Bayer turns the page

In the latest sign that shareholder angst gets results, German pharmaceutical giant Bayer is replacing its CEO, the company said yesterday, moving on from the architect of its ill-fated Monsanto acquisition amid escalating pressure from investors.

Bill Anderson, a former Roche executive, will take over on April 1, replacing Werner Baumann, whose contract extended into 2024. Anderson will be the first American to run the 160-year-old conglomerate, which invented aspirin and later played a major role in the development of hormonal contraceptives, hemophilia clotting factors, and the blood thinner Xarelto.

Baumann, who led the company's $63 billion merger with Monsanto in 2018, had long since lost support of shareholders, and Bayer's stock price has fallen nearly 50% under his tenure. Appointing Anderson, an outsider, suggests Bayer might eventually follow shareholders' advice and split its pharmaceutical and chemical divisions into two companies.

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Sequencing

Illumina's X factor isn't quite taking off

San Diego sequencing giant Illumina said yesterday that it delivered the first machine from its new line of high-powered DNA sequencers. The nearly $1.3 million instrument, known as the NovaSeq X Plus, can decode up to 20,000 human genomes a year and was purchased by the Broad Institute, among the biggest buyers of genomic technologies in academic science.

But observers are worried the rollout is off to a rocky start. During an earnings call earlier this week, analysts pointed out that pre-orders for the new instruments have only risen from 140 about a month ago to 155 now. That's raising questions about demand at a time when a growing list of sequencing rivals are trying to cut into Illumina's sizable market share.

Those and other concerns have weighed on the company's stock. Illumina shares have tumbled 46% over the past year, a far greater drop than that of the overall industry, and the company's fourth-quarter revenue was down 10% from the prior quarter.

Financials

Teva's long decline might be over

Over the last six years, the once-mighty drug company Teva Pharmaceutical has been through pricing pressure, opioid settlements, and routine managerial upheaval, losing about half of its value in the process. Now, thanks in part to the gradual erosion of AbbVie's patent estate, the Israeli giant might finally return to growth.

In its earnings presentation yesterday, Teva forecasted 2023 sales of about $15 billion, which, as Evercore ISI analyst Umer Raffat points out, would mark the first time the company has actually grown on an annual basis since 2017.

But there's no guarantee those plans will pan out. Teva's full-year guidance assumes the company will make some amount of money from a biosimilar version of Humira, the top-selling anti-inflammatory treatment from AbbVie. In order for that to be possible, Teva and its manufacturing partner will need to convince the FDA their product passes muster. Any delays to that process could make the company's return to growth impossible.

Biotech

The next NASH domino is soon to fall

Last year's surprising Phase 3 success of a novel medicine for the prevalent liver disease NASH suggested a decade of fruitless pharmaceutical efforts might finally have produced an effective drug. In the months to come, we'll find out whether a second, similar medicine can replicate those results.

Viking Therapeutics expects to have Phase 2 results in the second quarter on whether its drug, VK2809, can outperform placebo at reducing fat in the livers of NASH patients, the company said yesterday. In an earlier trial, enrolling patients with less severe liver disease, Viking's drug led to a 58% reduction in liver fat compared to a 9% reduction in placebo patients.

VK2809 is aimed at the same biological target as Madrigal Pharmaceuticals' resmetirom, an oral treatment that reduced the fat deposits and fibrotic scarring that are hallmarks of NASH in a Phase 3 study disclosed in December. The possibility that VK2809 could eventually match or even surpass resmetirom's effects long been the subject of debate among investors, as Viking's roughly $700 million market cap presents a larger potential upside than Madrigal's $4.5 billion valuation.

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