Biogen plans to cut 1,000 jobs as part of an effort to create $700 million in net operating savings by 2025, the company announced Tuesday morning.
The program, which the company calls “Fit for Growth,” is expected to generate $1 billion in gross operating expense savings, $300 million of which will be reinvested into product launches as well as research and development programs.
Biogen is taking steps to restructure the organization as it prepares for the broader launch of Alzheimer’s drug Leqembi in the U.S.
The treatment, which received accelerated approval from the Food and Drug Administration in January, was granted traditional approval earlier this month in a watershed moment for Alzheimer’s care. Leqembi is expected to be a blockbuster drug, with one recent analysis projecting nearly $13 billion in global sales by 2028.
Still, analysts have cautioned that diagnostic requirements and data collection will ultimately temper the initial uptake of Leqembi and other new Alzheimer’s drugs on the market.
In addition to the greenlight for Leqembi, the FDA also approved Qalsody (tofersen), a drug jointly developed with Ionis Pharmaceuticals to treat a rare genetic form of amyotrophic lateral sclerosis (ALS) known as SOD1-mutation-mediated ALS.
“In the second quarter, Biogen continued to advance groundbreaking science with the FDA approval of two first-in-class therapies for Alzheimer’s disease and ALS, while also delivering on our base business expectations,” Biogen CEO Christopher A. Viehbacher said in a statement. “Biogen’s business is in transition. Accordingly, we have taken a bottom-up view to shift our resources to the areas of greatest value creation. 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.”
The restructuring effort was announced in Biogen’s latest earnings report, which was highlighted by $2.46 billion in total revenue, down 5% year-over-year, an earnings per share of $4.07, down 44% over the same period, and an adjusted EPS of $4.02, down 23%.
Biogen suffered from a 15% decline in product revenue from its multiple sclerosis division, while its spinal muscular atrophy revenue inched up to $437 million.
Additionally, the company noted that the reimbursement to Eisai for Biogen’s share of U.S. Leqembi SG&A expense is reflected as a component of revenue rather than SG&A.
Still, the biotech maintained its full-year financial outlook of mid-single digit percentage decline in total revenue and an EPS between $15 to $16.
Biogen’s stock was down 4% during the Tuesday trading session.