A handful of Allergan's top shareholders want to bring back the old CEO as chairman

REUTERS/Shannon Stapleton

Former Allergan CEO David Pyott.

• A handful of large Allergan shareholders are privately discussing bringing back former Allergan CEO David Pyott in a chairman role, according to people familiar with the matter.
• It's unclear if investors have formally reached out to Pyott yet to discuss a return to the company.
• Shareholders were disappointed that the Botox-maker didn't go far enough in its strategic review announced earlier this week, and want the company to split the chairman and CEO roles which are currently both held by Brent Saunders.

A handful of large Allergan shareholders are privately discussing bringing back former Allergan chief executive David Pyott in a chairman role, according to people familiar with the matter.

Billionaire investor David Tepper's hedge fund Appaloosa Management and Senator Investment Group on Tuesday called on the Botox-maker's board to split chief executive and chairman roles at the company which are both currently held by Brent Saunders. Carl Icahn has also taken a stake in the company, according to Bloomberg.

It remains unclear if investors have reached out to Pyott formally to discuss a return to the company. The investors Business Insider spoke to are among the top 40 biggest Allergan holders.

A spokeswoman for Allergan declined to comment.

Pyott, who served as chief executive of Allergan from 1998 to 2015, declined to comment when Business Insider asked him if he was interested in a new role at Allergan. Since leaving the company, he has served on several boards including BioMarin Pharmaceutical, lighting company Philips, and adhesive company Avery Dennison.

Under Pyott, Allergan transformed from a small Southern California eye care business with approximately $1 billion in sales to a global specialty pharmaceutical and medical device company, with sales of more than $7 billion in 2014 and more than 10,000 employees.

Pyott stepped down as chief executive after Allergan was sold to Actavis for $66 billion. He was replaced by Actavis CEO Saunders to run the combined company.

But investors haven't been happy with many of the decisions Saunders has made leading Allergan.

Business Insider previously reported that investors had raised concerns about Allergan's direction after seeing the drugmaker's shares slump 33% in the past year. That's compared to a 12% rise for the Nasdaq Biotech Index during the same period.

Allergan said last week it was planning to sell off two businesses it considers non-core to the company, including its women's health and infectious disease businesses, to focus its core aesthetics business which includes products like Botox and double chin treatment Kybella.

In a letter to Allergan's board earlier this week, Appaloosa's Tepper and Senator said that the company's strategic review didn't go far enough and urged it to hire a new CEO or chairman from outside the company and to replace at least two additional board members.

While Allergan and its CEO were once investor darlings, things took a turn in September 2017 when the company touted a deal it had struck with the Saint Regis Mohawk Tribe to transfer patents of the eye drug Restasis. The move gives the drug sovereign immunity from certain patent challenges.

In October 2017, a district judge invalidated some of Restasis' patents through another channel. The loss meant Allergan wouldn't get much of the upside from the St. Regis deal, especially after the negative reaction it received from lawmakers and the public.

Matters didn't get better when Allergan announced in April it was in the "in the early stages of considering a possible offer" for the UK-listed Shire, only to say four hours later that it wouldn't make an offer.