December 10, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Analysts are again checking the tea leaves and analyzing the stars to try and understand what Cambridge, Mass.-based Biogen, Inc. has in the works. Now the Boston Business Journal reports that despite the company’s plans to cut 11 percent of its workforce, it also appears to be planning to expand its Kendal Square facilities by 350,000 square feet.
At its third-quarter financial reporting on Oct. 21, Biogen showed an 11 percent increase in revenue compared to the third quarter of 2014. Despite that, the company also announced significant restructuring, including slashing a number of pipeline programs and an 11 percent cut in workforce. It’s expected to cut annual operating expenses by about $250 million.
Perhaps more surprising was the company, which has had success in the high-risk area of multiple sclerosis (MS) drug development, had indicated it is shifting some of its focus to the even riskier, but potentially lucrative, Alzheimer’s market.
has been a problem this year, which is partly responsible for the impetus to cut operating expenses. Shares traded on Mar. 20, 2015 for $475.61, dropped to $309.43 on July 27, and further to $256.04 on Oct. 13. They are currently trading for $284.61.
There has also been alternating speculation that Biogen is on the market to acquire another company—or is the target of an acquisition. The company has $4.1 billion in cash, and a number of analysts have suggested an acquisition would be a good idea. “Investors think Biogen’s top priority should be to acquire an asset that will have meaningful top-line growth within the next 18 to 36 months,” Bloomberg Intelligence analyst Asthika Goonewardene told BloombergBusiness. And the emphasis is on sooner, not later. “So, not one of those really small biotech companies that will only deliver something very promising five to seven years down the line.”
Although Biogen isn’t saying who the targets might be, potential targets include Boston-based Vertex Pharmaceuticals and New York-based Acorda Therapeutics . Biogen hasn’t indicated it’s committed to an acquisition, although it has said that it was keeping its eyes open.
At one point analysts, thought Pfizer Inc. might pick up Biogen, but with Pfizer still wrapping up its Hospira, Inc. buy and deep into the beginning stages of its acquisition of Allergan , that’s unlikely. Roche Holding or Merck & Co. could have both the size and motivation to acquire Biogen.
Meanwhile, it’s not entirely clear if Biogen is still completely focused on expanding in Kendall Square. Biogen already has 1.4 million square feet of space on its Cambridge Kendall Square campus that has seven buildings. If it expands, the 350,000-square-foot space is on top of the Cambridge Center North garage at 290 Binney Street. Boston Business Journals cites sources in the local real estate industry who said Biogen had a letter of intent to lease the space, and were close to completing it, but have since “pulled back after its October announcement detailing plans to cut some 800 people from its workforce.”
However, Biogen’s senior director of corporate communications, Jason Glashow, told Boston Business Journals, “We have just not made a decision at this point on the space. We have until the end of the year to make a decision. … We haven’t pulled back on anything at this point.”
Another source indicates that another company, Akamai Technologies (AKAM), which is located across from the expansion space in question, has also been looking to consolidate its offices, possibly with an eye on the same space. “Boston Properties is playing the two off each other,” the source was quoted. “They were talking to Akamai, and they were talking to Biogen, and they were talking to Akamai—they kind of go back and forth between the two.”
It does sound like Biogen plans to make a decision in the next three weeks.
