Source – Biogen
During the announcement of its first-quarter earnings, Biogen revealed its strategic decision to discontinue the development of at least four investigational drugs. This move is aimed at enabling the company to focus on more profitable opportunities. As part of its cost-cutting measures, Biogen plans to reduce its workforce by 1,000 employees by 2025, which accounts for an 11.5% reduction from the workforce size at the beginning of 2023.
The decision to downsize and implement cost-cutting measures was influenced by the disappointing launch of the Alzheimer’s disease drug, Aduhelm. In response to the setbacks, the company’s new CEO, Chris Viehbacher, has been working to restructure and refocus Biogen.
Despite the challenges, Biogen remains optimistic about its research and development capabilities. However, Viehbacher emphasized the importance of being more selective in pursuing future projects.
At the beginning of 2022, Biogen had a workforce of 9,610 employees, as mentioned in a document submitted to the Securities and Exchange Commission (SEC). However, due to the unfavorable launch of Aduhelm, a drug for Alzheimer’s disease, the company has been taking measures to reduce its employee count.
To offset the cost-saving measures, Biogen estimates that the latest actions will result in $1 billion in operating expense savings by 2025. Part of this saved amount, approximately $300 million, will be reinvested into key products’ launches, including the newer Alzheimer’s disease drug, Leqembi, which recently received full FDA approval.
Although Biogen reported a 5% decline in revenues for the quarter compared to the second quarter of the previous year, the company still surpassed analyst expectations by $89 million. The bulk of the revenue beat came from sources other than product sales. Despite the challenges, Biogen maintains its guidance for the year, expecting a mid-single-digit percentage revenue decline from the previous year’s figure.
“We’re also getting reimbursement beyond CMS. We have Medicaid, for example, in 48 out of the 50 states so far and we have very good response from commercial insurers.”
– Viehbacher, CEO of Biogen
During Leqembi’s launch, Biogen incurred more expenses than generated sales. However, with the drug now fully approved and with broader Medicare coverage, sales are expected to pick up significantly.
“Biogen’s entire multiple sclerosis franchise presents very little to get excited about as every drug (Avonex, Plegridy, Tysabri and Fampyra) posted year-over-year declines in sales except for Vumerity, which posted growth of 7%,” Third Bridge analyst Lee Brown wrote.
On the other hand, Biogen’s multiple sclerosis franchise experienced a decline, with all drugs except Vumerity witnessing a decrease in sales. The spinal muscular dystrophy treatment Spinraza, which has historically been a bright spot for the company, performed well, exceeding expectations with $437 million in sales for the quarter.
