intangible assets, the company posted earnings per share of $1.06 for the quarter.

Pfizer reported revenue of $17.7 billion for the third quarter, up 31% from the same period a year ago.

It is a critical quarterly report for Pfizer, which is cutting costs as it works to recover from the rapid decline of its Covid business and share price over the last two years. The drugmaker’s shares are trading at about half of their pandemic-era high, putting the company’s market cap at roughly $163 billion.

contends that Pfizer failed to capitalize on the windfall earned from its Covid products and, in the process, destroyed tens of billions of dollars in market value. Smith points to what he believes are management’s poor investments in research and development and hefty acquisitions that have yet to be fruitful for the struggling company.

Notably during the quarter, Pfizer withdrew from world markets a critical sickle cell drug it had acquired in a $5.4 billion deal for Global Blood Therapeutics. Starboard is calling for a massive overhaul at Pfizer, saying that the company needs to be more disciplined in its investments.

Bourla said Tuesday he and other executives met with Starboard two weeks ago, and called it “constructive and cordial.”

Pfizer agrees with some of the points Starboard raised, but has “vastly different views on many others,” Bourla said. For example, Starboard challenged Pfizer’s capital deployment for business development. But Pfizer believes its deals will bring significant shareholder returns, Bourla said.

Bourla pointed to changes Pfizer has implemented over the last 10 months, such as appointing new executives and separating its U.S. and international businesses.

Still, he said, “We will engage productively with our shareholders, including Starboard” and consider “all good ideas that are offered.”

Meanwhile, Pfizer reiterated Tuesday it is on track to deliver at least $4 billion in savings by the end of the year. The company in May announced a multiyear plan to slash costs, with the first phase of the effort slated to deliver $1.5 billion in savings by 2027.

whopping $43 billion.

Those drugs brought in $854 million in revenue for the quarter, including $409 million from a targeted treatment for bladder cancer called Padcev as well as $268 million from Adectris, a drug that targets certain lymphomas. Pfizer completed its acquisition of Seagen in December.

Revenue also got a boost from sales of Pfizer’s Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. Those drugs booked $1.45 billion in sales, up 62% from the third quarter of 2023.

Analysts had expected that group of drugs to rake in $1.37 billion for the quarter, according to estimates from StreetAccount.

Pfizer said its blood thinner Eliquis, which is co-marketed by Bristol Myers Squibb, also helped drive revenue growth during the period. The drug posted $1.62 billion in revenue for the quarter, up 8% from the year-earlier period.

That is slightly higher than the $1.59 billion that analysts were expecting, according to StreetAccount.

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Sales of Eliquis could take a hit in 2026, however, when a new price for the drug goes into effect for certain Medicare patients following negotiations with the federal government. Those price negotiations are a key provision of President Joe Biden‘s Inflation Reduction Act that the pharmaceutical industry fiercely opposes.

Meanwhile, Pfizer’s vaccine against respiratory syncytial virus, or RSV, saw $356 million in revenue for the third quarter. The shot, known as Abrysvo, entered the market during the third quarter of 2023 for seniors and expectant mothers who can pass on protection to their fetuses.

Analysts had expected the shot to generate sales of $255.4 million, according to StreetAccount estimates.

Last week, Pfizer’s RSV shot won approval for adults ages 18 to 59 who are at increased risk for the disease – a decision that will likely significantly expand the reach of the jab in the U.S.

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Merck says experimental RSV treatment protected infants in trial, paving way for potential approval

suimt — Thu, 17 Oct 2024 22:00:01 +0000

The logo for Merck is displayed on a screen at the New York Stock Exchange on Nov. 17, 2021.

Andrew Kelly | Reuters

Merck on Thursday said its experimental treatment designed to protect infants from respiratory syncytial virus showed positive results in a mid- to late-stage trial, bringing the company one step closer to filing for approval of the shot.

The pharmaceutical giant could emerge as a new competitor in the market for treatments against RSV, which causes thousands of deaths among older Americans and hundreds of deaths among infants each year. Complications from the virus are the leading cause of hospitalization among newborns, making Merck’s drug a valuable new treatment option if approved.

