All Change At Alexion, But Will It Boost Investor Confidence?
Executive Summary
The US rare diseases company Alexion appoints a new COO and is now looking for a new CFO, head of R&D, and head of human resources, as leadership changes leaves its CEO searching for a new executive team.
A further series of executive changes at Alexion Pharmaceuticals Inc. has been cautiously welcomed as an opportunity for recently appointed new CEO Ludwig Hantson to build his own team and have a complete break from past company missteps, but observers are questioning whether the changes are sufficient to boost confidence in the US company.
The ultra-rare disease drug developer was rocked by a sales audit investigation at the end of last year - that subsequently found inappropriate but not illegal behavior - and the resignation or retirement over past months of its founder and other executives.
Former CEO David Hallal resigned at the end of 2016, and Alexion founder and chairman Leonard Bell stepped down from the board, as previously planned, on May 10, with interim CEO and former AstraZeneca PLC head David Brennan taking over the role.
The New Haven, Conn.-based company has been criticized for the high prices of its pharmaceuticals that are focused on rare and orphan diseases, and over past months its alleged sales practises in Brazil have been under investigation by the Brazilian authorities. The company’s top-selling and high-priced product, the complement inhibitor Soliris (eculizumab), is used to treat paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), and accounts for most of the company’s revenues: $2.84bn of its $3.08bn in revenues in 2016 were due to Soliris.
In the latest series of executive changes, Alexion announced May 23 that industry veteran Brian Goff has been appointed chief commercial officer effective from June 1, 2017, succeeding Carsten Thiel who is leaving the company. Chief Financial Officer Dave Andersen will resign his position at the end of August, having only joined in December 2016, and Executive Vice-President and Head of R&D Martin Mackay will retire at the end of 2017.
Further, Executive Vice-President and Chief Human Resources Officer, Clare Carmichael, is to leave the company on June 1, 2017, to pursue new opportunities.
Alexion’s share price declined by 8% on the day of the news, with observers apparently concerned about the short tenure of CFO Andersen. “His position was permanent and he was expected to fill his position for at least one to two years of transition to the new leadership,” noted analysts at Leerink.
But other analysts pointed out that Andersen was brought in to stabilize the company, and now a more drug development-experienced CFO was being sought.
Some analysts believed an adverse response to the current round of executive changes at Alexion might be an over-reaction. “An executive team shake-up is not unexpected, although the degree of change is surprising,” said Deutsche Bank analysts. Analysts at Morningstar said they believed Alexion had “turned a new leaf”, although they were worried that previous aggressive sales practices may be more pervasive than originally thought.
The new CEO has also been vocal about the need to re-prioritize Alexion’s R&D pipeline, and the planned resignation of Mackay means there is an opportunity to jumpstart that effort.
Bolstering Commercial Activities
Hantson was particularly pleased to welcome Goff, with whom he has previously worked. Goff is expected to lead Alexion’s commercial operations worldwide; he was COO of Neurovance Inc. from Dec. 2016 until its acquisition in March 2017. Before that he was Baxalta Inc.’s executive vice-president and president of its hematology division that was spun off from Baxter International Inc. in 2015 and merged with Shire PLC in mid-2016. Earlier he was Baxter Healthcare Corp’s global hemophilia franchise head.
Hantson is himself a new face at Alexion, having been appointed in March 2017 after being CEO of Baxalta during its sale to Shire, leading to some speculation that this history of deal-making might lend itself to Alexion becoming an M&A target.