Biogen Announces $1-Bn Restructuring Program; To Cut 1,000 Jobs
Biogen has announced a $1-billion restructuring program that includes a net headcount reduction of approximately 1,000 and an approximate $300 million to be reinvested into product launches and R&D programs. The restructuring program, called “Fit for Growth,” was announced as part of the company’s second-quarter earnings this week (July 25, 2023).
Through the restructuring, Biogen aims to generate approximately $1 billion in gross operating expense savings, approximately $300 million of which will be reinvested into product launches and R&D programs, resulting in approximately $700 million in net operating expense savings by 2025. The restructuring program further includes a net headcount reduction of approximately 1,000.
Biogen had a workforce of approximately 8,725 employees worldwide as of December 31, 2022 (4,970 employees in the US and 3,755 employees in foreign countries). The 1,000-staff reduction represents approximately 11.5% of its workforce.
“We have taken a bottom-up view to shift our resources to the areas of greatest value creation,” Biogen’s President and CEO Christopher A. Viehbacher in the company’s second-quarter 2023 earnings release of July 25, 2023. “While we will be making significant investments in our newly prioritized pipeline and new product launches, we will also need to invest less in other areas which are no longer growing. With these changes, I believe that Biogen will be better positioned to maximize its growth opportunities going forward.”
Viehbacher, the former CEO of Sanofi, took over the helm of Biogen last November (November 2022) from Michel Vounatsos, who announced in May 2022 that he would be stepping down as CEO. Vounatsos had led the company’s ill-fated launch of its Alzheimer’s drug, Aduhelm (aducanumab), once touted as a potential blockbuster, and stepped down following lower-than-expected results and diminished prospects for the drug. In 2022, the drug posted revenues of only $4.8 million. The failure of Aduhelm led the company to announce a series of cost-cutting measures, which included the substantial elimination of the commercial infrastructure for Aduhelm, in December 2021 and May 2022, with the goal of achieving $1.0 billion in cost-savings. The restructuring announcement this week (July 25, 2023) is in addition to the previously announced $1-billion cost-savings targets from 2021 and 2022.
Aduhelm, although the first drug approved by the US Food and Drug Administration (FDA) in more than 20 years to treat Alzheimer’s disease, was hurt by a limited patient population for the drug. The drug was approved under the accelerated approval pathway by the FDA, which provides patients with a serious disease earlier access to drugs when there is an expectation of clinical benefit despite some uncertainty about the clinical benefit with follow-up clinical trials required. The drug incurred a major setback when in April 2022, the US Centers for Medicare and Medicaid Services (CMS) restricted coverage under Medicare, the US federal health insurance program for individuals 65 or older, for Aduhelm and other anti-beta-amyloid drugs for treating Alzheimer’s disease. At the time (April 2022), the CMS issued a national policy for coverage of Aduhelm and any future monoclonal antibodies directed against amyloid for treating Alzheimer’s disease that are approved under FDA’s accelerated approval pathway only to patients taking part in approved clinical trials, which includes post-approval confirmatory trials. Such restrictions applied only to drugs approved under the accelerated approval pathway by FDA, not those gaining full or traditional FDA approval.
Biogen is banking on another Alzheimer’s drug, Leqembi (lecanemab), developed with Eisai, following FDA’s full approval of the drug earlier this month (July 2023) for patients with mild cognitive impairment or the mild dementia stage of Alzheimer’s disease. Earlier this month (July 2023), CMS said that broader Medicare coverage is available for the drug. Leqembi is the first amyloid beta-directed antibody to be converted from an accelerated approval to a traditional approval for the treatment of Alzheimer’s disease. The drug works by reducing amyloid plaques that form in the brain, a defining pathophysiological feature of the disease.
Despite a positive regulatory outcome for Leqembi, Biogen reported that it expects a mid-single digit percentage decline in revenues for the full-year 2023. For the first six months of 2023, the company reported a near 40% decline in revenues (-39.6%) from $4.12 billion in the first six months of 2022 to $3.61 billion for the first six months of 2023. A contributing reason for the decline is continued generic-drug incursion for the company’s top-selling drug, Tecfidera (dimethyl fumarate), a drug to treat multiple sclerosis, which saw first-half revenues fall from $808 million in 2022 to $529 million in 2023.