Seattle Genetics has had a bit of a dust-up today in the stock market, as investors have been seeking to make sense of a second case of a dangerous adverse event seen in a patient on the company’s new lymphoma drug.

Shares of the company (NASDAQ: SGEN) dipped almost 6 percent early in the day, after Wall Street analyst Elliot Favus circulated a report about how a second case of progressive multifocal leukoencephalopathy (PML) has been diagnosed in a patient taking the company’s flagship lymphoma drug. Favus, known for his bearish positions, didn’t immediately respond to a request for a copy of his report.

Seattle Genetics stock regained much of its value as the day went on, but news on PML is bound to rattle nerves on Wall Street. That’s because this condition is a rare, and sometimes deadly, brain infection that patients sometimes get when taking modern targeted biologic drugs like Biogen Idec’s natalizumab (Tysabri), and Roche/Genentech’s rituximab (Rituxan). The Tysabri case in particular made headlines, and prompted that drug to be temporarily withdrawn from the market, until scientists better understood the risks and benefits. Since Seattle Genetics’ brentuximab vedotin (Adcetris) only arrived on the market in August, and Seattle Genetics depends heavily on it as its only marketed product, it’s understandable why investors got jumpy.

The Seattle Genetics drug, for patients with Hodgkin’s lymphoma and anaplastic large cell lymphoma, has shown impressive effectiveness in clinical trials. It provided significant tumor shrinkage in 75 percent of patients with relapsed forms of Hodgkin’s disease in a clinical trial, and in about 86 percent of patients with anaplastic large-cell lymphoma. Researchers are still following patients to see how long those responses really do last, and to what extent they may help people live longer. The most common side effects found in clinical trials were a depletion in infection-fighting white blood cells, nerve damage in the fingers and toes, fatigue, nausea, and anemia.

Clay Siegall

CEO Clay Siegall offered a spirited defense of his product today when I reached him by phone. The PML association with Adcetris isn’t new, he said, as the first page of the product’s FDA approved prescribing information includes a warning about the condition. The warning says that a patient in clinical trials, who had received four prior chemotherapy regimens before getting Adcetris, died from PML.

Siegall did confirm that a more recent, second case of PML in an Adcetris patient has been diagnosed. That case was reported to the company, which shared with the information with the FDA. He wouldn’t comment on the patient’s condition, saying that it is company policy not to talk about individual patients.

To provide some context, Siegall notes that PML is part of the underlying disease that some patients have with lymphomas. In some cases, patients get multiple rounds of chemotherapy, which suppresses their immune systems, and makes them more vulnerable to … Next Page »

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Immune Design aspires to become a bigger company, and now it has recruited a CEO from a bigger company.

The Seattle-based vaccine developer is announcing today that its new chief executive is Carlos Paya, the former president of Elan, the Ireland-based biotech company which has significant operations in South San Francisco. Paya is replacing Immune Design’s founding CEO, Steve Reed, who will continue to serve on the company’s executive management team and board. Bruce Carter, the executive chairman, is staying in his position.

“We are fortunate to have someone of Dr. Paya’s caliber joining Immune Design,” Reed said in a statement.

Paya’s prior job was at Elan, the company known for developing the hit multiple sclerosis drug natalizumab (Tysabri). He oversaw commercial, marketing, R&D, and clinical operations there since November 2008. Before that, he was with Indianapolis-based pharma giant Eli Lilly (NYSE: LLY), as vice president of Lilly Research Laboratories. Paya, an immunologist by training, was a member of the faculty at the Mayo Clinic before going into the pharmaceutical industry.

Immune Design was founded in 2008 with technology from the Caltech lab of Nobel Laureate David Baltimore, and from Reed’s team at the Seattle-based Infectious Disease Research Institute. The technology is based on a vector from Baltimore’s lab that makes it possible to specifically stimulate dendritic cells of the immune system, which are known for sending sentinel warning signals about pathogens to other cells of the immune system. That targeting ability is being combined with synthetic chemical compounds called adjuvants, which are used to boost the effectiveness of vaccines.

The adjuvants from Reed’s lab, when combined with Baltimore’s precise delivery system, offer an opportunity to trigger highly potent, more specific immune responses in the body than vaccines from the past, according to Rick Klausner, a partner with The Column Group, one of the company’s founding investors.

The company has raised $50 million in two rounds of venture financing, and last year struck its first major partnership with AstraZeneca’s MedImmune unit to develop new vaccine candidates.

