Bayer's new CEO isn't committing to a breakup

Bill Anderson, the American-born executive who took over Bayer this summer, presumably had a wide-ranging conversation in his first press conference at the company this week. But the resulting coverage led with a single takeaway: He's not ready to commit to shareholders' demands that the company be split into pieces.

"I'm going to have an open mind" about whether Bayer's pharmaceutical, chemical, and agricultural businesses all belong within the same company, Anderson said, according to the Financial Times. "If I simply came in and said, 'No, I think the answer is structural change,' I think that would really be short-changing the people and the legacy of this company," he added, per Reuters.

But structural change is exactly what Bayer's shareholders want. Anderson's predecessor, who presided over the disastrous $63 billion purchase of the agriculture firm Monsanto, was the subject of a no-confidence vote. Weeks before Anderson's appointment, shareholders demanded the company's chairman replace the CEO and appoint an outsider tasked with breaking up the conglomerate.

Activism

Success made Exelixis rich and lazy, shareholder claims

Drug companies get a lot of criticism for using their profits to buy back stock rather than putting it all into the scientific research they theoretically exist to conduct. But as Exelixis learned this week, doing that opposite can be problematic, too.

Farallon Capital Management, an investment fund with a roughly 7% stake in Exelixis, is agitating for strategic and managerial change at the company. And its case, detailed in an open letter yesterday, basically boils down to: You should spend less money on research and more on stock buybacks.

Exelixis spent most of its two-decade history trying and failing to invent new drugs before finally succeeding with cabozantinib, a cancer treatment that now generates about $2 billion in annual revenue.

That windfall has led to a complete abandonment of research discipline, according to Farallon, which claims the company is spending $1 billion a year on "large, unfocused R&D program without an organizing principle or strategy." Instead, the company "should commit to an ongoing return of capital as cabozantinib continues to generate cash flow, both to reward shareholders for their investment and to ensure the Company is disciplined in prioritizing and maximizing the return on its research program," according to Farallon.

other R&D

Does the world need another Covid antiviral?

Gilead Sciences believes the answer is yes, and the company is running two Phase 3 trials on an oral version of the intravenous remdesivir, hoping to develop a more convenient and possibly more effective alternative to the market-leading Paxlovid.

The drug, called obeldesivir, met its goals in a Phase 1 study, Gilead told Reuters this week, and the company is recruiting more than 4,000 patients across two pivotal trials, enrolling vaccinated and unvaccinated people and stratifying them based on risk factors for severe Covid-19. Each study is expected to read out in 2024.

Gilead's investment is a bet that demand for Covid-19 antivirals will persist for years to come — and that obeldesivir can differentiate itself from Pfizer's Paxlovid and Merck's Lagevrio. Gilead's drug has at least one inherent advantage: The five-day course of treatment involves two tablets a day, which is likely more palatable than the six pills required by Paxlovid and eight demanded by Lagevrio.

Layoffs

Another biotech faces the cash crunch

NGM Bio, which ended 2022 with about enough cash to get to the end of this year, is cutting about one-third of its staff to reduce costs and prolong its corporate survival.

The company is laying off 75 employees in an effort to extend its cash runway through the first half of 2025, NGM said in a regulatory filing. In an email to the staff, NGM CEO David Woodhouse said the company had hoped to raise money through a stock sale last year, but the October failure of its treatment for macular degeneration eliminated about 75% of the company's value, making that impractical.

More than 50 biotech companies have downsized so far in 2023, according to a FierceBiotech tracker, carrying on a trend that began with last year's sharp decline in stock prices across the sector.

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