Biogen Idec Announces Restructuring Program

The biotechnology company Biogen Idec (Weston, MA) announced last week a major restructuring program that will refocus the company’s research and development (R&D) programs, consolidate facilities, and reduce its workforce.

On a product basis, Biogen Idec will focus on neurology and terminate its programs in cardiovascular medicines and either spin out or out-license its oncology assets. It also will cease its small-molecule discovery and process-development efforts and exit select neurology and immunology development programs, including neublastin for treating neuropathic pain and its anti-TWEAK antibody program. In total, the company will exit 11 programs.

Operationally, the company is consolidating its sites. It will close its oncology R&D site in San Diego as well as sites in Wellesley and Waltham, Massachusetts. According to the company’s 2009 annual filing, the company operates office and laboratory space in Waltham and office space in Wellesley. The company will consolidate the functions from these sites in eastern Massachusetts to its facilities in Cambridge, Massachusetts, and relocate US employees to existing sites in Weston and Cambridge, Massachusetts, and Research Triangle Park, North Carolina.

Cambridge is the site of a research laboratory, quality laboratories, and a biologics-manufacturing facility. Biogen Idec also operates a large-scale bulk biologics manufacturing plant and purification facility in Research Triangle Park. In June 2010, the company decided to delay completion of a large-scale biologics-manufacturing facility in Hillerød, Denmark, according to the company’s third quarter 2010 financial results. The company had completed the first phase of the project, which included construction of a labeling and packaging facility, an administrative building, and a laboratory facility as well as installation of major equipment and partial completion of the bulk-manufacturing facility. The second phase of the project, which began in January 2007, involved the completion and fit out of the bulk-manufacturing facility and construction of a warehouse.

As a result of its recent restructuring, Biogen Idec plans to reduce its workforce by approximately 13%. The company's workforce will be reduced by approximately 650 full-time positions to approximately 4,275 employees worldwide.

Biogen Idec had 2009 revenues of nearly $4.4 billion of which three products accounted for the lion’s share of the company’s sales. Avonex (interferon beta-1a), a drug to treat multiple sclerosis (MS), had 2009 sales of $2.3 billion. Tysarbi (natalizumab), a MS drug co-commercialized with Elan (Dublin) had total sales of nearly $1.1 billion, of which Biogen Idec’s share was $776 million. The company also co-commercializes the anticancer and autoimmunue drug Rituxan (rituxamab) with Genentech (South San Francisco, CA) and Roche (Basel, Switzerland). Total sales for Rituxan were approximately $2.7 billion, of which 2009 sales to Biogen Idec accounted for nearly $1.1 billion. As a result of its restructuring, Biogen Idec will eliminate its current Rituxan oncology and rheumatology sales force, and Genentech will assume responsibility for the US sales and marketing of Rituxan.

Biogen Idec hopes to realize annual savings of $300 million beginning in the middle of 2011 as a result of the restructuring. The restructuring will cost an estimated $115 million, which consists of $85 million for the workforce reduction and $30 million to close and consolidate facilities. The company expects that approximately $70 million of these costs will be incurred in the fourth quarter of 2010. In addition, the company made a $25-million payment to the specialty pharmaceutical company Cardiokine (Philadelphia) in the fourth quarter of 2010 to terminate a collaboration for lixivaptan, a vasopressin receptor antagonist for treating hyponatremia, that is in late-stage clinical development. The ongoing clinical-trial costs for other R&D programs being terminated will be approximately $24 million, which will be incurred through 2011.

Biogen Idec CEO George Scangos said the company plans to launch five new products by 2015. Its most promising candidates are fampridine for MS, BG-12 (dimethyl fumarate) for MS, PEGylated interferon for MS, daclizumab for MS, long-acting rFactor VIII for hemophilia A, long-acting rFactor IX for hemophilia B, and dexpramipexole for amyotrophic lateral sclerosis, commonly known as Lou Gehrig's disease.