Celgene announces changes to its leadership team
One of biotech's top names announced major changes to its executive management this morning, promoting three individuals internally and hiring a new Executive Vice President/CFO from outside of the company. Specifically, Mark Alles is being promoted to President/COO, Jacqualyn Fouse is being promoted to President of Hematology and Oncology, and Scott Smith will become the President of Inflammation & Immunology. In a noteworthy move, Celgene reached out to one of Biogen and Merck & Co.'s former executives in Peter Kellogg to become the new Vice President and CFO. All leadership changes will become effective August 1, 2014.
These leadership changes are certainly intriguing given that they are coming on the back of the first step in defending Revlimid's patent protection. As a refresher, Revlimid's patents are being challenged by competitors hoping to develop a generic version of the blockbuster cancer drug. A Markman hearing was held last week, with most observers reporting that Celgene's attorneys seemed to hold the upper hand.
Looking ahead, we will need to wait and see what this managerial shakeup ultimately means for this leading biotech. My off the cuff view is that the internal promotions are rewards for the series of clinical and commercial successes the company has achieved in recent years. As such, the key hire to watch will probably be Peter Kellogg, who brings decades of experience to this position.
Sarepta could move higher after positive mention
Shares of Sarepta Therapeutics are up 4% in premarket trading this morning after Roth Capital initiated coverage on the stock, rating it a "buy". Even more intriguing, however, is the $52 price target the company placed on Sarepta shares. All else being equal, Roth is suggesting that Sarepta is worth around $3 billion in terms of its market cap, without an approved product.
What's my take? My view is that Roth is looking backwards at how Sarepta's shares performed last year before the company's experimental Duchenne muscular dystrophy therapy eteplirsen ran into regulatory issues with the Food and Drug Administration. Now that those issues are being worked through, Roth appears to expect Sarepta shares to move closer to their previous 52-week highs.
While that is certainly possible, it's important to remember that we are also in the midst of a radically different market environment than last year. Clinical-stage biotechs have been some of the worst performers this year, as sentiment has shifted more toward valuations based on cash flows and revenue streams. Moreover, Sarepta was undoubtedly a beneficiary of this rising tide among all biotechs last year. And now that developmental biotechs have come back down to Earth to some degree, it might be difficult for Sarepta to achieve similar levels of performance prior to a regulatory approval for its lead clinical candidate. As always, time will tell!
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