Biogen Idec CEO George Scangos is putting his stamp on the direction of the company, by making some bold moves to cut jobs, facilities, and drug development programs. It’s all part of a bid to make a bigger impact in one area—neurology.
Weston, MA-based Biogen Idec (NASDAQ: BIIB), the world’s largest maker of multiple sclerosis drugs, outlined a sweeping series of cutbacks and strategic moves in a statement this morning. The changes are designed to save the company $300 million a year, the company said.
—Biogen is cutting 13 percent of its workforce. About 650 people will lose their jobs, leaving the company with a staff of about 4,275 employees worldwide.
—The company is going to close down its San Diego site, and its eastern Massachusetts sites in Waltham, MA and Wellesley, MA will be consolidated in Cambridge, MA and Weston, MA. This is a big blow to the San Diego community, which has been a part of the company since the 2003 merger between Biogen and Idec Pharmaceuticals. “The closing of our San Diego site is especially painful, as it is the home of the original Idec Pharmaceuticals and has played a fundamental role in the success of the company,” Scangos said in a statement.
—Cardiovascular disease R&D is being axed, and Biogen Idec will look to spin out or outlicense its cancer drug portfolio. The company plans to concentrate in the future on neurology treatments like its top-selling drugs for MS, and its expertise in the development of what it calls “select, high-impact biological therapies” which have the potential to truly stand out in the market. A total of 11 drug development programs are being cut. “We are a mile wide and an inch deep,” Scangos said in a conference call. “We need to focus.”
—Big changes are coming to the organizational chart. Business development, venture development, and corporate strategy are being reorganized “to improve crispness and timeliness of decision making and execution.” Layers of management will be eliminated, cutting back on bureaucracy. The company said it is now looking for a new head of its combined corporate development group.
—Biogen Idec is getting rid of the sales force that pitches the blockbuster drug rituximab (Rituxan) for cancer and rheumatoid arthritis. Biogen’s partner, the Roche unit of Genentech, will be responsible for the U.S. sales and marketing of Rituxan.
Scangos, a scientist and former CEO of South San Francisco-based Exelixis (NASDAQ: EXEL), said that R&D at Biogen Idec had to improve from the minute he was publicly introduced as the new boss last June. The company has been repeatedly hit with critiques from billionaire activist Carl Icahn, who has complained about the company’s lack of R&D productivity, noting that the company hasn’t brought a product to market since the 2004 introduction of its MS therapy natalizumab (Tysabri).
Four months after taking the job, Scangos had this to say: “Biogen Idec will be better off as a result of these actions. First, we will have increased focus. We have been operating in too many therapeutic areas and haven’t maximized our opportunities. We will now focus on a few areas where we can be among the best, and this starts with neurology.”
That means Biogen Idec will consolidate resources on its top-selling products interferon beta-1a (Avonex) as well as Tysabri. It will also continue to place its bets on new MS drugs, including an oral pill called BG-12; a treatment called fampridine being co-developed with Acorda Therapeutics; a longer-lasting pegylated interferon which would require fewer injections than Avonex; an antibody treatment called daclizumab developed in partnership with Abbott Laboratories; and anti-Lingo, a treatment which aspires to become the first to regenerate damaged tissue that coats nerves which go get damaged in MS patients.
While much of the activity will be focused on neurology, Biogen said today it will “employ rigorous criteria” when it decides to pursue other things. Biogen Idec will continue to pursue a couple of hemophilia programs, as examples. “The company will leverage its immunobiology, process development and biologics manufacturing expertise to target high-potential treatments for select disorders where there is a significant unmet need and where the drug candidate has the potential to be highly differentiated,” the company said.
Even though Biogen hasn’t introduced a new product in six years, the company said it has plans to launch five new products in the next five years, by 2015. “It is critical that we drive a culture of excellence,” Scangos said in the statement.
Biogen Idec is hosting a conference call to discuss today’s news at 8:30 am Eastern/5:30 am Pacific.