Pfizer CEO wins support from ex-executives amid talks with activist investors

Former Pfizer ( PFE ) executives who worked with activist investor Starboard Value days ago to help turn around the pharmaceutical giant have switched sides.

Former CEO Ian Read and former CFO Frank D’Amelio issued a statement late Wednesday saying they had withdrawn their support for Starboard.

“We have decided not to be involved in Starboard Value’s efforts regarding Pfizer. We fully support Pfizer Chairman and CEO Albert Bourla, senior management and the board of directors and are confident that over time they will deliver shareholder value,” the two wrote in a statement issued on their behalf by Guggenheim Securities.

Guggenheim has been a financial adviser to Pfizer on its deals for years, including its $43 billion purchase 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 within the company.

But the company’s stagnant stock has sparked rumors since last year that Bourla’s position could be in jeopardy. The rumors have turned again in the last 48 hours.

“Investors wouldn’t mind an executive shake-up as Bourla has perhaps done what it can do for now, including a full M&A slate, which leaves PFE with a fairly high leverage ratio and not a ton of maneuverability outside of cost reduction,” Mizuho said. Strategist Jared Holz wrote in a note to clients Wednesday ahead of Guggenheim’s statement.

Now investors have to wait until next week to see how the talks play out. Bourla is scheduled to meet with Starboard CEO Jeff Smith on Tuesday.

It was reported this week that Starboard has built a roughly $1 billion stake in the pharmaceutical giant as it seeks to turn the company around and boost its value. But some analysts note that there isn’t much movement left on the board for Pfizer, which has had to adjust to falling COVID revenue and recoup strategic efforts that began a year before the pandemic.

Holz said in a note to clients Monday after news of the Starboard stake that a consensus view of the situation is that activists “may not have the easiest path” to change Pfizer.

“Feedback has been very consistent … especially given that (Pfizer) has already undertaken a cost-cutting strategy to better align expenses with revenues and improve its earnings trajectory. Whether or not there are any other tricks up Starboard’s sleeve is essential. question,” added Holz.

The story continues

Pfizer shares fell 2% in early trading on 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-1, of course. Follow Anjalee on most social media platforms @AnjKhem.

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