Pfizer's (PFE, Financial) stock saw an uptick after reports emerged that activist investor Starboard Value has invested $1 billion in the pharmaceutical giant. This development was positively received not only by equity investors but also by bondholders, as evidenced by a narrowing spread on the company’s outstanding bonds.
Starboard is reportedly consulting with two former Pfizer executives to devise a strategy aimed at returning the company to profitability. During the pandemic, Pfizer enjoyed significant revenue growth from its vaccines and antiviral products, with sales soaring to over $100 billion in 2022 compared to $42 billion in 2020. However, demand for these products has since declined, and the company has struggled to replicate that success with other products.
CEO Albert Bourla had previously highlighted weight-loss drugs as a key area of focus. Yet, Pfizer faced setbacks last year when a trial drug caused several side effects, leading to the abandonment of the project. The company has since announced its selection of a preferred extended-release formulation for its experimental drug danuglipron, a GLP-1 receptor agonist similar to Novo Nordisk’s Ozempic and Wegovy, but delivered orally rather than by injection. Studies on danuglipron’s extended-release formulation are set to proceed later this year.
Attention has also shifted to some failed deals under Bourla's leadership. Last month, Pfizer announced the global withdrawal of a sickle cell drug after data linked it to sickle cell complications and possible fatal events. This drug, Oxbryta, was part of Pfizer's $5.4 billion acquisition of Global Blood Therapeutics Inc. in 2022. The company also made other significant acquisitions, including a $43 billion purchase of cancer drug specialty biotech Seagen and a $6.7 billion acquisition of Arena Pharma, alongside a $11.6 billion investment in Biohaven Pharmaceutical Holding.
While the exact plans of Starboard for Pfizer remain unclear, Pfizer's spokesperson stated they do not comment on market speculation or rumors.
During the pandemic, Pfizer's stock peaked at approximately $59 per share by the end of 2021. However, as the demand for its drugs and vaccines has waned, the stock has fallen to around $28.29 per share. The stock has plummeted by about 40% in 2023, partially due to overly optimistic guidance and a major cost-cutting initiative announced about a year ago.
