Renowned American biotechnology firm Illumina Inc. has appointed the Vice President of Agilent Technologies as its new CEO. The significant leadership change follows a turbulent period marked by a bitter proxy battle with billionaire investor Carl Icahn, who opposed the company’s acquisition of cancer test maker Grail in 2021. The proxy fight indubitably led to the resignation of CEO Francis deSouza and paved the way for the new Illumina CEO, Jacob Thaysen.
Amidst the array of challenges that Thaysen will have to face as Illumina’s new CEO, a major obstacle in his tenure is of how the leadership change elicited mixed reactions from the biotech firm’s investors. That’s not all.
With all the legal issues surrounding the company, what will the potential impact of Jacob Thaysen as the new Illumina CEO be on the financial performance of the company and how has the stock market reacted to Thaysen’s appointment?
Why Did Illumina Score A New CEO?
Illumina Inc. has achieved the milestone of a global reach spanning over 140 countries. Founded on April 1, 1998, the company specializes in the development, manufacturing, and marketing of integrated systems for genetic variation and biological function analysis. Illumina Inc. is headquartered in San Diego, California.
How did the company embroil itself in disputes and why did Illumina’s new CEO appointment come to be?
Illumina reacquired cancer test maker Grail in 2021 for a whopping $7.1 billion, without approval from the U.S. and European antitrust regulators. This decision prompted Icahn to pursue a proxy fight, arguing the unit should be divested as it had cost billions of dollars to investors.
The proxy battle with prolific activist investor Carl Icahn concluded with a shareholder vote in May, resulting in the ousting of former board chair, John Thompson, with Icahn’s nominee, Andrew Teno.
This upheaval was followed by Francis deSouza’s resignation in June. Interestingly, despite deSouza securing more shareholder votes than his challenger, the activist investor’s influence prevailed.
So of course, Illumina’s new CEO was bound to garner considerable attention. The 48-year-old Jacob Thaysen has big shoes to fill, ones that are mired in disputes with the EU and US competition regulators. Thaysen faces the mighty challenge of turning around Illumina’s financial performance at a rather delicate time for the biotech firm.
How Have Investors Reacted To Jacob Thaysen As Illumina’s CEO?
As Jacob Thaysen has played the role of a Senior VP at Agilent Technologies, the foray of a CEO is new to him. Thaysen brings a wealth of experience to his new role, having also served as part of the analytical instruments division leadership at Agilent since 2018.
Many industry experts, like Evercore’s Vijay Kumar, view Thaysen as a well-qualified choice for the CEO position, given his extensive background in the medical tools industry and his understanding of Illumina’s customer base.
“Illumina’s new CEO comes with a core genomics background, which was critical in our mind given the context of previous hire [deSouza] being outside the industry. Thaysen is a top leader at one of the top five life science companies and is well known by the life sciences and technology investor base, which should help on the communication front.”
Yet, Thaysen’s lack of CEO experience has irked some Illumina investors as well as sparked some hope in other investors to increase the company’s share prices.
Only some investors remain cautiously optimistic about Illumina’s future under Thaysen’s leadership. Whereas, Citi analyst Patrick Donnelly said that other investors had hoped for a CEO with prior executive experience and that Illumina’s new CEO remains a “show me” story.
The Stock Market’s Reaction To The New Illumina CEO
Thaysen will step into the ring at the helm of Illumina tackling two scrutinizing antitrust regulators seeking to block the Grail acquisition – One from the European Commission (EU), and the other from the US Federal Trade Commission (FTC). Illumina was fined €432 million in July for closing the deal without the approval of European officials.
Thaysen’s appointment as the new Illumina CEO coincides with a crucial juncture for the biotech company, as the company also recently revised its full-year forecast, citing a slower recovery in China as a contributing factor.
These legal challenges, coupled with intensified competition in the genomics sector, have contributed to a substantial decline in Illumina’s market capitalization, plummeting from around $75 billion in August 2021 to approximately $25 billion.
The market responded with a more than 4% drop in Illumina’s stock price following the announcement of a new Illumina CEO.
Despite the initial market reaction, Thaysen’s appointment is seen by some analysts as a positive development, given his expertise and industry knowledge. Under his leadership of four years, the analytical instruments division of Agilent had thrived into doubling operating profits, according to a press release from Illumina.
“Jacob Thaysen’s unique combination of deep technological and commercial experience will be a great addition to Illumina. He brings a fresh perspective, a demonstrated track record driving profitable growth, and a strong commitment to create value for all of Illumina’s stakeholders.”
– Stephen MacMillan, the chair of Illumina’s board.
Charles Dadswell, who served as interim CEO, will return to his previous role as senior vice president and general counsel.
As Thaysen assumes the role of CEO on September 25, he is expected to navigate Illumina through these challenges and work to restore the company’s financial performance.