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Biogen Idec’s (NASDAQ:BIIB) stock price is soaring this morning after the Weston, MA-based biotech company reported a bump in first quarter revenue and new details about a successful late-stage clinical trials for its oral multiple sclerosis drug.

Shares of Biogen were up more than 22 percent to $105.83 as of 10:23 am Eastern time. The company reported that its revenues for the first quarter increased 9 percent to $1.2 billion, aided by increased sales of its big-selling multiple sclerosis drugs natalizumab (Tysabri) and interferon beta-1a (Avonex). Also, executives during a call with investors reportedly gave more vivid details about the benefits of its oral MS drug, dimethyl fumarate (BG-12), than were provided earlier this month when the firm announced that a late-stage study of the drug was a success.

Biogen, the world’s largest provider of multiple sclerosis drugs, is aiming to extend its franchise with an oral MS pill. Its existing therapies for the disease are injected, and an oral pill could offer greater convenience to patients. In September, Swiss drugmaker Novartis was the first to gain FDA approval for an MS pill, fingolimod (Gilenya), for relapsing forms of the disease. Israel-based Teva Pharmaceutical (NASDAQ:TEVA) is also in the running with an MS pill called laquinimod, which is in late-stage development.

Biogen said this morning that the firm’s oral MS drug reduced the proportion of patients who suffered relapses of the disease by 49 percent after two years compared with those on a placebo, and patients on the drug also showed a 38 percent reduction in disability progression, Reuters reported. These details build on what the company said on April 11 about the drug’s performance in a pivotal Phase III trial of 1,200 patients called DEFINE, which met its primary and secondary goals. The company is also conducting a separate Phase III trial of the drug called CONFIRM, the results of which are expected in the second half of this year.

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Biogen Idec is the world’s biggest maker of multiple sclerosis drugs, and today it just cleared a hurdle that might help it stay at the top of the heap for years to come.

The Weston, MA-based biotech giant (NASDAQ: BIIB) said today that its oral MS drug candidate, dimethyl fumarate (BG-12), met its main goal of reducing MS flare-ups over two years, when compared with a placebo, in a pivotal study of 1,200 patients known as DEFINE. The drug was found effective when given either twice a day or three times a day, Biogen Idec said. The Biogen treatment also met all of its secondary goals, such as reducing the number of new or enlarging brain lesions, and slowing the rate of disability from the neurodegenerative disorder—which, often over a period of years, robs people of their ability to walk.

“We are very pleased with these data and believe that BG-12 has the potential to offer MS patients a highly effective oral treatment option with a strong safety profile,” said Doug Williams, Biogen Idec’s executive vice president of research and development, in a statement.

Today’s statement from Biogen didn’t disclose any specific details about the safety profile, or the magnitude of the benefit patients experienced. The data is still being analyzed, and will be presented at a future scientific meeting, the company said. Plus, Biogen Idec needs to reproduce the benefit of the oral drug in one more ongoing pivotal trial, known (naturally) as CONFIRM.

The new oral drug is critical for Biogen’s competitive position. Biogen is the world’s largest maker of MS drugs on the strength of its injectable therapies interferon beta (Avonex), and natalizumab (Tysabri). But each of these products has its weaknesses—patients tend to relapse on interferons over time and grow weary of the injections, while Tysabri is dogged by a dangerous side effect known as PML. Many of the 400,000 U.S. patients with multiple sclerosis have long desired oral pill alternatives, and haven’t had one until recently. Swiss pharmaceutical giant Novartis won FDA approval back in September for fingolimod (Gilenya). Another oral MS drug candidate from Germany-based Merck KGaA failed to win FDA clearance in February.

There’s no way to know how the Biogen oral drug stacks up with Novartis’s treatment until more complete data sets come out at scientific meetings, but optimism is in the air among Biogen shareholders this morning. Biogen stock climbed more than 5 percent to $77.37 at the opening bell of trading this morning.

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One of Biogen Idec’s rivals in the development of oral multiple sclerosis drugs got some bad news from the FDA. The agency has informed Germany-based Merck KGaA that it wants more safety data on the firm’s experimental MS pill cladribine, which has failed to gain approval at this time, the company said today.

This news comes as Weston, MA-based Biogen (NASDAQ:BIIB), one of the largest providers of multiple sclerosis treatments, completes late-stage development of its own oral MS drug, dimethyl fumarate (also called BG-12). The company has said that data from two Phase III clinical trials of the drug for relapsing forms of the autoimmune disease are expected this year.

Merck KGaA (which is independent from Whitehouse Station, NJ-based Merck & Co.) has been developing cladribine for MS through its subsidiary, EMD Serono, which has U.S. headquarters in Rockland, MA.

