What Killed Alexion Stock Today?
Alexion stock (Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)) dropped over 13% by midday on Monday as the company’s CEO and CFO resigned, a month after the company began investigating allegations related to sales practices of its prized blood disorder drug “Soliris.”
Alexion stock joins the fast-growing throng of pharmaceutical companies in hot water for accusations regarding business practices. Though perhaps not as dire as the charges levied against Valeant Pharmaceuticals Intl Inc (NSYE:VRX), the whistleblower who first raised questions over sale practices may have been at least partly responsible for the changing of the guard at Alexion Pharmaceuticals.
The company announced that board member David Brennan, former AstraZeneca Plc (ADR) (NYSE:AZN) chief, would replace CEO David Hallal on an interim basis. As for the CFO, that position will be helmed by David Anderson, former CFO of Honeywell International Inc. (NYSE:HON). (Source: “Alexion Pharmaceuticals says CEO, CFO resign, shares slump,” Reuters, December 12, 2016.)
With an investigation into the allegations of the former employee regarding the sales practices of Soliris disclosed last month, some believe that this too played a part in the executives’ resignation.
“We suspect that the handling of the whistleblower case led to a fight for control of the board, which the CEO/CFO lost,” wrote Piper Jaffray Companies (NYSE:PJC) analyst Joshua Schimmer in a client note.
It is important to note that the investigation is nearing its end and has yet to identify any facts that would require the company to update its previously reported historical results. That is good news for Alexion stock.
The investigation did, however, contribute to a delayed third quarter 1–Q report with the U.S. Securities and Exchange Commission (SEC). (Source: “Drug company Alexion’s shares drop 12% in early trade after CEO, CFO exit,” CNBC, December 12, 2016.)
“This transition comes at a time of great strength and momentum in Alexion’s business,”said interim CEO David Brennan in a written statement. “When the board asked me to become interim CEO, I did so without hesitation because I believe strongly in this company and its mission to serve patients with breakthrough medical innovation and life-transforming therapies.”
Whether this is a single-day fallout for Alexion stock as a result of the potential uncertainty following the executive shake-up, or the start of a worrying trend, a lot of eyes will be focused on Alexion stock.