Biogen plans to chop 1,000 jobs as the corporate prepares to launch Leqembi

A Biogen facility in Cambridge, Massachusetts.

Brian Snyder | Reuters

biogenic On Tuesday, the company said it expects to cut about 1,000 jobs, or about 11% of its workforce, to cut costs as the biotech prepares to launch its newly approved Alzheimer’s drug Leqembi.

It’s the latest round of layoffs after Biogen cut nearly 900 jobs last year. At the end of 2022, 8,725 people were employed worldwide.

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The job cuts are also part of the company’s ongoing cost-cutting and reorganization plan, which also includes reducing its research and development pipeline to prioritize Leqembi and other drugs. Biogen said in its second-quarter earnings report that the prioritization of its research and development pipeline was “essentially complete.”

According to Biogen, the larger plan is expected to result in gross operating cost savings of about $1 billion by 2025.

Approximately $300 million of these savings are reinvested in product launches and research and development programs.

The company also said the plan will result in net operating cost savings of $700 million by 2025.

Biogen shares lost more than 3% in early trading on Tuesday.

The new layoffs follow groundbreaking approvals earlier this year of Leqembi and the company’s ALS drug Tofersen.

Investors are pinning their hopes on the new drugs as Biogen’s blockbuster treatments for multiple sclerosis and spinal muscular atrophy face stiff competition from cheaper versions and similar drugs.

Biogen CEO Chris Viehbacher said during a conference call on the results that the cost-cutting plan “is a real opportunity to make sure we’re really poised for growth this year before we start launching products.”

“There are a great many patients who depend on Biogen products,” he said during the call. “There is of course a need to invest heavily in the launch of our new products. Controlling costs is obviously important, but shareholder value is best maximized when we can truly make these launches a success.”

Wall Street analysts were pleased with the announcement of the layoffs.

Wells Fargo analyst Mohit Bansal said in a Tuesday research note that the broader cost-cutting plan “is in line with our expectations and was the reason for our bullish stance on the name.”

“We expect the stock to rise on this news as investors have been waiting for this move,” he said.

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Biogen also reported second-quarter sales and adjusted earnings on Tuesday that beat Wall Street estimates.

Biogen had revenue of $2.46 billion for the quarter, down 5% from the prior-year period. Analysts had expected revenue of $2.37 billion for the second quarter.

The company reported net income of $591.6 million, or $4.07 per share. This compares to net income for the year-ago period of $1.05 billion, or $7.24 per share. Excluding certain items, adjusted earnings per share for the period were $4.02. Analysts had expected adjusted earnings of $3.77 per share.

Biogen also reiterated its full-year guidance. The company is forecasting a mid-single-digit percentage year-over-year revenue decline in 2023 and full-year adjusted earnings per share of $15-$16.

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