Updated from 1:20 p.m. EDT
Mark Levin's days of running
have come to an end, and the prospect of a new perspective at the helm has restored investors' hope.
The company named Deborah Dunsire, the current head of
North American oncology operations, as the new president and chief executive, according to an announcement Wednesday. Dunsire will also join the board, and she plans to assume her duties by Aug. 1.
Shares of Millennium rose 59 cents, or 6.5%, to $9.65.
Levin, a co-founder of Millennium, had served as CEO since the company's inception, but told the board of his intention to resign to pursue personal interests and spend more time with his family. Millennium says its board had been seeking a replacement for the past two years.
According to a
Securities and Exchange Commission
filing Wednesday, Levin will give up his duties as chairman and CEO but remain on the board. Kenneth Weg, a member of the board since 2001, will become nonexecutive chairman.
On a conference call Wednesday morning the company reiterated its goal of reaching non-GAAP profitability by the end of 2006, but Yaron Werber of Smith Barney doesn't think it will happen until the following year.
"Investors have apparently lost confidence in the previous management's ability to make the business profitable in 2006, with the Velcade franchise under pressure from Revlimid's launch," Werber wrote in a research note.
Revlimid, an experimental drug for treating multiple myeloma, showed positive interim results in trials that suggested the drug's superiority over current treatments. Positive results of Revlimid trials in chronic lymphocytic leukemia were presented at the American Society of Clinical Oncology meeting last month.
Sales of Velcade, a multiple myeloma treatment that serves as the main growth driver of Millennium's stock, have reached a plateau, according to Werber. The product is in development for additional indications, and the company's success is riding on the results of ongoing clinical trials, the analyst believes. Smith Barney does and seeks to do business with the companies covered in its research reports.
In an interview, Dunsire said that speaking as an executive, competition isn't good for business, but as a doctor, she knows that it gives patients more therapeutic options. To increase a patient's chances of successful treatment, Millennium is in the early stages of planning trials combining Velcade with Revlimid for more a effective treatment, she says.
Werber rates the stock a hold, saying Wall Street's estimates for Velcade sales in 2006 are too optimistic. Still, he says "management changes should increase investor confidence in the stock and we expect a move into the low-teens on the news."
"I look forward to building on the company's rich legacy and track record in bringing breakthrough medicines to patients, while fulfilling its goal of non-GAAP profitability in 2006 and long-term growth," Dunsire said in a statement. She plans to review the pipeline and look for opportunities for making operations more efficient, according to analyst Mark Augustine of CSFB.
Millennium was actively looking to bring in a new CEO with greater operational experience, according to Sapna Srivastava of Morgan Stanley. Srivastava says Dunsire is well-suited for streamlining expenses and driving the company toward profitability.
However, there are still questions about how her experience in Big Pharma will translate for an emerging biotech company, as well as how she will identify the winners in Millennium's pipeline, the analyst says. Morgan Stanley does and seeks to do business with the companies it covers.
Dunsire says Millennium will focus on three segments -- oncology, inflammation and cardiovascular treatments. While at Novartis, she focused on oncology products and oversaw the launch Zometa, Femara and Gleevec, among others.
Earlier in her career, Dunsire was a clinical researcher responsible for the implementation of global phase II and phase III safety and efficacy studies across multiple treatment areas such as immunology, neurology, dermatology, oncology and transplantation. She has also been a practicing physician.