S&P Stays Negative on Struggling Teva

Former Teva president and CEO Erez Vigodman making a point at a business conference. (Miriam Alster/Flash90)

Standard & Poor’s (S&P) has issued a pessimistic assessment of Teva Pharmaceutical Industries, maintaining its BBB rating with a negative outlook, and took the company’s management and governance mark down to fair from satisfactory.

The bleak assessment will add further drag on Teva’s efforts to pull out of a turbulent year.

“Israel-based generic drug maker Teva Pharmaceutical Industries continues to face a number of challenges, including threats to its Copaxone (a treatment for multiple sclerosis) business, continued generic pricing pressure, and risks to execution of its strategy as the company navigates changes to its management team,” wrote S&P analyst Kim Logan. “We continue to monitor whether the appointment of a new CEO and the concurrent business review bring any change in strategic direction or financial policy.

“The negative outlook reflects our expectations for slower deleveraging than in our previous forecast and risks to our new base case.”

A shakeup at the highest echelons accounts for the low management rating. Teva CEO Erez Vigodman was ousted in February, after presiding over a prolonged decline in Teva’s share price. In December 2016, Sigurdur (Siggi) Olafsson resigned as president and CEO of Teva’s Global Generic Medicines Group.

Logan observes that the timing of the personnel changes compound other difficulties:

“The management changes have occurred at the same time the company is striving to integrate the Allergan generics acquisition, achieve 2017 guidance, and manage through legal and regulatory hurdles. The company’s ongoing strategic review also adds a degree of uncertainty to its plans for its generics and specialty businesses.”

Teva battled back with a promise of better times just around the corner.

“The next four months will be the most interesting in the history of Teva as an innovative company – more than all of its over 100 years of history,” declared head of global R&D and chief scientific officer Dr. Michael Hayden at a medical technology conference in Raanana on Monday.

On the list for the next four months: SD809 (Deutetrabenazine) for the treatment of Huntington Disease, which is awaiting FDA approval; Phase III clinical trial results for chronic migraine treatment Fremanezumab; pain treatment Fasinumab; and multiple sclerosis treatment Laquinimod, Globes reported.

“We don’t expect everything to go smoothly. But we do expect progress that will position us in neurological sector treatments where patients have been left behind to some degree with no solutions. Most of us here will live until we are 85 but not all of us will know that that is what is happening,” Hayden said.