Biogen and Seagen tapped former Big Pharma leaders as their new chief executives on Thursday, but the biotech stocks diverged following the long-anticipated announcements.
At Biogen, Christopher Viehbacher will succeed Michel Vounatsos. Viehbacher spent 20 years at GSK — formerly GlaxoSmithKline — and served as global CEO of Sanofi for six years.
David Epstein will take over for Seagen's interim CEO, Roger Dansey. Epstein spent more than 25 years at Novartis and is fresh off a stint at venture capital firm Flagship Pioneering. Also, Dansey was appointed president of research and development.
But on the stock market today, only Biogen stock advanced. The biotech stock rose 3% to 290.70, while Seagen shares lost 5% and ended the regular session at 131.06.
Biotech Stock: New Blood At Top Spot
Viehbacher will take on his new role at Biogen on Nov. 14 following the departure of Vounatsos, who spent five years leading the biotech company.
During his time at Sanofi, Viehbacher navigated patent losses and finding new sources of revenue such as blockbuster drug Dupixent. Sanofi and Regeneron Pharmaceuticals partner on the blockbuster drug, a treatment for eczema, asthma and a nasal condition.
Most recently, Viehbacher cofounded Gurnet Point Capital, a health care investment fund.
Biotech stock Biogen has been on a run on positive test results for its new Alzheimer's drug, an Eisai-partnered med called lecanemab. Shares now have a bullish Relative Strength Rating of 96, according to IBD Digital. This puts Biogen stock in the top 4% of all stocks in terms of 12-month performance.
Former Flagship Leader At Seagen
Epstein's role at Seagen follows a short time at Flagship where he was an executive partner. Flagship helped found Moderna in 2010.
Prior to Flagship, Epstein spent more than two decades with Novartis where he built up its oncology business. Later, he served as CEO of Novartis Pharmaceuticals, a division of the broader company.
Seagen is a leader in cancer drugs, making antibody drug conjugates. Also known as ADCs, these drugs act as torpedoes, taking out cancer cells with targeted chemicals. But Seagen stock has been under pressure. There were whispers Merck could buy it, but that deal hasn't come to fruition.
The biotech stock has a middling RS Rating of 54. Shares are forming a cup-with-handle base with a buy point at 183.10, according to MarketSmith.com.
Murky CEO Territory
Both biotech stocks have been in murky territory when it comes to CEOs.
In early May, Vounatsos announced his plan to step down from Biogen's helm following a series of missteps with Alzheimer's drug Aduhelm. Though Aduhelm is approved, the Centers for Medicare and Medicaid Services largely declined to offer reimbursement for it. So, Biogen has mostly shelved its commercial efforts and is, instead, focusing on lecanemab.
Wedbush analyst Laura Chico applauded the appointment of Viehbacher to Biogen's top spot.
"We see Mr. Viehbacher as a strong candidate to fill the role given his past experience as CEO of Sanofi and industry knowledge," she said in a note to clients. "That being said, the role poses unique challenges — some that will need to be dealt with sooner vs. later."
Among those, she noted Biogen's existing multiple sclerosis business is in decline. Overall sales skidded 11% to $1.62 billion in the third quarter. Sales of biosimilars, less expensive knockoffs of biologic drugs, also fell 7% year over year. Further, biotech stock investors are watching breathlessly for more news on the Alzheimer's drug with Eisai.
"We look ahead to understand 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 he was arrested on domestic violence charges. Following Siegall's resignation, the board immediately named Dansey the interim CEO. Dansey has several years under his belt as Seagen's chief medical officer.
Since then, the potential Merck could buy Seagen first lifted the biotech stock. Then, due to a paucity of news on that front, Seagen shares have fallen off.
"While the announcement of a new CEO was largely anticipated, the impact on perceived strategic optionality appears to be weighing on shares, which was heightened over the summer over widely reported rumors of takeover talks with Merck," SVB Securities analyst Andrew Berens said in a note.
He expects Seagen stock to return to strength as investors digest the news. He kept his outperform rating on the biotech stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