With the exception of Novartis’s oral MS drug, fingolimod (Gilenya), which garnered FDA approval in September 2010, the only treatment options for patients with multiple sclerosis are injected biological drugs. Oral treatments are seen as more convenient for patients and offer the potential for better prescription compliance because of the simpler administration of the pills versus injections.

Biogen’s oral MS drug might be important to building its franchise of approved MS treatments—which now include interferon beta (Avonex) and natalizumab (Tysabri)—while protecting the business from rivals trying to gain more of the market. Cambridge, MA-based Genzyme (NASDAQ:GENZ), for example, is in late-stage development of an injected MS treatment called alemtuzumab (Lemtrada) that has shown promise in clinical trials.

Biogen’s stock has barely moved this morning, and was listed at $70.01 per share this morning as of 10:01 am Eastern time. The stock is already trading near its 52-week high of $70.73 per share, according to Google Finance.

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Elan, the Dublin, Ireland-based drugmaker that co-manufactures Biogen Idec’s (NASDAQ: BIIB) multiple sclerosis drug Tysabri and has a major R&D operation in South San Francisco, is cutting staff, according to a late-Tuesday report from Reuters. The news organization said Elan is laying off approximately 130 people, or 10 percent of its total workforce, with most of the cuts occurring at the South San Francisco facility. About half of the people losing their jobs were scientists, Reuters said. The company reported losses of almost $260 million for the first nine months of 2010, and it stock has suffered an 80 percent decline since mid-2008.

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Weston, MA-based biotech Biogen Idec (NASDAQ:BIIB) and Elan, its Dublin-based partner, have asked U.S. and European health regulators to approve a new prescribing label for the companies’ multiple sclerosis drug natalizumab (Tysabri) in an effort to reduce the risk of a potentially lethal brain infection called progressive multifocal leukoencephalopathy (PLM) in patients who take the treatment, according to a press release. The requested prescribing label would include whether a patient who is being considered for natalizumab treatment has an anti-viral antibody whose presence is one of multiple factors that help doctors tell whether or she is at risk of developing PML.

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Biogen Idec is making another step towards building itself into a neurological diseases drug specialist. The Weston, MA-based biotech company (NASDAQ:BIIB) said today it has acquired a subsidiary of the Swiss biotech firm Neurimmune Holding to gain worldwide rights to antibody drugs against three specific proteins, which might cause neurodegenerative diseases such as Alzheimer’s, ALS, and Parkinson’s when they mis-fold.

Biogen, the world’s largest maker of multiple sclerosis drugs, said it has agreed to pay Neurimmune $32.5 million upfront and up to $395 million in potential milestone payments. The companies have a previous agreement that dates back to 2007 to discover antibodies against a separate protein target related to the treatment of Alzheimer’s. For the programs included in the new deal, Biogen is responsible for clinical development and commercialization of the antibody drug candidates and Neurimmune is taking on research duties such as discovery of back-up candidates against the protein targets of interest.

This latest deal fits with the strategy that Biogen revealed in early November when it announced it would axe about 650 jobs, close its cancer research hub in San Diego, and take other steps to emphasize its neurology business. The company, founded in 1978, is building on its existing base in this market with products such as its top-selling MS drugs interferon beta-1a and (Avonex) and natalizumab (Tysabri). The layoffs and other cost-cutting steps the firm announced last month are expected to reduce its expenses by about $300 million per year.

This deal with Neurimmune helps Biogen build up its neurology pipeline beyond its core strength in multiple sclerosis, which is becoming an increasingly competitive corner of the neurology market with large drug makers such as Novartis and EMD Serono advancing new oral MS therapies.

“Biogen Idec is committed to becoming the global leader in the development of innovative therapies for neurodegenerative diseases,” Alfred Sandrock, senior vice president of neurology research and development at Biogen, said in a statement. “Neurimmune continues to impress us with their ability to translate scientific insights into innovative antibodies for the potential treatment and prevention of many neurodegenerative diseases.”

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Biogen Idec is returning to its biotech roots, in a way. The Weston, MA-based company (NASDAQ:BIIB) made headlines yesterday for its plans to cut 650 full-time jobs and narrow its research and development focus to emphasize its core expertise in neurology. And a big part of the restructuring plan, the firm’s CEO, George Scangos, says, is to make the biotech company, well, more biotech-like.

Xconomy was early on Biogen’s big news yesterday and also provided details about where the job cuts are being made in Massachusetts and San Diego, where the company plans to completely close its R&D center.

