Biogen to cut 1,000 jobs to save costs as Alzheimer’s drug launch gathers pace

(Reuters) -Biogen Inc said on Tuesday it expects to slash about 1,000 jobs, or about 11% of its workforce, under a fresh cost-cutting program as the company ramps up the launch of a new Alzheimer’s disease drug in efforts to return to growth.

Investors have pinned their hopes on Leqembi as sales of multiple sclerosis drug Tecfidera take a hit from cheaper generic rivals while spinal muscular atrophy drug Spinraza faces rival treatments by Novartis and Roche.

Shares of the Massachusetts-based company rose 1.2% to $280.23 in premarket trading.

“Biogen (NASDAQ:)’s business is in transition,” said CEO Christopher Viehbacher, who was hired in November to help power up growth and put behind a series of setbacks for older Alzheimer’s drug Aduhelm.

“While we will be making significant investments in our newly prioritized pipeline and new product launches, we will also need to invest less in other areas,” he added.

Biogen, which had 8,725 employees worldwide at the end of 2022, expects to re-invest about $300 million from the new cost-cutting program into launches and research and development.

Excluding the re-investment, the program aims to reduce about $700 million in net operating expenses by 2025.

The company had said in April it would pause or discontinue at least four studies of experimental drugs to focus on more lucrative options including the Leqembi launch and trim costs.

In the second quarter, the company earned $4.02 per share on an adjusted basis, compared with estimates of $3.77.

Multiple sclerosis treatments Avonex and Vumerity, as well as SMA therapy Spinraza, beat analyst estimates, while Tecfidera missed expectation as it faced generic rivals.

“We see no unexpected surprises in Q2 results, allowing investors to focus on Alzheimer’s,” said Wells Fargo (NYSE:) analyst Mohit Bansal.