Biogen Idec, after weeks of speculation in the local real estate market, has confirmed it is considering options to move its headquarters back from the suburbs to Cambridge, MA, as CEO George Scangos seeks to foster a more close-knit culture between the company’s R&D and commercial operations.
“We’re working on it. We’ll see if it’s practical,” Scangos says. “We don’t have anything signed. We are exploring a number of options.”
Scangos’ latest remarks came on Tuesday during an interview with Xconomy at a temporary office being set up for top Biogen executives in Cambridge’s Kendall Square. While Scangos says he is still spending most of his time at the company’s new headquarters in Weston, MA, he has personally carved out the new temporary office (with fresh pastel paint on the walls you can still smell) on the second floor of 10 Cambridge Center, closer to the center of R&D and biotech drug production.
No new letter of intent or lease has been signed in Cambridge, Scangos says, but he elaborated on some of the issues he’s been considering in regard to a potential move to Cambridge.
“There are some practicalities to consider,” Scangos says. “We have a long-term lease [in Weston]. If we were to move everybody back here, we’d need a lot more space. We’d have to be able to get that at a price that’s reasonable, and we’d have to deal with a sublease.”
Scangos’ latest comments build on remarks he made last month in an interview with Reuters, and at the Convergence conference, which prompted speculation about a potential move of the sales, marketing, and administrative offices back to Cambridge. In those comments, Scangos said he didn’t like having executive offices that are separate from the company’s R&D facilities in Cambridge. The suburban facility lacks energy, and is isolated from the company’s labs, he said.
The decision to move Biogen’s headquarters to Weston was made in the fall of 2008, under previous CEO James Mullen. Scangos took over last summer. “It wouldn’t have been my choice. In an ideal world, we’d all be back in Cambridge,” Scangos said at Convergence on May 20. “But we don’t live in an ideal world. We’re looking into it [a move], but I don’t know if it’s realistic or not.”
In the Tuesday interview with Xconomy, Scangos repeated some of the reasons he wants to bring the R&D and commercial group back together in one place.
“What I don’t like is the split where we have sales and marketing sitting in Weston and R&D sitting here,” Scangos says. “Today, I’m the only member of senior management who’s here. Everyone else is in Weston. That’s not optimal. If we could get everybody together, I would very much like that. It’s more sensible to have everyone in one location. You can talk, go down the hall, have lunch together, just meet people randomly, and get really good discussions going between departments of R&D and commercial.”
The practicalities which Biogen will have to iron out to do that aren’t trivial. Back in the fall of 2008, the company signed a 15-year lease on a 356,000-square foot office building in Weston; it started moving into the new space during mid-2010. Shortly after signing the new lease, Biogen explained in its annual report to shareholders that “we anticipate that the Weston facility will decrease our overall occupancy cost per employee.” About 500 people had their offices moved from Cambridge to the 74-acre Weston site just a year ago. Biogen has about 4,400 employees worldwide.
Biogen will still have facilities in multiple locations around Massachusetts, and the world, even if the company executes on the idea of moving its headquarters back to Cambridge. The company owns 508,000 square feet of space in Cambridge, and leases 885,000 more square feet of space in Massachusetts, at locations in Weston, Wellesley, Waltham, and Somerville, according to the company’s most recent annual report.
While cost savings were cited as a reason for the suburban move in 2009, Biogen’s fortunes have changed quite a bit in the year since Scangos took the helm. Scangos put his stamp on the company last fall, when the company cut 650 jobs, narrowed its R&D focus to home in more on neurology, and closed its San Diego facility. Scangos hired a couple of well-regarded former biotech CEOs, Doug Williams and Steve Holtzman, to head up Biogen’s R&D and business development operations, respectively. The company enjoyed some good luck as well when it got impressive clinical trial data from a new oral drug for multiple sclerosis, called BG-12, which helped push its stock over $100 a share briefly in April. Biogen stock closed yesterday at $93.76—up 40 percent so far this year.
With investors relatively happy, Scangos has had some time to think about the environment he wants to create to make employees productive. During my visit to the temporary office at 10 Cambridge Center, he explained what he wants to accomplish with a new office arrangement.
The space at 10 Cambridge Center is temporary, he emphasized, but it’s also a bit of a petri dish for the kind of office climate he wants to foster. “Whether we move or don’t move, I want to reconfigure how people sit and talk in a lot more open space, like you see out here,” Scangos says. “The traditional office pattern is that the executives have all their offices on the outside walls, and all the admins and junior people are on inside walls with no exposure to natural light. It seems very hierarchical to me. It seems to be not a good environment for the majority of people here.”
He continued, “This is a temporary place to hang a hat, but it’s also a trial of this concept. You can see the admins out there, they don’t have cubes anymore. It’s more open. They have some things in their sight line, so there’s some privacy, but it’s more open, a more efficient use of space. It’s more collaborative.”
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