With investors chronically unhappy over an unimpressive stock price and the R&D wing being sliced back to reduce the bite it takes out of revenue, Amgen announced yesterday that both its CEO and R&D chief are stepping down from their posts. Kevin Sharer will step down May 23rd and Roger Perlmutter will hand over the research reins in February to Sean Harper, the chief medical officer. Bob Bradway, the COO, will become chief executive in a pair of moves widely interpreted as a shakeup at the top.
While revenue has swelled during Sharer's tenure at the top of the world's biggest biotech, the share price has remained mired by the heavy pressure applied to its anemia drug franchise as safety concerns has curtailed use of their treatments and the prospect of biosimilar competition grew.
Perlmutter, meanwhile, had made some bold moves recently to expand Amgen's pipeline of cancer drugs, buying out BioVex and acquiring its late-stage therapeutic vaccine in a billion-dollar deal and executing a pact with Micromet in another billion-dollar agreement. The BioVex deal delivered OncoVex, which uses a cancer-destroying virus modified from a cold sore virus designed to replicate in solid tumors while spurring the immune system to go in and tackle the cancer as well.
But OncoVex along with other late-stage programs like AMG 386, ganitumab (AMG 479), and AMG 145 fueled a spike in R&D costs, pushing the share of research expenses to revenue to about 20%. As a result, Amgen was forced to axe 380 R&D workers this year to help placate restive investors and improve the math at Amgen. But it didn't work.
"You have a high level of investor dissatisfaction," Bernstein's Geoffrey Porges tells The New York Times. "You can clearly see the hand of the investors and the market in these transitions."
"What I think Bob Bradway needs to do is shake up the culture at Amgen, to reinvigorate a focus of innovation for new products and a focus on cutting expenses," RBC's Michael Yee told Bloomberg. "This company has not had a successful history of business development." And that could trigger new partnership deals.
Special Report: Amgen - Biotech's Biggest Spenders 2011