Merck plans to discuss the study data with regulators worldwide, with a goal of making the treatment available for infants as early as the 2025 to 2026 RSV season, according to a release.

The trial examined the safety and efficacy of a single dose of the treatment, clesrovimab, in healthy preterm and full-term infants entering their first RSV season. Merck presented the results at the medical conference IDWeek in Los Angeles.

The treatment reduced RSV-related hospitalizations by more than 84% and decreased hospitalizations due to lower respiratory infections by 90% compared with a placebo among infants through five months, according to Merck. Clesrovimab also reduced lower respiratory infections that required medical attention by more than 60% compared with a placebo through five months.

RSV is a common cause of lower respiratory tract infections such as pneumonia. Results were consistent through both the five-month and six-month time points in the trial, Merck said.

The rates of adverse and serious side effects were comparable between patients who received Merck’s shot and those who took placebos in the trial. There were no treatment or RSV-related deaths in the study, the company added.

“These promising results demonstrating decreased incidence of RSV disease, including hospitalizations, highlight the potential for clesrovimab to play an important role in helping to alleviate the continued burden of RSV on infants and their families,” Dr. Octavio Ramilo, chair of the Department of Infectious Diseases at St. Jude’s Children’s Research Hospital, said in Merck’s release. Ramilo is also an investigator working on the trials.

Merck’s clesrovimab could potentially compete against a similar treatment from Sanofi and AstraZeneca called Beyfortus, which was in short supply nationwide last RSV season due to unprecedented demand. Both are monoclonal antibodies, which deliver antibodies directly into the bloodstream to provide immediate protection.

But Merck’s treatment can be administered to infants regardless of their weight, which the company said may offer convenience in terms of dosing. Meanwhile, the recommended dosage of Beyfortus is based on an infant’s body weight.

Last year, Pfizer and GSK rolled out RSV vaccines that are administered to expectant mothers who can pass on protection to their fetuses.

Novavax says FDA put hold on combination Covid-flu shot and influenza vaccine; shares plunge

Harsh — Wed, 16 Oct 2024 14:21:51 +0000

A health worker prepares a dose of the Novavax vaccine as the Dutch Health Service Organization starts with the Novavax vaccination program on March 21, 2022 in The Hague, Netherlands.

Patrick Van Katwijk | Getty Images

Novavax on Wednesday said the Food and Drug Administration has put a hold on its application for a combination shot targeting Covid and influenza and a standalone flu vaccine, sending the company’s shares down sharply.

The biotech company’s stock fell nearly 20% on Wednesday. The so-called clinical hold is due to a single report of nerve damage in a patient who received the combination shot in a phase two trial that finished in July last year.

A clinical hold is an order issued by the FDA to a manufacturer to delay or suspend a proposed clinical investigation on a drug.

It is unclear if the pause will impact Novavax’s ability to start and release data on phase three trials on those vaccines. Still, it appears to be a setback for the biotech company, which is scrambling to bring new products to market as demand for its Covid vaccine plummets worldwide.

Novavax said it was working with the FDA to resolve the clinical hold on its combination shot and standalone flu vaccine. The company said other trials of its Covid and flu shots had not shown any safety concerns related to the type of nerve damage reported in the patient.

Novavax said it does not believe there’s an established connection that the vaccine had caused the nerve damage in the patient but said it is working to provide more information to the FDA.

“Our goal is to successfully resolve this matter and to start our Phase 3 trial as soon as possible,” Dr. Robert Walker, Novavax’s chief medical officer, said in a release.

Public health officials see Novavax’s protein-based Covid vaccine as a valuable alternative for people who don’t want to take mRNA shots from Pfizer and Moderna, which use a newer vaccine method to teach cells how to make proteins that trigger an immune response against Covid.

Novavax’s shot, meanwhile, fends off the virus with protein-based technology, a decades-old method used in routine vaccinations against hepatitis B and shingles.

