Biogen May Cut Jobs, Shutter Facilities to Streamline Ops and Free Up $400 Million for R&D
July 25, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Despite exceeding its forecasts and expectations for the quarter, Biogen indicates it plans to streamline operations, which often means job cuts, and reallocate funds to focus more on research and development. In what is likely to make investors happy, the company made a far stronger statement than usual that it was interested in acquisitions.
Biogen reported total revenue for the quarter of $3.1 billion, an increase of 6 percent from the same period last year. And if you exclude the company’s hemophilia revenues, since it spun off that business into a new company, Bioverativ , the increase was 15 percent. The company has long been dominant in the multiple sclerosis (MS) market, although there is often talk of sagging sales. That’s not obvious this quarter, with the company’s Tecfidera sales increasing 13 percent compared to the previous year’s period, and MS sales growing 5 percent overall.
The bigger news was sales of the new drug, Spinraza, for rare disease spinal muscular atrophy (SMA). Revenues grew to $203 million for the quarter, hinting at a blockbuster future.
“Biogen continued to perform well across multiple areas of our business,” said Michel Vounatsos, Biogen’s chief executive officer, in a statement. “This quarter demonstrated our ability to advance and expand the pipeline, deliver strong commercial results, and build our senior management team. Our market-leading MS portfolio continues to perform as we anticipated at the beginning of the year, as an increasing number of patients worldwide are benefitting from our therapies. Through Biogen’s efforts, patients are gaining access to Spinraza around the world for a disease that previously had no approved therapies. And, we have added exciting assets to our pipeline to drive future growth.”
Vounatsos also indicated changes are coming as he conducted a strategic review since taking over the company. By 2019, the company plans to reallocate spending in order to hit $400 million in R&D spending.
And in news likely to make investors rejoice, the company stated, “Biogen’s new priority for capital deployment is to invest in building its pipeline through increased business development activity. The Company continues to focus on maximizing long-term shareholder value creation, and aims to deploy capital to generate returns meaningfully above its cost of capital. Biogen views investment in growth as its top priority, but also recognizes the value of opportunistically returning excess capital to shareholders through share repurchases.”
John Carroll, writing for Endpoints News, says, “Biogen has done deals over the past year, but a number of analysts have complained that they haven’t seen the company get down to business in earnest. Vounatsos took over as CEO in that environment at the beginning of the year, after a long stretch with George Scangos at the helm.”
In January, Geoffrey Porges, an analyst with JP Morgan, wrote, “Biogen has one of the cleanest balance sheets in large cap biotechnology and could afford to take on leverage for meaningful neuroscience M&A deals.”
In May, Biogen acquired a Phase III-ready drug candidate, Cirara (intravenous glibencamide; BIIB093), from Remedy Pharmaceuticals, for large hemispheric infarction, a severe type of ischemic stroke. And in June, it wrapped an exclusive license deal with Bristol-Myers Squibb for BIIB092, for Alzheimer’s disease and progressive supranuclear palsy (PSP). The drug is now in a Phase II trial in PSP.
A lot is riding on Biogen’s efforts in Alzheimer’s drug, with its aducanumab one of the most eagerly anticipated in the industry. Currently in Phase III trials, aducanumab won’t have final results until around 2020, and most industry watchers are well aware that Phase III is where most Alzheimer’s drugs go to die.
Investors seemed to like Biogen’s announcement, however. took a hop at the news, and is currently trading at $284.70.