After Dropping the "Biogen Bombshell," CEO Turns R&D Focus to Neurological Diseases Like Alzheimer's

After Dropping the
November 12, 2015
By Mark Terry, Breaking News Staff

Investors and analysts continue to act uncertain over Cambridge, Mass.-based Biogen, Inc. ’s strategy strategy as the company’s stock gets the jitters.

Late last month, in what employees and analysts have dubbed the “Biogen Bombshell,” the company indicated it was cutting 11 percent of its staff and slashing several pipeline programs, despite third-quarter financials that rose 11 percent, hitting $2.8 billion for the quarter. At the time, as The Motley Fool pointed out, those types of movements typically indicate a company in trouble. But the company’s stock at the time increased 4 percent.

Biogen has always worked in high-risk areas, such as multiple sclerosis (MS) and Alzheimer’s disease. One of the programs Biogen is slashing is a Phase III trial of its MS drug Tecfidera for secondary progressive multiple sclerosis (SPMS). There has been concern over a couple cares of a very rare side effect called progressive multifocal leukoencephalopathy (PML) that resulted in death. The connection is somewhat tenuous and extremely rare, but it’s had its effect on stock prices. The company is also cutting a pipeline project for lupus.

Biogen apparently is doubling down on the Alzheimer’s market, a desert wasteland of failed compounds with about 123 drugs having failed clinical trials. But Biogen has initiated enrollment in two identical Phase III trials with its drug aducanumab, with a total combined 2,700 patients. Analysts expect the cost of the trials to exceed $1 billion and data is expected through 2020, with the studies being completed in 2022.

“They’re making some pretty big bets,” said Chris Leo, senior vice president at Back Bay Life Science Advisors to The Boston Globe. “Alzheimer’s historically has been a graveyard for drug developers, but it’s clearly a huge opportunity. If Biogen can succeed with drugs in that area, that has the potential to dwarf their multiple sclerosis franchise. But that’s a very big if.”

Quick changes in direction are not completely new to Biogen’s chief executive George Scangos. Only four months after taking the helm of the company in 2010, he slashed 650 jobs, shuttered a San Diego laboratory, and halted its cancer and cardiovascular research programs. The company refined its focus on neurological diseases, which led to it becoming the leading global company in MS drugs.

The company’s stock jitters seems to be the result of the side effects for Tecfidera, and overall slowing sales, as well as so-so clinical results for aducanumab for Alzheimer’s. In March the company reported the drug showed a significant reduction in amyloid plaque in patients with Alzheimer’s disease. Biogen also has BAN2401, a Phase II product for Alzheimer’s that has the same target as aducanumab, and E2609, a BACE inhibitor that is also currently in mid-stage development for Alzheimer’s.

“We’re cautiously excited,” Jim Wessler, president of the Alzheimer’s Association of Massachusetts and New Hampshire told The Boston Globe. “Biogen is seeking to intervene in very, very early cognitive impairment and they’re showing a slowing in cognitive decline.”

“The reason we’re restructuring is this amazing pipeline we have to fund,” Scangos told The Boston Globe. “We’re making drugs that would be first in class in what they do, and that’s always risky. But they’re not wildly speculative. They’re based on solid science.”

At the moment, the stock market appears to approve. Biogen is on the upswing after a rocky three or four months. Shares traded for a high of $475.98 on Mar. 20, 2015, dropped to $373.93 on April 30, rose back to $408.93, then plummeted to $309.43 on July 27. Shares continued downward to a low of $256.04 on Oct. 13, but are currently trading for $296.32.

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