Biogen (BIIB) and Siegen (SGEN) named the former Big Pharma leader as its new chief executive on Thursday, but biotech stocks diverged after the long-awaited announcement.
At Biogen, Christopher Viehbacher will succeed Michel Vounatsos. Viehbacher spent 20 years in GlaxoSmithKline (GlaxoSmithKline) – formerly GlaxoSmithKline – and global CEO Sanofi (SNY) six years.
David Epstein will succeed Roger Dansey, Seagen’s interim CEO.Epstein is Novartis (NVS) and just started working at Flagship Pioneering, a venture capital firm. In addition, Dancy was named President of Research and Development.
But in this afternoon’s stock market move, only Biogen stock rose. Biotech shares rose 2 percent to close at around 287.90, while Seagen shares fell 4.8 percent to close at around 131.30.
Biotech stocks: New blood tops the list
Viehbacher will assume his new role at Biogen on November 2. 14 After Vounatsos left, he spent five years leading the biotech company.
During his tenure at Sanofi, Viehbacher dealt with patent losses and found new revenue streams, such as blockbuster drug Dupixent.Sanofi and Regeneron Pharmaceuticals (REGN) is a partner in blockbuster drugs for the treatment of eczema, asthma and nasal conditions.
Most recently, Viehbacher co-founded Gurnet Point Capital, a healthcare investment fund.
Biotech stock Biogen has tested positive for its new Alzheimer’s drug, an Eisai collaboration called lecanemab. The stock now has a Relative Strength Rating of 96, according to IBD Digital. That puts Biogen stock in the top 4% of all stocks in terms of 12-month performance.
Former flagship leader of Seagen
Epstein’s role at Seagen comes after a brief stint as managing partner at the flagship firm.Flagship help find modern (mRNA) in 2010.
Before joining Flagship, Epstein spent more than two decades at Novartis, where he built the oncology business. He later served as CEO of Novartis Pharmaceuticals, a division of the wider company.
Seagen is a leader in anticancer drugs, producing antibody drug conjugates. These drugs, also known as ADCs, act as torpedoes, removing cancer cells with targeted chemicals. But Seagen’s stock has been under pressure.there are whispers Merck (MRK) can buy it, but the deal has yet to materialize.
The biotech stock has an RS rating of 54. The stock is forming a cup-shaped base with a handle and a buy point at 183.10, according to MarketSmith.com.
Murky CEO Territory
Both biotech stocks are in murky territory as far as CEOs go.
In early May, Vounatsos announced plans to step down from the helm at Biogen following a series of missteps with Alzheimer’s drug Aduhelm. Despite Aduhelm’s approval, the Centers for Medicare and Medicaid Services has largely denied reimbursement for it. As a result, Biogen has largely shelved its commercial efforts to focus on lecanemab instead.
Wedbush analyst Laura Chico applauded Viehbacher’s appointment as Biogen’s top spot.
“Given Mr. Viehbacher’s past experience and industry knowledge as CEO of Sanofi, we believe he is a strong candidate to fill the role,” she said in a note to clients. “Having said that, the role presents unique challenges – some that need to be addressed early.”
Among them, she noted that Biogen’s existing multiple sclerosis business is in decline. Total sales in the third quarter fell 11% to $1.62 billion. Sales of biosimilars, cheaper copies of biopharmaceuticals, also fell 7% year over year. Also, biotech stock investors are holding their breaths for more news on Eisai’s Alzheimer’s drug.
“We’re looking ahead to see how the focus may change in the coming months,” she said.
Biotech stock Seagen under pressure
Also in May, Seagen’s former CEO Clay Siegall resigned after being arrested on domestic violence charges. Immediately after Siegel’s resignation, the board named Dancy interim CEO. Dansey has been Seagen’s Chief Medical Officer for several years.
The potential Merck acquisition of Seagen has since boosted biotech stocks first. Then, in the absence of news on that front, Seagen’s stock price has fallen.
“While the announcement of a new CEO can largely be expected, the impact on perceived strategic options appears to be weighing on share prices, as the announcement of a new CEO appears to be weighing on stock prices,” Silicon Valley Bank Securities analyst Andrew Behrens said in a note. The impact intensified over the summer amid widely reported rumors of acquisition talks with Merck,” notes.
He expects Seagen’s stock to return to strength as investors digest the news. He maintained his outperform rating on biotech stocks.
Follow Allison Gatlin on Twitter @IBD_AGatlin.
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