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Shares of Pfizer PFE rose nearly 3% on Monday following a report issued by Bloomberg, which stated that activist investor Starboard did not nominate any director to Pfizer’s board ahead of Jan. 25.
With the expiry of the deadline, Starboard has foregone an opportunity to bring changes in PFE’s board. This signals a less confrontational approach, at least for this year. Shareholders are set to convene at Pfizer’s annual meeting in April to vote on director seats for the year.
The article, however, pointed out that Starboard could still try to make the changes in Pfizer’s board next year if the two parties are unable to reach an agreement.
Bloomberg claims to have contacted both Pfizer and Starboard, who have either declined to comment on the above news or are yet to respond.
The above article provides some respite to Pfizer’s management, which was accused last year by Starboard of making poor capital allocation, research and development (R&D) failures and problems with forecasting and budgeting. Before making these claims, Starboard built a $1 billion position in PFE.
PFE Stock Performance
In the past year, shares of Pfizer have lost 2.3% against the industry’s 0.2% growth.
Image Source: Zacks Investment Research
Starboard Slams PFE for R&D Inefficiencies, Overpaid Acquisitions
At an investor summit in October, Starboard publicly detailed its concerns about the pharma giant and called out PFE’s board of directors to take action against the latter’s management for not earning sustainable revenues on R&D and M&A.
Starboard painted a grim picture of the pharma giant, highlighting numerous clinical setbacks and product launches that fell short of commercial expectations. It also criticized Pfizer's efforts with its GLP-1 agonist obesity program, citing Wall Street analysts’ skepticism about the latter’s once-daily formulation of oral GLP-1 drug danuglipron.
The activist investor also highlighted Pfizer’s investment of about $70 billion since the pandemic in a string of acquisitions, namely Seagen, Biohaven, Arena Pharmaceuticals, Global Blood Therapeutics and ReViral. Per the investor, the company overpaid for these acquisitions, citing PFE’s own target of generating more than $20.5 billion in sales from products acquired from these deals by 2030.
Per Starboard, the above decisions have resulted in Pfizer losing nearly $20-$60 billions of market value since 2019, despite receiving a $40 billion boost from its COVID-19 franchise during the pandemic. It attributed this market value decline to a lack of internal innovation and failure to deliver on its commitments.