Lesson's From Essner's Downfall: Excess Hype
Straightforward, stout and sporting a gray beard, Essner exudes a grandfatherly sense of calm. But, while he is hardly a Steve Jobs-like hypemeister, he's been trumpeting Wyeth's pipeline over the last three or so years, including the three drugs recently held up by the FDA: Pritiq, an antidepressant; the antipsychotic bifeprunox; and Vivant, an osteoporosis treatment.
Wyeth's pipeline appeared plentiful. Essner, with the help of chief scientist Robert Ruffolo, had revamped the company's labs, and Wyeth's scientists were investigating more compounds than many of its peers.
Investors took the bait, driving Wyeth's stock up 55 percent from October 2004 to June, when it hit an all-time high of $58 a share. Investors were hopeful that the upcoming drugs would help Wyeth offset the loss of patent protection for two of its top-selling drugs - the antidepressant known as Effexor XR and Protonix, an antacid medicine.
Both medications, which accounted for more than a quarter of Wyeth's $20.3 billion in 2006 revenues, could face generic competition as soon as 2010.
With Wyeth's recent FDA rejections, investors woke up to the fact that the company's pipeline won't be able to make up for the coming patent losses.