Pfizer stock skidded Thursday after former executives Ian Read and Frank D'Amelio said they are siding with the drugmaker in its battle with activist investor Starboard Value.
In a statement, the duo said they have decided not to be involved in Starboard's efforts to turn the tide at Pfizer. Instead, they are "fully supportive" of Chief Executive Albert Bourla, who Read hand-picked as his successor. Bourla took the reins at Pfizer in 2019. D'Amelio was the company's chief financial officer.
But Starboard says it believes Pfizer coerced Read and D'Amelio into flipping their stance on Pfizer.
"Specifically, we understand that people within Pfizer and/or their representatives have contacted Mr. Read and Mr. D'Amelio and purportedly threatened to commence costly litigation against them, claw back prior compensation, and cancel unvested performance stock units, unless they publicly release a statement supporting the current Chief Executive Officer, Dr. Albert Bourla," Starboard said in a letter to the board.
On today's stock market, Pfizer stock dropped 2.8% to 29.34. That reversed from a 2.2% climb on Monday after Starboard reportedly took a $1 billion stake in the drugmaker. Pfizer declined to comment to Investor's Business Daily, and Starboard didn't respond to a request.
Activist Focuses On Pfizer Stock Turnaround
Starboard says it reached out to Read and D'Amelio as part of its due diligence on Pfizer. During those meetings, the two apparently "expressed concerns about the trajectory of the business."
Pfizer's woes are well-known to Wall Street. Pfizer stock has been in a years-long decline. After developing the world's first Covid vaccine, Pfizer was late to the game in obesity treatment. Its first two efforts to develop a weight-loss drug flopped. Recently, Pfizer pulled Oxbryta from the market. Pfizer acquired Oxbryta, a sickle cell drug, with Global Blood Therapeutics for $5.4 billion.
Read and D'Amelio reportedly offered to assist in Starboard's planned Pfizer turnaround.
"Let us be abundantly clear, this is the extent of our engagement with Mr. Read and Mr. D'Amelio and is entirely consistent with the public reporting to date," Starboard said.
Starboard says it will meet with Bourla and Shantanu Narayen, a board member, on Oct. 16.
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