Biogen to Trim Workforce by 1,000 in Anticipation of Leqembi Release

Biogen announced on Tuesday that it anticipates a reduction of about 1,000 jobs, representing approximately 11% of its workforce, in an effort to cut costs as the biotech company prepares for the launch of its newly approved Alzheimer’s drug, Leqembi.

This comes after Biogen already cut nearly 900 jobs last year, with a total headcount of 8,725 employees globally at the end of 2022.

The job cuts are part of Biogen’s ongoing cost-cutting and reorganization plan, which includes streamlining its research and development pipeline to prioritize Leqembi and other drugs. In its second-quarter earnings report, Biogen stated that the prioritization of the R&D pipeline is “substantially complete.”

The overall plan is projected to generate approximately $1 billion in gross operating expense savings by 2025. Around $300 million of these savings will be reinvested into product launches and R&D programs. Additionally, the company expects $700 million in net operating expense savings by 2025.

In early trading on Tuesday, Biogen’s stock was down over 3%. The recent layoffs follow the approval of Leqembi and the company’s ALS drug, Tofersen, this year.

Biogen CEO Chris Viehbacher emphasized the necessity of the cost-cutting plan during an earnings call, stating that it’s “an opportunity to ensure that before we enter the product launches, we are truly prepared for growth.”

Viehbacher added, “There are many patients who rely on Biogen products. There is a clear need to make a strong investment in our new product launches. While managing costs is important, shareholder value is best optimized when we achieve success with these launches.”

Analysts on Wall Street expressed satisfaction with the announcement of the layoffs. Wells Fargo analyst Mohit Bansal stated in a research note that the broader cost-cutting plan aligns with their expectations and was the reason for their optimistic outlook on the company.

“We anticipate the stock to rise on this news as investors have been anticipating this move,” Bansal said.

Biogen also reported second-quarter revenue and adjusted earnings that exceeded Wall Street’s expectations. The company recorded $2.46 billion in revenue, a 5% decline compared to the same period last year, but surpassing analysts’ projected second-quarter sales of $2.37 billion.

In terms of net income, Biogen reported $591.6 million, or $4.07 per share, down from $1.05 billion, or $7.24 per share, in the same period last year. However, after excluding certain items, the adjusted earnings per share for the quarter were $4.02, beating analysts’ estimates of $3.77 per share.

Biogen reaffirmed its full-year guidance, projecting a “mid-single digit percentage decline” in 2023 revenue compared to the previous year, along with full-year adjusted earnings of $15 to $16 per share.