Scangos, who took over as Biogen’s chief executive on July 15, inherited a company that has not brought a new product to market sine 2004 and has been criticized by billionaire investor Carl Icahn and others on Wall Street for an overall lack of research and development productivity. (Those critiques sound an awful lot like the knocks on lumbering big pharmaceutical companies.) So Scangos is taking action, not just to address concerns among investors, but also to remove some of the productivity-hampering bureaucracy from the firm, he says.

“What’s best about small companies is they are fast, they are efficient, and there’s not a lot of bureaucracy,” Scangos said in an interview. “As the company gets larger, it gets harder and harder to do that. We want to make Biogen more like a biotech and less like a pharmaceutical firm.” The CEO has reduced the number of R&D committees, for instance, and he has designated project leaders who report directly to him.

Biogen, founded in 1978 during the biotech industry’s earliest days, has grown into a profitable industry leader, best known as the world’s largest maker of multiple sclerosis drugs. However, the company’s $1.2 billion in revenue for the third quarter of 2010 rose a modest 5 percent from a year ago, in part because of decreased revenue from one of is three major products, the anti-cancer and rheumatoid arthritis drug rituximab (Rituxan). Also, the company’s MS franchise faces competition from, among other products, the Swiss drug giant Novartis’s recently approved oral MS treatment, fingolimod (Gilenya).

Scangos inspected the company’s R&D pipeline and other operations over the summer, and concluded that the company was stretched too thin in terms of the number of therapeutic areas it was researching. A major part of the restructuring plan is to divest the company’s cancer and cardiovascular drug pipelines. The company has designated 11 programs that it plans to remove from its pipeline, including its molecule galiximab for lymphoma, the anti-tumor drug volocixiumab, and the cardiovascular therapy lixivaptan.

Scangos wants Biogen to build on its leadership in neurology. This means increasing revenue from its blockbuster MS drugs interferon beta (Avonex) and natalizumab (Tysabri), developing its existing pipeline of drugs for neurological disorders, and researching biomarkers and other avenues to help personalize treatments for people with illnesses such as multiple sclerosis, he said during a conference call with investors yesterday. The company highlighted its late-stage pipeline, which features five new neurological disease treatments that could reach the market by 2015. The firm also has two hemophilia drugs in late-stage development.

Still, there are lingering worries about the increasing number of cases of a potentially deadly brain … Next Page »

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Weston, MA-based Biogen Idec (NASDAQ:BIIB) plans to lay off most of the 300 to 350 employees at the company’s San Diego research center as part of the restructuring plan announced this morning, Biogen spokeswoman Christina Chan said. The drug development company, which was created in the 2003 merger of Massachusetts’ based Biogen and San Diego’s Idec Pharmaceuticals, says it will close all San Diego operations.

Xconomy reported the wider scope and strategy behind the cuts at Biogen this morning, including the major theme of focusing the company’s resources on neurology products, such as its multiple sclerosis drugs natalizumab (Tysabri) and interferon beta-1a (Avonex). Meantime, the firm is deemphasizing its research in the areas of cardiovascular and cancer therapies, the latter of the two being a focus of its San Diego R&D group.

Indeed, the cuts appear to be a major blow to the San Diego biotech community, where Biogen Idec ranks as a prominent leader and local success story. The layoffs in San Diego comprise roughly half of the 650 positions, or 13 percent of the firm’s total work force, that it says it will eliminate through the restructuring plan.

The impact is less severe in Massachusetts, where Biogen is consolidating its operations and cutting about 80 workers, or 4 percent of its 2,000 employees in the Bay State, Chan said. The firm is closing its operations in Wellesley, MA, and Waltham, MA, consolidating its Massachusetts operations at its Cambridge, MA, and Weston facilities.

Biogen is planning to offer jobs to some of its San Diego workers—but they will have to move out of the state for those positions. Chan said that about 25 percent of the firm’s San Diego employees are being offered jobs at the company’s sites in Cambridge and Research Triangle Park, NC. Otherwise, most of the firm’s workers in San Diego will be let go by January 10, while a smaller number of employees will stay on until mid-2011 to assist in winding down operations there, she said.

Xconomy plans to follow up on our initial reports on Biogen’s bold cuts with further analysis and interviews with company executives about the impacts on the San Diego and Boston-area biotech communities.

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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.

George Scangos

—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 … Next Page »

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Biogen Idec (NASDAQ: BIIB), one of the world’s biggest makers of multiple sclerosis drugs, has some catching up to do in bringing an oral MS treatment to market. Swiss drug giant Novartis said today it has won FDA approval of an MS pill, which some see as more convenient than the injected treatments for the disease that Weston, MA-based Biogen and others sell.

