Teva Pharmaceutical Industries Ltd. (TEVA) shares fell the most in 16 months on investor disappointment with Chief Executive Officer Jeremy Levin’s plan to replace revenue from branded drugs losing patent protection in the next three years.
Teva’s American depositary receipts (TEVA:US) fell 5.3 percent to $39.47 at the close in New York, the biggest single-day decline since Aug. 8, 2011, adding to yesterday’s 2 percent drop. Before yesterday, the receipts had gained for seven straight days.
Teva’s new CEO, speaking yesterday to analysts and investors in New York, vowed to refocus the company’s branded effort on areas such as neurology while delivering cost-cuts of as much as $2 billion. While acknowledging that sales for best- selling Copaxone and other branded drugs may decrease as competition intensifies and patents expire, Levin said investors who stick around won’t be disappointed as he positions Teva to grow organically in the long-haul.
“The company laid out a promising vision for the long-term but it might have been less clear for some how they’re going to boost growth in the next few years,” Judson Clark, an analyst at Edward Jones & Co. who has a buy rating on the stock, said by phone. “In the shorter-term, some investors may be concerned that there isn’t a visible catalyst or any one drug that can easily replace Copaxone,” a multiple sclerosis treatment that generated $1.05 billion in sales in the third quarter.
“We do not see a pipeline drug with enough innovation to replace Copaxone,” Jami Rubin, an analyst at Goldman, Sachs & Co., wrote in a report yesterday after the presentation. “More importantly, we would have liked to see a greater commitment to rewarding investors with additional cash returns.” She has a “neutral” rating on the stock.
Jason Gerberry, an analyst at Leerink Swann & Co., cut the stock to neutral from buy, citing a “challenging revenue outlook” and a lack of near-term catalysts. Ronny Gal of Sanford C. Bernstein & Co. reduced his price estimate to $50 from $55. Teva will go through a “long transition process” and cost cuts won’t have much of an effect until 2014, he said.
Some investors were disappointed with the lack of update on CT-011, an experimental cancer drug, said Douglas Tsao of Barclays Plc.
“We are doing the proper diligence to assess the potential of the drug,” Michael Hayden, the company’s chief scientific officer, said of CT-011 in an interview yesterday. “We haven’t made a decision yet.”
In Tel Aviv, the stock declined 3.9 percent to close at 156.70 shekels, the biggest drop since Oct 4.
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