The biotechnology giant has been under severe pressure for a few months now, so it’s not too surprising to hear that biotech major Biogen announced on Wednesday that it plans to layoff around 11% of its workforce and stop further development on some programs. This new restructuring of the firm is designed to cut operating costs by $250 million a year.
Shares of Biogen were up 7% following the restructuring news and the notably better-than-expected earnings.
Biotech industry analysts point out that the reduction in force follows a slowdown in the growth of Biogen’s multiple sclerosis drug Tecfidera and is likely related to an overall slump in the biotech sector.
Of note, the firm reported better-than-expected third-quarter adjusted earnings of $4.48 a share on total sales of $2.8 billion. It was a strong beat, as consensus earnings estimates were for $3.80 a share on $2.65 billion in sales. Tecfidera sales were above estimates, at $937 million for the quarter, compared to a consensus of $892 million.
Al 11% RIF represents close to 880 employees among the more than 8,000 total workforce.
Biogen stock is down 22% this year as Tecfidera sales have slowed down and the sector has slumped. The firm announced on Wednesday it will boost commercial support for the MS druf, with the launch of new direct-to-consumer marketing programs.
The company also boosted its full-year forecast, calling for 2015 revenue growth of up to 9%, whereas the earlier projection was for 8%. The statement also forecast earnings of $16.20 to $16.50 a share, a bump up from earlier estimates of $15.50 to $15.95 a share.
Biogen said that it was halting several development programs, including Tecfidera in secondary progressive MS, and medicine known as “anti-TWEAK” in lupus nephritis, as part of the restructuring effort.
In separate news Wednesday, the firm announced another of its multiple sclerosis drugs, Tysabri, failed in a late-stage clinical trial for secondary progressive MS (Tysabri remains approved for use in other forms of MS).
Statement from Biogen CEO
“We remain committed to maximizing the potential of our commercial portfolio, with a particular emphasis on Tecfidera,” Biogen CEO George Scangos noted. “The decision to reduce the company’s workforce was extremely difficult, but we believe these actions are necessary to fulfill our mission of bringing important new medicines to patients.”