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Biogen cuts workforce and culls pipeline projects

Attempts to make major cost savings as MS drug sales slow
Biogen

Biogen has embarked on a major cost-cutting drive as it copes with a slowdown in sales growth for its multiple sclerosis drugs.

The company will cut 11% of its workforce - equivalent to around 880 staff - and also call a halt to a number of drug development programmes in MS, immunology and fibrosis research as it tries to achieve cost-savings of around $250m a year.

The cutbacks will cost Biogen around $85m-$95m, with most of the charge payable before the end of the year. The layoffs will affect manufacturing, analytical, operations and marketing, according to the company.

"The decision to reduce the company's workforce was extremely difficult," said the firm's chief executive George Scangos in a statement. "We believe these actions are necessary to fulfil our mission of bringing important new medicines to patients."

Some of the money saved has been earmarked for a renewed promotional push for oral MS therapy Tecfidera (dimethyl glutamate), which achieved sales of $937m in the third-quarter, a rise of 19% on the same period of 2014 although its quarter-to-quarter growth (of around 6%) is below expectations, particularly as it was buoyed by a price increase.

Tecfidera's success depends on Biogen persuading patients on other drugs to switch to the therapy, but "growth in the US and Germany remains challenging," said Scangos, who said the firm will step up efforts to educate physicians on its "strong efficacy and favourable safety profile."

Among the pipeline casualties are Tecfidera for secondary progressive MS, and Biogen also reported yesterday that its injectable MS drug Tysabri (natalizumab) was unable to slow disability progression in this hard-to-treat patient group, although it did cut relapse rates.

"ASCEND did not achieve its primary or secondary endpoint, and we do not intend to file for label expansion," commented Biogen's chief medical officer Alfred Sandrock.

"We are disappointed in these results, as secondary progressive MS is a serious condition with no effective therapies."

Overall, Biogen's sales rose 11% to $2.8bn, while net income climbed 13% to $966m, and the company now expects a n 8%-9% increase in full-year revenues.  It also reiterated its commitment to two high-potential but also high-risk pipeline candidates - aducanumab for Alzheimer's disease as well as anti-LINGO antibody BIIB033 for optic neuritis, which is vying to be the first drug shown to repair nerves.

Investors responded favourably to the figures and restructuring announcement, with shares in the firm closing up 4% at a little over $276.

Article by
Phil Taylor

22nd October 2015

From: Sales

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