Novartis’s once-daily pill fingolimod (Gilenya) is the first oral drug for relapsing forms of multiple sclerosis to hit the U.S. market, according to the company. Biogen, which is in late-stage development of its own MS pill called BG-12, was quick to issue a statement this morning to acknowledge Novartis’s drug approval. Yet the Biogen statement noted that the “long-term safety profile of Gilenya has yet to be established.”

Biogen is expecting to have data from a Phase III trial of its own oral multiple sclerosis drug in the middle of next year. The company now sells the injected MS treatments interferon beta (Avonex) and natalizumab (Tysabri), and those drugs accounted for 70 percent of the firm’s $1.2 billion in revenue for the second quarter of 2010. While natalizumab (which is co-marketed by the Irish drug maker Elan) has been Biogen’s fastest-growing product, the drug carries the risk of serious brain infections called progressive multifocal leukoencephalopathy (PML).

Multiple sclerosis is a disease in which the sheaths around nerves in the brain and spinal cord are damaged, causing lesions to form. Muscle spasms and loss of control of  body movement are common symptoms of the disease.

Another major competitor in the pursuit of an oral MS drug is EMD Serono, a division of Germany-based Merck with U.S. headquarters in Rockland, MA. In July, the FDA granted EMD priority review of its experimental MS pill, cladribine, and the firm expects the agency to decide whether to approve the drug for the U.S. market by the fourth quarter of this year. Merck (not to be confused with Whitehouse Station, NJ-based Merck) is also one of Biogen’s rivals in the market for interferon beta.

Novartis says it has shown in a clinical study that its oral MS drug prevents relapses of multiple sclerosis better than Biogen’s interferon beta, which is the firm’s biggest selling drug.

Biogen’s shares were down 5.55 percent on the day to $55 per share as of 11:38 am Eastern time.

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The long Fourth of July holiday weekend made for a short week of life sciences news in San Diego. Even if I made short work of this week’s roundup, though, let’s hope you long remain interested.

—Qualcomm (NASDAQ: QCOM) chairman and CEO Paul Jacobs, who was instrumental in bringing the World Economic Forum’s mobile health summit to San Diego last week, said he sees wellness and chronic care management as the two biggest opportunities in wireless health. The Qualcomm CEO said mobile devices can help cut the costs of chronic care management, which accounts for most of the healthcare budget, by monitoring patients’ vital signs and reminding them to take their pills.

—Santarus, the San Diego biotech that specializes in treating gastrointestinal disorders, cut 37 percent of its workforce, or about 120 jobs, after a competitor began selling a generic version of omeprazole sodium bicarbonate (Zegerid) for treating heartburn and gastroesophageal disease. Santarus (NASDAQ: SNTS) still has a proprietary drug for treating Type 2 diabetes, and has at least two other drug candidates in late stage clinical trials.

—San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) said it signed an agreement with Japan’s Eisai Pharmaceuticals to sell its lorcaserin weight loss drug in the United States. Arena, which gets $50 million upfront and could get as much as $160 million in additional milestone payments, plans to manufacture the drug for Eisai—and will take between 31.5 percent and 36.5 percent of Eisai’s estimated annual U.S. sales.

—George Scangos, who was named last week as CEO of Biogen Idec, told analysts the Weston, MA-based biotech powerhouse (which maintains operations in San Diego) has got to improve its R&D productivity. As Ryan reported, Biogen Idec (NASDAQ: BIIB) hasn’t brought a new drug to market since the 2004 launch of natalizumab (Tysabri), the company’s treatment for multiple sclerosis.

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George Scangos, the newly appointed chief executive of Biogen Idec (NASDAQ:BIIB), is calling for the biotech powerhouse to improve its research and development productivity. Which could mean that some projects get cut, Scangos said in a call with analysts yesterday. The news broke on Wednesday that Biogen selected Scangos for the big job.

Scangos, 62, knows how to run a tight R&D ship. He comes to Weston, MA-based Biogen after 14 years as CEO of the South San Francisco-based cancer drug developer Exelixis (NASDAQ:EXEL), an organization with fewer than 400 employees and an impressive 14 compounds in development. Some credit for that efficiency also goes to Michael Morrissey, who is taking the helm as CEO of Exelixis after serving as the firm’s president of R&D. (Biogen recently moved its headquarters from Cambridge, MA, to Weston, and it also has a base of operations in San Diego.)

