Biogen Inc. Chief Executive Michel Vounatsos will resign from the company as it slims down its workforce, cuts spending by $1 billion annually and attempts to chart a new course after Medicare’s devastating refusal to cover its new Alzheimer’s drug Aduhelm.
Biogen said Tuesday that Mr. Vounatsos would continue to lead the company and remain on its board until a search for a new CEO is completed.
Biogen also said it would substantially eliminate the sales infrastructure it built up to support Aduhelm’s launch, which will contribute to other cost-cutting measures intended to provide savings of $500 million annually.
The downsizing is in addition to the $500 million cost-cutting program Biogen implemented in December and brings the total annual cost-cutting target to $1 billion.
Biogen’s moves signal the end of the company’s hopes that Aduhelm would become a significant source of new revenue, as well as the departure of a second executive who championed the drug and pushed ahead with seeking FDA approval based on mixed results from two incomplete clinical trials.
“This will be good for everyone involved,” Mr. Vounatsos said on an earnings call. He said that while the company’s core business was doing as well as could be expected and that the company’s product pipeline is strong, it would be good for “somebody else who comes with the support of the board and basically revisits the assumptions.”
Meantime, he said, “Business continues, and I will be at the top of it until the last second.”
Wall Street analysts once projected Aduhelm to become a blockbuster, achieving billions of dollars in annual sales from some of the estimated six million people in the U.S. living with Alzheimer’s, the progressive neurological disease that gradually robs patients of their memories and self-sufficiency.
Biogen said Aduhelm sales were $2.8 million in the first quarter, representing 0.1% of the company’s product sales.
The sales were far from initial forecasts. Some analysts had expected Aduhelm would help transform Biogen, diversifying its product suite beyond its traditional strength in multiple sclerosis and compensate for declining sales of older drugs, including Tecfidera and Avonex.
Biogen’s development of Aduhelm was marred, however, by missteps in its handling of two key clinical trials. The company halted the studies in 2019, after a statistical analysis of data from the halfway point predicted the drug was unlikely to be successful in slowing patients’ mental decline.
Biogen then soon backtracked, saying that it had erred in its analysis and that one of the studies was on track for success and another showed positive signals despite trending toward failure.
FDA officials were largely receptive to Biogen’s view and worked with the company to reanalyze the data. But many external experts were skeptical and said that Biogen should complete an additional study to prove the drug worked. An external committee of FDA advisers voted unanimously against the drug, some of whom later resigned in protest when the FDA approved the drug anyway.
Then Biogen’s launch of Aduhelm sputtered. Many doctors disagreed about the drug’s effectiveness, utility and cost, which was initially set at $56,000 annually before being slashed in half in response to criticism from patient groups and others.
The Cambridge, Mass., company’s market value reached $62.5 billion in the days after Aduhelm was approved in June 2021, but has fallen more than 50% since then as large insurers refused to pay for the drug because of concerns about its effectiveness and side effects.
Last month, Medicare’s parent agency said it wouldn’t routinely pay for Aduhelm except if patients enrolled in clinical trials testing the drug.
Mr. Vounatsos was appointed CEO in 2017. His tenure was marked by the loss of patent protection for the multiple sclerosis pill Tecfidera, Biogen’s biggest product by sales; the launch of an innovative new therapy for infants struck by a rare disease called spinal muscular atrophy; and wild swings in Biogen’s stock price based on Aduhelm’s prospects.
Biogen’s research chief Alfred Sandrock, who shepherded Aduhelm’s development, resigned from Biogen last November after more than 20 years with the company.
Biogen shares rose 1% on Tuesday.
Biogen’s Aduhelm is the first approved treatment for early stage Alzheimer’s patients that may be able to slow the disease. WSJ explains how the drug interacts with brain cells, and why some doctors aren’t ready to prescribe it yet. Illustration: Jacob Reynolds
Biogen has reached “a pivot point, effectively throwing in the towel on Aduhelm and announcing a CEO transition,” Brian Abrahams, an RBC Capital analyst, said in a note to clients. “Though [the] go-forward strategy remains somewhat vague…we believe these changes will be well received over the long term, and give the company a fresh start.”
The company said it would continue to support assistance programs that will provide Aduhelm free to U.S. patients already taking the drug.
Biogen also said it would continue to fund ongoing Aduhelm studies and the start of a planned new clinical trial that was mandated by the Food and Drug Administration as a condition of the drug’s approval last year.
Under its new move, Biogen will effectively eliminate the sales and support staff it assembled for Aduhelm, a complex treatment to prescribe and administer.
Aduhelm has to be given with an intravenous infusion by a healthcare professional, and patients typically undergo diagnostic testing beforehand to confirm the presence of amyloid in their brains. After treatment, doctors have to monitor patients for the risk of swelling and small bleeds in their brains.
Biogen had expected its sales force to have to educate neurologists and other doctors treating Alzheimer’s patients about the drug
Biogen is disbanding the Aduhelm sales force even as it prepares for the possible launch of a new Alzheimer’s treatment called lecanemab in the U.S. in the next year or two.
“Based on the timing, it would make no sense to carry such a large team for such a long time,” said Mr. Vounatsos. “We could not afford to keep the team for that many months.”
Biogen also reported its first-quarter financial results on Tuesday. Sales fell 6% to $2.5 billion, down from $2.7 billion in the year-earlier quarter. The company’s net income was $303.8 million, down 26% from a year earlier, in part due to a write-off of $275 million for Aduhelm inventory.
A number of companies, including Biogen, are developing Alzheimer’s treatments similar to Aduhelm, a monoclonal antibody that targets the reduction of a protein called amyloid from the brain. Some researchers believe the buildup of amyloid plays a key role in Alzheimer’s.
Biogen and its partner Eisai Co. are collaborating on lecanemab and expect to complete an application to the FDA for accelerated approval in the second quarter, Biogen said. Aduhelm was also approved under an accelerated approval, which allows the FDA to approve treatments for serious diseases before they have been fully proven to be effective.
The companies expect a late-stage Phase 3 study of lecanemab to be completed in the fall of this year, and Eisai plans to seek full approval for the drug in the first quarter of next year, Biogen said.
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