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Biogen said today it will reduce its workforce 11%, or up to about 880 employees, mostly by year’s end as part of a restructuring that will also include termination of several pipeline drug development programs.
The layoffs and restructuring come as the biotech giant responds to a slower increase in sales for its marketed drugs than in recent years—a slump that has resulted in the company’s stock losing 44% of its value since reaching its 2015 high closing price of $475.98 on March 20, falling to a closing price of $265.81 yesterday.
Compounding Biogen’s challenges is increased competition from rival drug developers for multiple sclerosis treatments, and the expectation of even more new MS products from Roche and other companies.
In its annual Form 10-K filing earlier this year, Biogen disclosed the size of its workforce at about 7,550 employees worldwide as of Dec. 31, 2014. However, in news reports today, both CNBC and The Boston Globe reported the size of Biogen’s workforce at about 8,000 staffers.
“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,” Biogen CEO George A. Scangos, Ph.D., said 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 said it has begun notifying employees affected by the restructuring, and has initiated the required consultation processes in European countries where employees may lose their jobs.
The company is also ending its Phase III program to add a new indication for the marketed multiple sclerosis drug Tecfidera® (dimethyl fumarate) in secondary progressive MS, the development of anti-TWEAK in lupus nephritis, and certain activities in immunology and fibrosis research.
Biogen expects to incur a charge of approximately $85-$95 million related to the restructuring, primarily in the fourth quarter of this year. Those charges include $70 million to $80 million related to employee termination benefits and approximately $15 million related to termination of R&D programs, the company said in a regulatory filing.
Biogen said the restructuring will save approximately $250 million in annual expenses—a savings the company said it will plow into key commercial initiatives, from boosting sales and marketing of Tecfidera—including new direct to consumer marketing programs—to advancing what it deems high-potential pipeline candidates, which it listed as:
- Aducanumab, now in Phase III for Alzheimer’s disease;
- SMN-Rx for spinal muscular atrophy, another Phase III compound;
- Raxatrigine (CNV1014802), a Phase III-ready compound for trigeminal neuralgia which is also Phase IIb ready for lumbar radiculopathy;
- MT-1303, another Phase III-ready compound that is indicated for inflammatory bowel disease with potential further development in MS—subject to closure of its exclusive licensing agreement with Mitsubishi Tanabe, announced September 9;
- Two Phase II Alzheimer’s disease candidates, BAN2401 and E2609;
- Anti-LINGO, a Phase II compound for multiple sclerosis
“We remain committed to maximizing the potential of our commercial portfolio, with a particular emphasis on Tecfidera®,” Dr. Scangos stated. “We continue to see growth for our market leading portfolio of MS products, driven by the uptake of our oral therapy Tecfidera in recently launched countries worldwide and the introduction of Plegridy® to new markets.”
At $6.763 billion, Biogen’s total product revenues for the first nine months of 2015 are 14% above the same period last year. The company’s top selling drug remains Tecfidera, which racked up $2.646 billion during January-September of this year, up nearly 33% from a year ago.
Biogen also reported Q3 earnings of $965.622 million, up nearly 13% from the third quarter of 2014, on revenues that rose almost 11% year over year to $2.778 billion.
Separately today, Biogen acknowledged a Phase III clinical trial failure, saying that the pivotal ASCEND (A Study to Characterize the Efficacy of Natalizumab on Disability in SPMS) study investigating natalizumab for secondary progressive multiple sclerosis (SPMS) did not achieve its primary and secondary endpoints.
The primary endpoint of the study was the percentage of patients with confirmed progression of disability on one or more components of ASCEND’s composite endpoint: the Expanded Disability Status Scale (EDSS), Timed 25-Foot Walk (T25FW) and the 9-Hole Peg Test (9HPT) where progression was confirmed at a second visit at least 6 months later and at week 96.
ASCEND was a randomized, double-blind, placebo-controlled, Phase 3 trial involving 889 patients in 15 countries. Participants were randomized to receive either natalizumab 300 mg or placebo intravenously every four weeks for 96 weeks.
