Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) stock soared on the Tel Aviv Stock Exchange (TASE), following its jump yesterday on Wall Street, which followed a number of positive announcements regarding the company: incoming CEO Erez Vigodman will remain on Teva’s board, CFO Eyal Desheh pledged to cut expenses by $2 billion or more, and the company is confident that it will receive US Food and Drug Administration (FDA) approval for a 40mg Copaxone dosage.
Analysts are no longer indifferent about developments in the company. Citi analyst Liav Abraham claims that Vigodman remaining on the board of directors paves the way for the reduction of board members from 15 to 12 (in the pharmaceutical industry, it is customary for boards to have 10-12 members), which, in her opinion, is a big step towards positive change in Teva’s corporate governance structure.
Moreover, the matter is one that has troubled investors following the recent firing of former CEO Jeremy Levin. The separation between management and the board was perceived as ill-conceived by investors; as one that made it difficult for management to implement company strategies, and rendered them subject to pressures from the board, which intervened in the management of the company.
Citi said, “We view the continued representation of Mr. Vigodman on Teva’s Board as a material positive development for the corporate governance structure at Teva, which should enable swifter decision making and ensure an alignment of views between senior management and the board.”
Abraham expects Teva’s board to shrink, and said, “A smaller board will enable Teva to act more nimbly to navigate the multiple pressures facing the company.”
Moreover, Abraham believes this sends a very important message to capital markets, as Teva is in essence announcing that it is listening to the market, and taking aggressive steps to create value for investors. “Today’s announcement provides a clear signal to investors that Teva’s Board of Directors is focused on maximizing shareholder value creation,” said Abraham.
Citi also addressed the FDA decision regarding the 40mg Copaxone dosage, which would allow for three weekly injections, instead of daily injections. Teva estimates it will succeed in migrating more than 40% of Copaxone users to the new, improved dosage. Citi stated that the FDA decision will be announced on January 29, and will be the next catalyst for the company’s stock.
Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2014
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