As Biogen Boss Moves to the Bay Area, California Biotechs Pay Attention
July 22, 2016
By Mark Terry, BioSpace.com Breaking News Staff
It was announced yesterday that Biogen ’s chief executive officer, George Scangos, is leaving the company as soon as a replacement is found. Reportedly he is moving to the west coast and the Bay Area to spend more time with his family. For any Bay Area biotech or life science company looking for a seasoned and successful executive, this would seem to be a great opportunity.
He’s leaving on a high note, although not without its problems. The company’s second-quarter earnings, which were also announced yesterday, exceeded analysts’ projections with $2.9 billion in revenue.
“The past six years have been quite successful,” Scangos said in a statement. “We have introduced six new products onto the market, increased our earnings and revenues several fold and transformed our research-and-development and commercial organizations to world-class levels, joining our already industry leading biologics manufacturing capabilities.”
All true. On the other hand, when the company’s clinical trial of opicinumab (Anti-LINGO-1) failed in June, the company’s stock dropped from $289.84 on June 6 to $252.58 on June 7, losing almost $8 billion in market value. Biogen is currently trading at $287.22.
And apparently few people were shocked at Scangos’ exit. Michael Yee, an analyst with RBC Capital Markets Corp., told Bloomberg, "This is one where people thought there could be change given all that has gone on in the past year or so.”
Those changes include top managers leaving the company and the slowing sales of the company’s top multiple sclerosis drug, Tecfidera. And Scangos had made a strategic pivot to focus on Alzheimer’s disease, a notoriously difficult drug development problem to solve. The stakes are high and the rewards could be huge, but it’s still a very high risk area.
Most analysts suspect the company will search outside for Scangos’ replacement. “I imagine what they’re looking for is someone who’s already running a smaller company or has a track record of leading an integrated business unit focused on the neurosciences,” said Geoffrey Porges, an analyst at Leerink Partners, to Bloomberg.
And there’s been numerous rumors that Biogen would be a good acquisition target. Various companies have been floated, including Gilead Sciences , Merck & Co. , Novartis AG and Pfizer .
“There’s a long list of much larger companies who need to diversify and need to add pipeline opportunities,” said Porges, “and Biogen pretty incontrovertibly has the preeminent late-stage Alzheimer’s disease program right now. You don’t even have an incumbent chief executive officer that you’d have to deal with.”
For his part, Scangos has not ruled out running another company, which should perk up the ears of various Bay Area life science companies and biotechs. “I’m not ready to sit on a porch with a mint julep, or whatever people drink,” Scangos told The Boston Globe.
It’s not one hundred percent clear on why he’s leaving, although at 68 it seems clear he wants to live closer to his children and grandchildren in California. He did tell The Boston Globe that in talks with Biogen’s board, his decision to leave “got concrete relatively recently. The board thinks it’s a good time for a transition.”