Biogen stock fell Tuesday after the company said it plans to cut about 1,000 jobs in an effort to cut operating expenses. The announcement came as Biogen reported better-than-expected second-quarter financials, as earnings fell more than 20% with its fully approved Alzheimer's drug, Leqembi, not yet profitable.
The Cambridge, Mass.-based multinational biotechnology company said Tuesday it plans to cut around 11% of its workforce to help reduce annual operating expenses by $1 billion by 2025. Biogen had 8,725 employees at the end of 2022.
Chief Executive Chris Viehbacher told investors Tuesday that Biogen has to focus on products that have a strong chance of success, and on growth opportunities.
"You have to be cost-efficient and you have to invest in growth," Viehbacher said. Viehbacher added this will be a "redesign of the whole company."
"We are working through the organization layer by layer," Viehbacher said, adding it is too early to know exactly which areas of Biogen will be most impacted.
The company plans to invest about $300 million in new product launches, and remaining research and development programs.
Biogen stock fell 2.4% to close at 270.31 during Tuesday's market trade. On Monday, shares edged up a fraction to close at 277. On a weekly chart, Biogen stock has formed a flat base with a 319.76 buy point, according to MarketSmith analysis.
Biogen Stock: Second-Quarter Earnings
The biotech firm announced that second-quarter profits slipped 23% to $4.02 per share while revenue dropped 5% to $2.45 billion. Wall Street expected earnings to fall 28% to $3.77 a share, with sales decreasing 9% to $2.36 billion.
The company reported revenue from its multiple sclerosis portfolio continuing to decline, falling 15% to $1.21 billion. This includes sales from Tecfidera, Vumerity, Plegridy, Tysabri and Fampyra.
Biogen also reported a loss of $20.7 million from its Leqembi collaboration during the quarter. For the first half of 2023, Leqembi has resulted in a loss of $39.6 million. Biogen executives told investors it expects Leqembi to stay negative in 2023 as the drug launch ramps up.
Viehbacher told investors during the earnings call that Leqembi's full approval is a "historic moment" and that the launch of the drug is underway in the U.S.
"We're going to be discovering an awful lot and a lot of this is just not that predictable," Viehbacher said.
Biogen also reaffirmed its full-year outlook, with expectations of a mid-single-digit percentage decline in revenue vs. 2022 and earnings between $15 and $16 per share.
Alzheimer's Drug In Focus
The focus on Leqembi comes after the Food and Drug Administration fully approved the treatment on July 6.
The drug already had accelerated approval. But with the traditional approval, the Centers for Medicare and Medicaid Services said it will reimburse patients for the cost of the Alzheimer's treatment. Leqembi costs $26,500 annually without insurance.
But questions remain about how fast Biogen and partner Eisai can ramp up production of the drug.
Doctors will have to submit patient data before treatment and every six months to a registry database. The approval also includes a black box warning for a heightened risk of brain swelling in patients with a specific genetic abnormality and those on blood thinners. The FDA suggested patients receive genetic testing prior to treatment.
Meanwhile, Eli Lilly is hot on Biogen's heels with an Alzheimer's drug of its own. Analysts expect Eli Lilly's donanemab to receive FDA approval by the end of the year.
Following FDA final approval of Leqembi, Biogen stock fell to its lowest point since April and has been trading below the 200-day line.
Biogen Stock: First-Quarter Results
Ahead of second-quarter earnings, analysts expected Biogen's full-year earnings to fall 13% to $15.42 a share. That was in line with Biogen's reaffirmed outlook for profit to come in at $15-$16 per share. Wall Street also predicted revenue sliding 6% to $9.6 billion.
On April 25, Biogen beat first-quarter expectations. The company earned $3.40 per share, minus some items, on $2.46 billion in sales. Earnings fell 3% but topped expectations by 12 cents a share. Sales skidded 6%. Still, analysts called for Biogen sales to come in even lower, at $2.34 billion.
Biogen lost $18.9 billion in its Leqembi collaboration with Eisai. Leqembi has been on the market since its accelerated approval in January. Analysts expected a $16 billion loss on Leqembi in the first quarter.
Biogen's multiple sclerosis franchise continued to decline, while its bread-and-butter medicines are facing competition from new products and generic knockoffs.
Sales of the company's multiple sclerosis portfolio plummeted 19% across the board to less than $1.13 billion. Revenue from Tysabri, used to treat multiple sclerosis, missed forecasts at $473 million, but Tecfidera beat with $274 million.
Biogen stock has a 60 Composite Rating out of a best-possible 99. BIIB shares have a 56 Relative Strength Rating, and a 51 EPS Rating.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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