Appaloosa steps up pressure on Allergan after failed drug trials

FILE PHOTO: A sign marks Allergan's offices in Medford, Massachusetts, U.S., July 31, 2017. REUTERS/Brian Snyder

(Reuters) - Hedge fund Appaloosa LP on Thursday repeated its call for an independent chairman at Allergan Plc, after the Botox producer revealed that one of its drugs had failed three clinical studies.

Allergan announced on Wednesday that rapastinel, its depression treatment, had failed to meet clinical goals in three late-stage trials, spurring concerns among analysts over the drugmaker’s pipeline of products.

“With this latest fiasco, we again call on the Company to install an independent chairman with suitable experience to bring new leadership to the Board and rein in management’s predilection for value-destruction,” Appaloosa said.

The hedge fund, led by billionaire David Tepper, has also said Allergan should consider selling or separating itself, and demanded that it split the role of chairman and chief executive officer.

Implementing Appaloosa’s recommendations would be “highly disruptive” to its operations, Allergan has said.

“The Board’s misplaced fear of ‘disrupting’ Allergan is wearing thin as an excuse for inaction and can only perpetuate further erosion in the shareholders’ investment,” Appaloosa added on Thursday.

Allergan did not immediately respond to a request for comment.

Its shares have been lagging those of its industry peers on account of abandoned plans to sell some businesses, a disappointing 2019 revenue forecast and rising competition for several important drugs.

Reporting by Manas Mishra in Bengaluru; Editing by Arun Koyyur