Trouble calling for Glaxo chief

Boss at feared hedge fund Elliott makes dramatic appearance at investor meeting... in heavy blow to Walmsley

ONE of the world’s most feared hedge fund bosses has ramped up the pressure on GlaxoSmithKline chief executive Emma Walmsley by making a surprise appearance at a crunch investor meeting.

In a dramatic intervention, Gordon Singer, head of Elliott Investment Management’s London office, questioned Walmsley’s leadership in front of GSK’s chairman and its 50 top investors at a private virtual event.

Singer, son of Elliott boss Paul Singer and seen as heir to his father’s empire, also demanded to know what was holding back the drug company’s share price, which has slumped below pre-pandemic levels after hitting summer highs.

GSK chairman Sir Jonathan Symonds and senior independent director Vindi Banga had called the meeting to reassure investors on the progress of plans to split the group.

But a source familiar with Elliott’s tactics said the unexpected appearance of one of the activist investor’s most senior and feared bosses would have been a deliberate move to send a message to GSK top brass.

‘He wants them to know he’s there,’ the source said. ‘He doesn’t do anything by accidrug dent. Their activist business by definition is a bit more theatrical because what they’re trying to do is move the share price. I think the fundamental reason he’s [intervened like this] is to put pressure on the chief executive, who’s not agreeing with him.’

Gordon Singer, who spent a year at Exeter College, Oxford, is seen

‘Gordon doesn’t do anything by accident’

as analytical and reserved compared with his combative father.

The Arsenal fan, 47, trained as an analyst at Lehman Brothers before leaving the bank to join his father’s firm in 1999. He led its expansion in Europe after taking charge of the London office in 2009.

Elliott is known for its aggressive tactics in forcing corporate shakeups. It took a multi-billion pound stake in GSK earlier this year, and in July called for a sale, rather than a spin-off, of its consumer business. It also demanded a process to pick the next boss of ‘New GSK’ – the remaining biopharma arm after the spin-off – piling pressure on Walmsley. GSK’s board has said she will stay on as chief executive.

Last month, a smaller hedge fund, Bluebell Capital, went public with the same aims, insisting it was not acting in concert with Elliott.

One investor on the call last week said: ‘Gordon wanted to know what was holding back the share price, which looks undervalued, and what confidence Jonathan and Vindi had in Emma. Elliott wants a process to prove Emma is up to the job.’ It is understood Symonds reiterated his support for Walmsley, who wasn’t on the call herself, and Banga said ‘management had a few more rounds left in them’ as they try to keep Elliott at bay. Walmsley’s lack of scientific experience has been repeatedly questioned as she prepares to lead New GSK.

Another investor on the call said: ‘It was disappointing. Vindi believes that the consumer spinout and the drugs pipeline are a catalyst for share price growth – we’re not convinced.

‘Gordon was polite, he’s a gentleman and a professional.’

Elliott’s stake emerged in April, sparking an initial surge in the share price. Investors had been concerned about the strength of GSK’s drugs pipeline, with key HIV dolutegravir’s patent due to expire by the end of the decade.

Elliott – which has assets worth more than $40billion (£30billion) – has called for greater scientific experience on GSK’s board.

The £70billion pharma giant has committed to bringing in directors with scientific backgrounds. It is understood that Symonds expressed frustration on the call at the difficulty in finding suitable executives with no conflicts of interest.

One large fund manager who invests in GSK said: ‘I have a lot of sympathy for Emma. There are plenty of pharma companies not run by scientists. Realistically the chief executive is an overlord there to set the strategy and grow the business.’

A GSK spokesman declined to comment on Elliott’s intervention, but said: ‘During the Investor Forum meeting Jon and Vindi shared the GSK Board’s best-practice approach to corporate governance, including how this supports maximising shareholder value.’

Paul Singer has made Elliott one of the world’s most feared hedge funds after running successful campaigns against corporate giants including Whitbread, the owner of the Premier Inn and Beefeater hospitality chains. Bluebell turned heads when it claimed the scalp of Danone chief Emmanuel Faber earlier this year.

Analysts expect GSK’s third-quarter results due later this month to show how the lingering effects of Covid in the US are still curtailing sales of its vital Shingrix shingles vaccine. Walmsley was criticised for missing the boat on bringing a Covid vaccine to market. But Covid treatments and tie-ups with rival vaccine makers are expected to bring in pandemic-related revenue.

GSK’s drugs pipeline was given a lift last week when David Julius and Ardem Patapoutian were awarded the Nobel Prize for medicine. The US scientists were recognised for discoveries in how the body perceives temperature and touch, which could lead to new ways of treating pain and disease.

GSK is in early stage testing of an orally administered drug, TRPV4, aimed at helping the millions worldwide who suffer from blindness related to diabetes complications.

The drug is borne out of the science pioneered by Dr Julius, who later advised GSK scientists. It marks the fourth year running that the pharma giant’s work has had links with the Nobel Prize winner.

GSK’s head of research, John Lepore, told The Mail on Sunday: ‘We follow the world’s most innovative science to develop transformational medicines for patients.’

‘A process to prove Emma is up to the job’