AstraZeneca's shares hit on rumours that CEO Pascal Soriot will join Teva

Shares in AstraZeneca fell more than 5 percent Thursday following an earlier report that CEO Pascal Soriot is expected to be named as the new chief executive of Teva. The report from financial news website Calcalist indicated that Soriot has met with Teva's search committee and agreed to take the position formerly occupied by Erez Vigodman, who stepped down from the Israeli drugmaker in February.

Earlier this year, Teva chairman Sol Barer said that his main priority was the continuing global search to identify a candidate with "deep and broad pharmaceutical experience" to serve as CEO. When questioned about the need for the new chief executive to be based in Israel, Barer remarked "we are looking around the world for the best candidate. We are committed once we find that candidate to do what it takes to bring that candidate to Teva."

According to Calcalist, Soriot, who has been CEO of AstraZeneca since 2012, is expected to earn about twice as much as Vigodman, who was paid $5.7 million annually. The source noted that while financial terms of the contract are still being negotiated, Soriot will receive a signing bonus of up to $20 million.

"Coupled with heightened UK scrutiny of chief executive pay and the rebellion against the last Astra remuneration report, [the signing bonus] could be a likely factor behind any departure in our view," commented Liberum analyst Roger Franklin. "Soriot is a quality chief executive who has delivered a 40 percent increase in the dollar share price (outperforming EU pharma) and his departure would not be a positive depending of course on the identity of any replacement," Franklin added.

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Soriot, who helped AstraZeneca successfully fend off an unsolicited takeover approach from Pfizer in 2014, has been rebuilding the company's drug pipeline and is currently awaiting data from the MYSTIC study. The trial is investigating the PD-L1 inhibitor Imfinzi (durvalumab), both as monotherapy and in combination with the CTLA-4 inhibitor tremelimumab, as a first-line treatment in patients with non-small-cell lung cancer, with results expected imminently. Analysts at Credit Suisse suggest that positive data from MYSTIC could see AstraZeneca's share price jump 17 percent, while negative results may cause a 12-percent drop.

Commenting on Soriot's possible move to Teva, Trinity Delta analyst Mick Cooper noted it "only makes sense if MYSTIC is expected to disappoint." However, analysts at UBS said they do not see a readacross to the study. "We do not see the reports, even if true, as any indication of the specific results of the MYSTIC trial," they remarked, adding "if Astra knew the results, they would have announced them." UBS suggested that one positive interpretation of the report could be that Soriot believes a lot of the restructuring at AstraZeneca has already been completed.


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