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Allergan stock rises after David Tepper’s Appaloosa ups pressure on the struggling drugmaker

Allergan shares rose Tuesday after billionaire hedge fund manager David Tepper increased his pressure on the drugmaker, calling for the company to jump-start the business with new strategies and recommending again that it separate the CEO and chairman roles.

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The stock rose about 1 percent Tuesday after the Appaloosa Management president lambasted Allergan’s executives, characterizing recent decision-making at $47 billion Allergan as “self-inflicted wounds” and marred by “ill-considered initiatives.”

“In the wake of last Tuesday’s earnings call (and market reaction) it should by now be readily apparent to all interested and responsible parties that Allergan requires a fresh approach to its business strategy and an unbiased review of its capabilities, opportunities, and way forward,” Tepper wrote in Appaloosa’s letter. “Of course, fully arresting AGN’s decline will require rigorous follow-through and likely more radical remediation measures.”

Appaloosa first asked Allergan’s board to separate the roles of chairman and CEO in a letter dated April 23, 2018. Despite two subsequent letters advocating the change, the Allergan directors have “ignored” similar proposals in the past, Tepper said.

Allergan offered the following statement to CNBC:

“Allergan’s Board of Directors has received Appaloosa’s proposal and is committed to continuing to engage with them, as we do any shareholder who has input and constructive ideas. The Board of Directors is committed to strong governance practices and independent board leadership. The company has been executing its strategy to drive growth and value for shareholders as it transforms into a global biopharmaceutical leader. Allergan has a strong long-term outlook across its four key therapeutics areas and a highly promising R&D pipeline.”

The company reported a $4.3 billion loss in the fourth quarter as it posted about $5.4 billion in pretax impairment charges. It reported last week a loss of $12.83 a share, an about-face compared with profits of $8.88 a share from a year ago. Analysts polled by Refinitiv were expecting a loss of 44 cents a share.

Appaloosa Management has approximately $14 billion of assets under management. Tepper also owns the National Football League team Carolina Panthers.