|Biogen CEO George Scangos|
Biogen ($BIIB) ended a bad week with a blast of bitter news that took another big bite out of its share price.
Revenue was off target, with its big growth engine Tecfidera missing its marks in the MS market by a wide berth--creating the kind of nasty surprise that Wall Street analysts hate. And following up on a flop for its top Alzheimer's programs, the company had more failures to report for its R&D group--setting the stage for a more aggressive approach to controlling costs while plotting its next steps in an increasingly expensive M&A game.
Company execs adopted a bullish attitude, but the pipeline discussion was painful this morning. The company said it was scrapping one of its longterm (and low-profile) programs, neublastin, after seeing a failure in Phase II for sciatica. There was a flop for Tysabri in a Phase II acute ischemic stroke study, though the company isn't giving up on the work in the area. And Biogen laid out its design for a Phase III study of its lead Alzheimer's hope after suffering a setback earlier in the week for one its key mid-range doses in an early study.
Biogen's shares plunged 17% as the bitter news sank in and executives--lauded over recent years for one of the big turnarounds in biotech--put a confident face on piloting their way out of the sudden turbulence.
"We certainly are, I would say, increasingly aggressive about wanting to add additional compounds to our portfolio and our pipeline," noted CEO George Scangos. "I think you can count on that. ... I don't think we're in a panic situation," he added after being pressed on executing on the M&A front. But with a good balance sheet and the ability to take on considerable debt, the CEO asserted, the company will be aggressive.
You can expect an even more relentless focus on internal costs.
|Biogen CFO Paul Clancy|
"We now need to pivot," CFO Paul Clancy told analysts this morning, rooting out "any and all waste. "We'll navigate through that."
Clancy didn't detail how the company could save cash, but the news will likely send a shiver through the company rank-and-file, which has seen selective layoffs as Biogen CMO Al Sandrock pursued his visions of a lean and mean Biogen 2.0.
When a biopharma company isn't doing as well as expected on the numbers side, you can expect to hear a lot about its late-stage pipeline. Biogen had been hoping to come out of the AAIC conference in Washington, DC, this week with considerably more applause for its Alzheimer's drug aducanumab, which is being hustled into a late-stage program. But its 6-mg dose for the drug missed hitting a significant response on two key measures of the disease, while demonstrating evidence of brain swelling among patients. And despite repeated assurances that the company was extraordinarily pleased about the trial results and evidence of the drug's ability to clear amyloid, the latest update only created fresh doubts about the difficult, expensive and risky Phase III study ahead.
Biogen did clarify what it plans to do in the Phase III, though. Two studies are being mounted, each with 1,350 patients. For patients who are noncarriers of ApoE4, a genetic risk factor for Alzheimer's, the low dose will be 6 mg and the high dose will be 10 mg. Carriers will get either a 3-mg or a 6-mg dose and there will be a titration period during treatment so investigators can better manage the risk of ARIA.
Managing this next news cycle is likely going to be much harder than anything Scangos has experienced since taking the reins about 5 years ago. That's a new kind of challenge, and one that investors will be watching closely.
- here's the release