AZ on the slide again as CEO departure rumours bubble away

AstraZeneca's shares are heading south for the second day in a row, with rumours that chief executive Pascal Soriot has been poached by Teva refusing to die down.

AZ was down almost down 3.5% yesterday and lost another 1.5% in early trading this morning, fuelled largely by the UK company failing to issue an outright denial and simply responding to all enquiries with a 'no comment'.

The rumours emerged yesterday when a report in the Israeli news website Calcalist said Soriot had met with Teva - in the midst of a search for a new CEO after the departure of Erez Vigodman in February - and expressed his agreement to take on the role.

If confirmed, the news will be a blow for AZ as Soriot is in the midst of a massive refocusing project at the business that has seen it sell off dozens of non-core and mature product lines and invest in its pipeline, with the lofty ambition of driving sales to $45bn by 2023.

That promised sales growth was key to the company fending off a merger approach from Pfizer in 2014, two years into Soriot's tenure, but has looked increasingly tough to achieve thanks to some pipeline disappointments and lower than expected sales growth for some key products.

The timing of Soriot's supposed departure - just as AZ is anticipating massively important results from the MYSTIC trial of its immuno-oncology drugs Imfinzi (durvalumab) and tremelimumab in first-line non-small cell lung cancer (NSCLC) - has made investors nervous that he may be heading for the exit before bad news arrives.

Earlier this year AZ set tougher targets for the combination in the trial as it tries to close the gap with Merck & Co's Keytruda (pembrolizumab), Bristol-Myers Squibb's Opdivo (nivolumab) and other competitors in the fast-growing cancer immunotherapy sector. The data is due to read-out any day now, with a view to potential filings in the latter half of the year.

Heading to Teva seems like another tough task for Soriot, as the Israeli pharma group has had three CEOs in the last five years - Shlomo Yanai, Jeremy Levin and Vigodman. During that time, previously robust growth replaced by a dramatic slowdown in the business thanks in part to patent expirations for multiple sclerosis blockbuster Copaxone (glatiramer acetate) but also a tougher operating environment for Teva's big generics business. Public spats between senior management and the board haven't helped steady the ship.

So why move? From the rumours, it seems Soriot is being offered a handsome signing bonus - some say $20m - plus a salary that it twice what his predecessor received.

Industry gossip is split: the rumours are unfounded, or Soriot has decided his turnaround work at AZ is done and he can leave for a fresh challenge, or he is admitting his efforts haven't been successful and is heading for the exit ahead of bad news. Time will tell.