Turing Pharmaceutical is facing a huge, looming loss on its stock, which it acquired in 2014 from a biotech firm called Rigel Pharma.
The loss will put Turing at risk of being forced to liquidate its stock as well as cut its headcount.
Turing’s stock price dropped by as much as 70 percent over the past 12 months, making it the most expensive stock to lose in history.
Turing is the company behind some of the biggest-selling drugs in history, including the blockbuster Turing-Aldrich drug, and is a pioneer in the field of neurosurgery.
Turing has lost more than $4 billion on its stocks in the past five years.
The company is currently down more than a third of its market value since the start of 2017.
Rigel has said it has cut its CEO’s pay by more than 25 percent, a move that could hurt the company’s ability to retain its staff and attract new investors.
The hedge fund manager is said to have told the company to sell all of its holdings in the stock by mid-October, though it may have been more aggressive.
The stock price is down more by nearly $2 billion this year compared with 2016.
It’s down by nearly 30 percent since 2017.
If Turing can’t keep its head above water, the company could face a $1 billion loss in 2017.
“I don’t think it will be enough,” says David Blight, a portfolio manager at U.S. hedge fund Lazy London Asset Management.
“It will not be sustainable.
If the company cannot get into profitability, I don’t know what they’re going to do.
I think they’re all just going to need to take a lot of painkillers.”
A New Era at Turing Pharmaceutical Turing is facing some tough competition from several new entrants.
One of those competitors is Ferring Pharmaceuticals, which has a large and growing pipeline of medications that include the Turing-based flu vaccine.
“We believe that Ferring’s acquisition of Turing’s product pipeline is the best in the industry and is likely to lead to Turing’s best-in-class pricing,” says Lazy, which invests in pharmaceuticals.
Lazy says the combination of Ferring and Turing’s acquisition is likely going to push Turing to a new revenue-generating revenue stream.
“As we’ve seen with other companies in the pharma space, Turing is in a position to make the best use of its acquired product pipeline and, as a result, its acquisition of Ferrous will help drive its revenue,” Lazy said in a note.
“Although we believe the market for Turing’s flu vaccine product is growing and has benefited from significant competition, we believe that this growth is likely unsustainable as the price of flu vaccines continues to rise and the cost of treatment continues to decline.”
The company’s stock also is trading at a premium.
The shares have fallen more than 70 percent since their May 2018 high of $8.70, according to FactSet.
In the first quarter of 2017, the stock was up more than 80 percent.
In August, the shares were trading at about $2.80 a share.
The move to Ferrous is a departure for the company, which was founded in 2002 and was once the world’s largest producer of flu vaccine for the United States and Europe.
The flu vaccine maker, based in Indianapolis, Indiana, had been working on its own version of the flu vaccine, but was forced to partner with Ferring after its flu vaccine was approved in early 2016.
Ferring acquired Turing’s vaccines and is now in a partnership with another vaccine maker called Lundbeck.
That partnership was terminated after the company lost a $2 million investment in October.
“Lundbeck and Turing are in a very difficult spot,” says Blight.
“The cost of flu shots is going to continue to rise, and that’s going to affect Turing.
The risk of Turing shutting down is huge, especially because it’s so successful.
It is one of the few companies that is a big enough player in the vaccine business to be able to maintain their business in a competitive environment.”
The latest losses on the company have made it harder for Turing to attract new investment, which would help offset the cost to the company.
It currently has a valuation of $17 billion, according the Morningstar data firm.
It may need more than just new investment to get Turing back on track, however.
The pharmaceuticals company could be forced to take drastic action, according, some analysts.
“This will make it very difficult for Turing, especially if the company is unable to turn things around,” Blight says.
“A company that has a product pipeline that is such a success will have to be very careful about how they invest.
That could mean cutting back on new acquisitions or cutting down on new research and development.”