A big knock on the R&D engine at Biogen, one of the world’s leading makers of multiple sclerosis drugs, is that the company hasn’t brought a product to market since the 2004 launch of its MS therapy natalizumab (Tysabri). Scangos, who starts work at Biogen on July 15, indicated that he would like to recreate some aspects of the Exelixis culture at his new company.

“At Exelixis, we were able to create a culture with a sense of urgency, a lack of bureaucracy, and great productivity—but with much more limited financial resources,” Scangos said. “One of the compelling characteristics of Biogen Idec is its size; it’s large enough and has great cash flow, and it’s small enough so that we can instill a greater sense of urgency and move quickly and decisively.”

Scangos reminded analysts and journalists at least twice yesterday that he doesn’t officially start work at Biogen for another couple weeks, and he declined to discuss specific changes he would make. But a focus of his early days will be on reviewing Biogen’s pipeline, which includes five products in late-stage development that have the potential to be launched on the market over a three-year period, he said.

“Another priority for me is to take a hard look at R&D. We spend a lot of money on R&D and we have to make … Next Page »

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The future leader of Biogen Idec might be as familiar with a petri dish as he or she is with a spreadsheet.

That’s according to Bill Young, who took over as Biogen’s chairman of the board on January 1. Young is on the board committee that’s searching to replace CEO Jim Mullen, who announced last month that he’s stepping down after a decade at the helm of the Cambridge, MA-based biotech giant (NASDAQ: BIIB). I met with Young last week while he was visiting a startup in Seattle.

“We have a whole list of criteria, but the most important of which is that we find someone who has managed and understands the role of science in a biotech company, and how that needs to be bridged to the commercial side of things,” Young says. “That may mean it’s a scientist or someone who understands how that fits into what biotech companies are designed to do, which is develop products.”

The job is one of the higher-profile gigs in biotechnology. Biogen, which also has operations in San Diego, is the world’s largest maker of multiple sclerosis drugs. It generated $4.4 billion in revenue last year, and came close to a $1 billion annual profit in 2009. Biogen had 4,750 employees worldwide heading into this year, and a stock market valuation of $15 billion that ranks it behind only Amgen, Gilead Sciences, and Celgene among biopharmaceutical industry peers.

Yet Biogen has its share of headaches. Uncertainty about the side effects of its fastest-growing multiple sclerosis drug, natalizumab (Tysabri), are a constant worry. Billionaire investor Carl Icahn ripped the company last year for poor R&D performance that he said added up to “failed leadership.” Icahn persuaded shareholders to give his slate two board seats, and he already has given notice that he wants three more in this year’s board election. This fight has gotten personal at times, like when Icahn reminded shareholders that Mullen was paid $60.8 million in total compensation, combining salary, bonus, and stock options over a five-year period, while Biogen stock declined from $66.61 to $47.63.

Bill Young

Mullen sounded battle-weary last month when he spoke at a Goldman Sachs conference about this exit: “If you’re going to have a mid-life crisis, you can do one of two or three things, right? Sports cars I’m too big for. Mistresses are not approved at home. Maybe a career change is what’s in order. I decided to go with Number 3. I think it’s a good time, for, you know, a transition.”

While Mullen looks for something else to do, he doesn’t appear to have groomed an obvious internal successor. It’s also worth noting that Mullen has a business background, not a scientific one.

“There may be some internal candidates we consider, but they are largely external,” Young says. “We have a lot of people interested. As you can imagine, there are not many large, cash flow positive biotech companies around these days. Many have been acquired or haven’t reached that stage yet. Biogen Idec is certainly one of those. There’s a lot to work with there. Good culture, strong science. Jim [Mullen] has been there 20 years, done a good job, but I think he was ready to try something else. That’s OK and appropriate. People will make that decision from time to time.”

The search committee has hired … Next Page »

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At least one more patient has been diagnosed with a rare, and potentially fatal brain infection after taking natalizumab (Tysabri), the hit drug for multiple sclerosis from Biogen Idec and Elan, according to Biogen CEO James Mullen.

There are now 28 confirmed cases of patients with progressive multifocal leukoencephalopathy (PML) as of the last count in mid-December. That’s one more case than I counted in a detailed summary of PML risk that we published on November 19. Mullen made his remarks in front of a group of investors today at a Goldman Sachs conference titled “Healthcare CEOs Unscripted: A View From the Top.”

