Former Pfizer (PFE) executives who were reportedly working with activist investor Starboard Value days ago to help turnaround the pharma giant have switched sides.
Former CEO Ian Read and former CFO Frank D’Amelio issued a statement late Wednesday saying they have rescinded their support of Starboard.
“We have decided not to be involved in the efforts of Starboard Value regarding Pfizer. We are fully supportive of Pfizer Chairman & CEO Albert Bourla, senior management and the board, and we are confident that over time they will deliver shareholder value,” the two wrote, in a statement issued on behalf of them by Guggenheim Securities.
Guggenheim has been a financial advisor to Pfizer on its deals for years, including the $43 billion acquisition of Seagen last year. D’Amelio worked under Bourla in the early years of the pandemic.
The move, while unusual and sudden, may not be all that surprising. Insiders have told Yahoo Finance for months that Bourla is well-liked and respected inside the company.
But the company’s stagnant stock has spurred rumors since last year that Bourla’s position could be in danger. The rumors swirled again in the past 48 hours.
“Investors would not mind an executive refresh as Bourla has perhaps done what he can do for the time being including a laundry list of M&A leaving PFE with a fairly high leverage ratio and not a ton of maneuverability outside of cost-cutting,” wrote Mizuho’s healthcare expert Jared Holz in a note to clients Wednesday, prior to the Guggenheim statement.
Now investors must wait until next week to see how discussions unfold. Bourla is scheduled to meet with Starboard CEO Jeff Smith on Tuesday.
It was reported this week that Starboard had built about a $1 billion stake in the pharma giant, looking to turn the company around and boost its value. But some analysts note that there are not many moves left on the board for Pfizer, which has had to adjust to waning Covid revenues along with playing catch up on strategic efforts that began in the year before the pandemic.
Holz said in a note to clients Monday, following the news of Starboard’s stake, that a consensus view on the situation was that the activists “may not have the easiest path” to turning Pfizer around.
“Feedback has been very consistent …especially given that (Pfizer) has already undertaken a cost-cutting strategy in order to better align expenses with revenue and improve its earnings trajectory. Whether or not there are other tricks up Starboard’s sleeve is a key question,” Holz added.
Pfizer’s stock was flat in pre-market trading Thursday.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on most social media platforms @AnjKhem.