Pfizer threatened to sue renegade executives prior to activist schism, Starboard's Smith says

Harsh — Thu, 10 Oct 2024 19:33:00 +0000

Ian Read, former CEO of Pfizer Inc., gestures as he speaks during a panel session at the World Economic Forum in Davos, Switzerland, on Jan. 17, 2017.

Simon Dawson | Bloomberg | Getty Images

Activist Starboard Value accused Pfizer of threatening litigation against the company’s former CEO and chief financial officer in order to get them to break ranks with the investor’s nascent turnaround campaign at the pharmaceutical giant.

Starboard managing member Jeff Smith said in a Thursday letter to Pfizer’s board that the company or its advisors also “threatened” to claw back former chief executive Ian Read and ex-CFO Frank D’Amelio’s past compensation and cancel their unvested shares.

Smith asked that the board assemble a special committee to investigate the matter, describing it as “highly inappropriate, flagrantly unethical, and a significant breach of fiduciary obligations.”

The risk of legal liability was a driving factor in Read and D’Amelio’s public backing of Pfizer CEO Albert Bourla late Wednesday night, said a person familiar with the interactions between the company and the two former executives.

Pfizer shares slipped overnight as news of the two executives’ breakaway emerged, and opened down roughly 2.5% in Thursday morning trading.

Starboard’s Smith said that when the activist approached the two executives, both expressed “concerns” about Pfizer’s direction under Bourla and offered to help Starboard in its turnaround campaign.

Starboard did not respond to CNBC’s requests for comment. A Pfizer spokesperson declined to comment.

Smith and Bourla are slated to meet in person next week, Smith said, confirming earlier reports. The agenda of the discussion could not be learned, but people familiar with Starboard’s thinking previously said Pfizer’s focus on disciplined cost structure and mergers and acquisitions had suffered under Bourla’s leadership.

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Former Pfizer CEO, finance chief step back from Starboard's activist campaign

Harsh — Thu, 10 Oct 2024 02:39:01 +0000

Ian Read, chairman and chief executive officer of Pfizer, speaks as President Donald Trump, left, listens during an announcement on a new pharmaceutical glass packaging initiative in the Roosevelt Room of the White House in Washington, D.C., July 20, 2017.

Andrew Harrer | Bloomberg | Getty Images

Former Pfizer CEO Ian Read and ex-CFO Frank D’Amelio said Wednesday evening that they would step away from Starboard Value’s campaign at the struggling pharmaceutical giant, just days after news of the activist’s stake broke.

Read and D’Amelio said they were “fully supportive” of Pfizer CEO Albert Bourla in a joint statement made via an investment bank and confirmed to be authentic. The duo had been in contact with a number of directors shortly before news of Starboard’s stake broke Sunday evening, according to people familiar with the matter.

“We are confident that over time they will deliver shareholder value,” the two former executives said of Pfizer’s current board and management. The company’s shares are essentially flat for the year and are off by roughly 50% from their 2021 highs.

The statement was made through Guggenheim Securities, which has long advised Pfizer on dealmaking. A representative for the bank declined to comment beyond the release.

The about face comes as Pfizer’s board grapples with the activist’s efforts, and just days before Starboard’s Jeff Smith was slated to meet with CEO Bourla, said people familiar with the matter. For executives to join, and then walk away from an activist’s campaign is highly unusual.

It was also not immediately clear what impact, if any, the breakaway would have on Starboard’s campaign. A representative for the activist fund did not immediately return a request for comment. Starboard, one of the largest and most tenacious activist funds, has amassed a roughly $1 billion position in the pharmaceutical firm, CNBC previously reported.

Jeff Smith, the managing member at Starboard, has previously mounted campaigns at Autodesk and Salesforce in recent months. While it typically focuses on the technology sector, it also built stakes in Starbucks and Wall Street Journal parent News Corp this year.

Representatives for Pfizer did not return requests for comment.

Healthy Returns: What activist Starboard's $1 billion stake means for Pfizer

Harsh — Tue, 08 Oct 2024 20:46:17 +0000

Jakub Porzycki | Nurphoto | Getty Images

A version of this article first appeared in CNBC’s Healthy Returns newsletter, which brings the latest health-care news straight to your inbox. Subscribe here to receive future editions.