Mullen talked about the hit drug’s difficult history with PML as part of a wide-ranging and candid conversation with Goldman analyst May-Kin Ho in New York. These were the first public remarks Mullen, 51, has made since the Cambridge, MA-based company (NASDAQ: BIIB) announced this week he is stepping down in June as CEO, after a decade at the helm. He offered his thoughts on how to mitigate the risk for multiple sclerosis patients, his reflections on what worked and what didn’t in the 2003 merger with San Diego-based Idec Pharmaceuticals, and how the industry needs to change its ways to keep innovation alive. Here are the highlights that I picked up from the webcast.

On how Biogen Idec plans to keep doctors, patients, and investors informed about PML risk:

Biogen Idec says it plans to offer monthly updates to physicians about the latest statistics on PML cases, and infection rates. It will also staff a hotline for physicians who want to gather detailed, updated information and context from the company’s medical staff. The company plans to lay out the numbers in a more detailed fashion, with rates on incidence of infection, numbers showing how long certain groups of patients have been on the drug, combined with data on how many total patients are receiving treatment. “That’s the best way for people to visualize what’s going on,” Mullen says.

“The whole communications strategy around that has been challenging,” Mullen said. “We’ve gotten lots of feedback. Pretty much whatever we’ve done, someone won’t like it.”

On why he’s leaving the company in June:

Mullen noted that the Tysabri risk-management situation has stabilized during the past year. A new patent that lasts until 2026 has extended the lifespan of pegylated interferon beta (Avonex) which may help it fend off cheaper “follow-on” biologic competitors. And the product pipeline looks encouraging as well, he said.

“There are a lot of good prospects out there for Tysabri, and there aren’t, if you will, a lot of huge, thorny issues to be wrestled to the ground here in the short term. It’s a good time for a transition.”

From a personal perspective, he added: “If you’re going to have a mid-life crisis, you can do one of two or three things, right? Sports cars I’m too big for. Mistresses are not approved at home. Maybe a career change is what’s in order. I decided to go with Number 3. I think it’s a good time, for, you know, a transition. We’ve also got a new chairman with Bill Young. We’ve got some new board members. We’ll have a few more new board members. It’s a good time for people to sort of re-think … Next Page »

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[Updated 6:05 pm Eastern 1/4/10] Biogen Idec, the world’s largest maker of multiple sclerosis drugs and an anchor of Boston’s biotech cluster, is looking for a new CEO. The Cambridge, MA-based company (NASDAQ: BIIB) said today that longtime CEO James Mullen is stepping down on June 8, and also will be relinquishing his seat on the board at this year’s annual meeting.

Mullen, 51, joined the company in 1989 as director of facilities and engineering, and rose through the ranks on the business side over the next two decades. He became vice president of operations in 1992, and then ran Biogen’s international operations from 1996 to 1999. He was named CEO and president of Biogen in June 2000, and he has held both of those titles since the 2003 merger with San Diego-based Idec Pharmaceuticals.

Mullen presided over a period in which Biogen emerged as the world’s largest maker of multiple sclerosis drugs and one of the biotech industry’s leading companies. But it has recently come under fire from billionaire investor Carl Icahn for failing to deliver investment returns on par with its biotech peers, and for its inability to introduce any new marketed products since natalizumab (Tysabri) was approved by the FDA in November 2004.

Pressure from shareholders wasn’t a factor in Mullen’s decision to step down, says Tim Hunt, Biogen’s vice president of communications.

“After more than 20 years at the company, he’s retiring,” Hunt says. “He feels it’s the right time for a transition in leadership.” He said Mullen has “a good working relationship” with the board, and that the timing is right, because “the situation with Tysabri has stabilized,” and the company is confident in its pipeline of experimental product candidates. Tysabri, the hit MS drug, has had a tortured history because of its link to a rare, and potentially fatal brain infection called progressive multifocal leukoencephalopathy (PML).

Mullen will continue to earn a prorated portion of his annual base salary of $1.25 million through June 8, and will collect a bonus worth 125 percent of his base salary, Biogen said in a regulatory filing. All of his unvested stock options will vest on his retirement date of June 8. If the company is sold before his retirement date, Mullen will collect a severance payment worth triple his annual base salary and target bonus.

James Mullen

Biogen has started a search for Mullen’s replacement, and he said he will help the new leader with the transition.

Mullen noted in a statement: “I have had the opportunity to work with many talented and dedicated colleagues over the past 21 years, and I am proud of all that we have accomplished together. With our strong product portfolio, pipeline, global presence and financial profile, the company is well positioned to continue to enhance the lives of patients and deliver value to its investors.”

