Biogen’s rise and fall this year has been symbolic of the sector’s bull run and recent retreat, which is why all eyes were squarely on the Cambridge, MA-based company’s latest sales numbers this morning. Those numbers beat expectations, but they were overcast by some bigger news: Biogen has hunkered down, and cut a bunch of jobs to save money going forward.
In its earnings release, Biogen (NASDAQ: BIIB) said it’s axing a number of the programs in its pipeline in a bid to save about $250 million a year. This will mean its roughly 8,000-person global workforce will be reduced by about 11 percent—equal to about 880 jobs. Biogen is going to put this cash towards drugs with “high potential,” and high risk as well—Alzheimer’s disease, multiple sclerosis, and spinal muscular atrophy.
According to a Biogen spokesperson, about 400 of the job cuts are expected to be in Massachusetts, and potentially another 130 of them are in Research Triangle Park, NC, although the numbers aren’t final as of yet. The rest are overseas.
Biogen is also ditching a number of programs. Those drugs include its preclinical work in immunology and fibrosis, its Phase 3 program of dimethyl fumarate (Tecfidera) in secondary progressive multiple sclerosis, and a drug called anti-TWEAK for lupus nephritis. Biogen is taking a one-time charge of $85 million to $95 million for the job cuts.
“The decision to reduce the company’s workforce was extremely difficult, but we believe these actions are necessary to fulfill our mission of bringing important new medicines to patients. We have several high-quality programs that are now or soon will be in Phase 3, and the cost savings from the restructuring will be reinvested to carry out those programs aggressively and hopefully to bring them to patients as quickly as possible,” said CEO George Scangos in a statement. “We are grateful for the contributions of our talented and admired colleagues and we will do our best to treat everyone with fairness and dignity.”
Biogen also said that quarterly sales of dimethyl fumarate came in at $754 million. That beat consensus estimates of $726 million, though those numbers were aided a bit by a 6 percent price hike on the drug in August. The company has modestly increased its financial forecasts for the year, predicting a 8 to 9 percent boost in total revenue this year compared to 2014.
Separately, the company also said natalizumab (Tysabri) failed a Phase 3 study in secondary progressive MS.
Biogen will hold a conference call this morning to discuss the news.
Biogen—and biotech in general—sorely needed some good news here. Biogen accounts for about 7.95 percent of the Nasdaq Biotechnology Index (NASDAQ: IBB), which has been battered over the past month as drug pricing talk has sapped some of the life out of the biotech bull market.
Last quarter, disappointing sales of dimethyl fumarate caused Biogen to lower its sales forecasts for the year, and shares spiraled downward. The drug’s flattening trajectory put more of an emphasis on Biogen’s pipeline, whose star prospects include an antibody drug for Alzheimer’s (aducanumab) and a drug meant repair nerve damage in multiple sclerosis patients (Anti-Lingo). Both are biotech moonshots—risky programs that could swing Biogen’s fortunes significantly one way or the other. Case in point: Biogen executives telegraphed optimism about the aducanumab data at a conference in December 2014, and shares climbed from about $300 to as much as $475 apiece when Biogen offered a glimpse of that data in March. They closed Tuesday at $265.81 apiece, levels Biogen hasn’t seen since late 2013.
In addition, Biogen has seen some top executives, like former R&D chief Doug Williams, and commercial head Tony Kingsley, leave over the past few months. As often happens with a restructuring, however, investors cheered this morning. Shares of Biogen were up almost 8 percent in pre-market trading.