Happy Tuesday! Pfizer‘s troubles may finally be coming to a head.

Former executives of the pharmaceutical giant are backing a push by activist investor Starboard Value to turn around the struggling company, according to recent reports.

Starboard has a roughly $1 billion stake in the drugmaker and approached former Pfizer CEO Ian Read and ex-CFO Frank D’Amelio, both of whom expressed interest in supporting the activist investor’s efforts to shake up the company, CNBC previously reported. As of late Tuesday, Pfizer has a market cap of roughly $165 billion.

Read and D’Amelio relayed proposals from Starboard to several members of the company’s board on Sunday, the Financial Times reported on Monday, citing sources familiar with the conversations. Still, the details of the turnaround plan are scant.

Read was Pfizer’s CEO from 2010 through 2018, while D’Amelio was Pfizer’s chief financial officer from 2007 to 2021.

Here’s why it matters: Read and D’Amelio’s reported involvement is a rare instance of former executives engaging in what could be an activist fight for the future of one of the largest pharmaceutical companies in the world.

Investors have been clamoring for change at Pfizer, whose shares are down more than 30% over the past two years. The company has struggled to recover from the rapid decline of its Covid business, which raked in record-breaking revenue during the peak of the pandemic.

Pfizer CEO Albert Bourla is facing mounting pressure to improve the company’s performance after several commercial missteps over the past two years – including disappointing data on an experimental obesity pill and a slower-than-expected launch of a respiratory syncytial virus vaccine – along with a costly M&A strategy that has yet to yield significant returns.

Pfizer is betting big on oncology, and particularly its whopping $43 billion acquisition of cancer drug developer Seagen, to regain its footing. But that deal may take years to pay off. Meanwhile, Pfizer last month pulled a key sickle cell disease drug from global markets – the centerpiece of its roughly $5 billion buyout of Global Blood Therapeutics in 2022.

Starboard’s turnaround push raises questions about Bourla’s fate at the company.

“We’ve sensed investor frustration with CEO Albert Bourla since at least the beginning of 2023,” BMO Capital Markets analyst Evan Seigerman wrote in a research note Monday.

Still, he said, “While placing blame on one person may seem easy, rarely will it result in a quick turn-around.”

Other analysts similarly said there may be no quick fix by an activist investor.

“We await future developments, but we do not see low-hanging fruit to boost shareholder value,” 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 by patent expirations for top-selling drugs and pressure from competitors. Pfizer has also pursued significant cost-cutting efforts, he added. The company last fall announced that it would cut $4 billion in costs and in May disclosed another multi-year plan to slash roughly $1.5 billion in expenses by 2027.

Pfizer’s debt levels are also relatively high, Risinger noted, with $57.5 billion in debt as of June 30. He said that may only be partially reduced by selling more shares from its assets, such as the consumer health business Haleon.

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

Feel free to send any tips, suggestions, story ideas and data to Annika at annikakim.constantino@nbcuni.com.

Hims & Hers Health, a direct-to-consumer health-care company, closed 10% higher on Monday following the announcement that the stock is being added to the S&P SmallCap 600.

The S&P Dow Jones Indices said Hims & Hers will replace Vector Group ahead of the opening bell on Oct. 9, according to a release Friday. Japan Tobacco completed its acquisition of Vector Group, which operates tobacco and real estate businesses, on Monday.

Hims & Hers offers treatments for weight loss, sexual health, hair loss and other conditions, and the stock is up nearly 120% year to date as of Monday’s close. However, shares of the company tumbled last week after the U.S. Food and Drug Administration announced tirzepatide injections are no longer in shortage.

Tirzepatide is the active ingredient in Eli Lilly’s GLP-1 weight loss drug Zepbound and diabetes drug Mounjaro. Hims & Hers doesn’t offer these medications through its platform, but CEO Andrew Dudum told investors in August that the company was looking to introduce access to compounded versions in the near future, as well as the branded versions when supply allowed.