[Updated 6:05 pm Eastern with CEO pay details.] Biogen has endured a tumultuous year at the top, which intensified last May when Icahn mounted a proxy fight, urging shareholders to oust directors for what he called “failed leadership.” It was a blistering attack on Biogen’s marketing, dealmaking, research and development, and management. In his May proxy filing, Icahn pointed out that Mullen sold $85 million worth of his shares in the company at an average price of $59 a share since the merger with Idec. He noted that Mullen was paid $60.8 million in total compensation, combining salary, bonus, and stock options over the preceding five years, while Biogen’s stock declined from $66.61 to $47.63 in that time.

Icahn’s arguments had some sway with shareholders, as he won two of the four seats he campaigned for last spring, and since then, four more directors have resigned or announced plans to resign.

Separately, Biogen announced that it has added Caroline Dorsa as a director who will fill a term that expires in 2011. Dorsa is chief financial officer of Public Service Enterprise Group, and a former senior vice president of Merck.

Shares of Biogen climbed 36 cents to $54 in after-hours trading following the announcements.

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The board of Redwood City, CA-based Facet Biotech (NASDAQ:FACT) unanimously recommended that shareholders reject the latest tender offer from Cambridge, MA-based Biogen Idec (NASDAQ:BIIB), saying that the $17.50 per-share offer, which would value Facet at about $438.7 million, was inadequate. Biogen called the bid, made a week ago, its “best-and-final offer.” Facet nonetheless says it is giving the Cambridge firm chance for due diligence discussions “to enable Biogen Idec to determine whether it will materially increase its offer to reflect the true value of our company and prospects.” Biogen began its takeover bid for Facet in September.

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Cambridge, MA-based Biogen Idec reports today that it’s upping its bid to buy Facet Biotech by 21 percent, after the smaller firm’s board rejected Biogen’s earlier buyout offer in October.

Biogen (NASDAQ:BIIB) said it would pay $17.50 per share in cash for Redwood City, CA-based Facet, valuing the company at about $438.7 million, and increasing Biogen’s previous offer by $3 per share. The purchase of Facet (NASDAQ:FACT) would give Biogen full ownership of daclizumab, an antibody for multiple sclerosis that the two companies are developing together.

Biogen is calling this latest bid to acquire Facet its “best-and-final offer.” In addition to daclizumab, which is in mid-stage clinical trials, Facet’s other key asset includes an antibody drug for solid tumors, volociximab, in Phase II clinical trials. The buyout would build on Biogen’s market-leading franchise for multiple sclerosis treatments, which includes its marketed drugs interferon (Avonex) and natalizumab (Tysabri).

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[Update: 1:55 pm Eastern, 11/20/09] After a bitter standoff earlier this year with billionaire investor Carl Icahn over alleged mismanagement, Cambridge, MA-based Biogen Idec now faces another sharp attack from a major shareholder.

New York-based HealthCor Management, a hedge fund that invests in health and biotech companies, said today in a regulatory filing that Biogen (NASDAQ: BIIB) overpays CEO James Mullen, that his performance has been poor, and that the company has a record of “excessive and fruitless” spending on R&D and little regard for its shareholders. HealthCor portfolio managers Joseph Healey and Arthur Cohen, in a letter dated November 18, urged the board to “revisit” Mullen’s compensation, cut research spending, and start buying back shares to boost the stock price. HealthCor said it holds 3.65 million shares, or about a 1.3 percent stake in Biogen, and it has held a position for more than a year.

HealthCor is urging the board to turn things around by buying back $500 million to $1 billion worth of stock annually. That would reduce the supply of available shares, and increase the value of those that remain on the market.

“We fear that continued acquiescence to the status quo will be viewed as an indictment of the Board’s lack of focus on shareholder value creation,” HealthCor wrote in a letter to the board, which was disclosed to the Securities and Exchange Commission.

[Update with company response, 1:55 pm Eastern, 11/20/09.] Biogen Idec “actively engages with our shareholders and we appreciate their input,” says company spokeswoman Jennifer Neiman. That said, she also noted that Biogen has already done share repurchases worth $5 billion since 2004, and last month its board authorized an additional $1 billion of share repurchases.

HealthCor said in its letter that it has been arguing for changes at Biogen for more than a year. The fund noted that the company’s stock has seen no real growth for six years, and is currently trading near levels seen before the company filed for FDA approval of natalizumab (Tysabri) in 2004. (The stock was selling for $44.26 per share on February 17, 2004, and was at $46.05 at the time HealthCor wrote its most recent letter on November 18, 2009.)

While “investors have been left holding the bag,” in HealthCor’s words, the firm … Next Page »

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