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

“We don’t offer access to tirzepatide at this time,” a Hims & Hers spokesperson told CNBC in a statement Monday. “Whenever we bring a treatment to our platform, our first consideration is how accessible it will be for the large majority of customers and accessible means consistently available at a reasonable price.”

Hims & Hers is one of several digital health companies selling compounded GLP-1 medications as a cheaper alternative for consumers while demand for the weight loss and diabetes drugs spikes. But they’re not a foolproof way to carve out a piece of the anti-obesity drug market, which some analysts estimate could generate $100 billion in annual revenue by 2030.

Both Zepbound and Mounjaro are under patent protection in the U.S., and Eli Lilly does not supply the active ingredient of those two drugs to outside groups. The FDA warned last week that outsourcing facilities are generally restricted from compounding copies of an approved drug unless it’s on the shortage list.

“When a drug shortage is resolved, FDA generally considers the drug to be commercially available,” the agency said on its website. “Certain amounts are permissible under the law as long as the compounding is not done ‘regularly or in inordinate amounts.'”

Though Hims & Hers does not offer compounded tirzepatide, the FDA’s announcement was enough to spook investors. Shares of Hims & Hers closed down nearly 10% on Thursday.

Analysts at Citi said that Hims & Hers will not be directly impacted by the tirzepatide news, but it does limit the company’s total addressable market. It also suggests that shortages could resolve faster than anticipated, they added.

“HIMS has maintained that it will be able to continue to compound GLP-1s after shortages abate by changing the form factor/formulation/dosage for the clinical benefit of an individual,” the analysts wrote in a Thursday note. “In our view, this sets HIMS up for a legal battle in the coming months.”

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

Activist Starboard Value has $1 billion Pfizer stake, taps former executives for help, sources say

Aseem — Mon, 07 Oct 2024 02:20:11 +0000

People pass by the Pfizer headquarters building in New York City, Jan. 29, 2023.

Kena Betancur | View Press | Corbis News | Getty Images

Activist investor Starboard Value has a roughly $1 billion stake in pharmaceutical giant Pfizer and is seeking to mount a turnaround at the struggling company, according to people familiar with the matter.

The activist’s exact plans could not be learned, but Starboard has approached former Pfizer CEO Ian Read and ex-finance chief Frank D’Amelio, both of whom have expressed interest in supporting Starboard’s turnaround, said the people.

Starboard believes that Pfizer’s current leadership under CEO Albert Bourla has stepped away from historically disciplined cost structure and investment in novel drugs, the people said.

Pfizer’s revenue and free cash flow ballooned during the Covid-19 pandemic, thanks to the company’s fast-tracked vaccine. But its stock has not done well, trading about 30% lower than it did in 2019. That is in part due to an expensive acquisition strategy — nearly $70 billion in M&A since 2020 — the return of which some analysts have questioned.

One particularly concerning deal was Pfizer’s acquisition of Global Blood Therapeutics. Pfizer pulled a drug for sickle cell disease it got just two years ago via the roughly $5 billion acquisition. The company played down the financial impact in September, saying the drug Oxbryta brought in a little over $300 million last year.

Read was Pfizer’s chief from 2010 to 2019 and inherited a company in tumult. But shares more than doubled during his tenure, as executives instituted that cost- and core-focused culture which it has now apparently moved from.

To be sure, the company has taken steps to tamp down on costs. It began a $4 billion cost-cutting program and then announced a second round of further cost reductions. Still, more than $100 billion in shareholder value has evaporated since the Covid-19 pandemic faded largely into the rearview mirror.

Starboard is run by Jeff Smith, and has historically focused on the technology sector. It is currently challenging News Corp’s dual-class share structure, and in recent months has mounted campaigns at Autodesk, Salesforce and Match Group.

The Wall Street Journal earlier reported news of Starboard’s stake. A Pfizer spokesperson declined to comment on “speculation and rumor.”

— CNBC’s Angelica Peebles contributed to this report.

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Pfizer, is expected to lose market exclusivity by 2028.

Revlimid took in $1.41 billion in sales, down 1% from the same period a year ago. That surpassed analysts’ revenue expectations of $1.11 billion for the treatment, according to StreetAccount.