"Biogen Inc. said it plans to replace its chief executive and effectively abandon the high-profile Alzheimer's disease treatment Aduhelm as the biotech giant attempts to chart a new course after Medicare's devastating refusal to pay for it.
Biogen said Tuesday that Michel Vounatsos, 60 years old, would continue to lead the company and remain on its board until a search for a new CEO is completed. It also took steps that will effectively end its marketing of the Alzheimer's drug.
Biogen's moves signal the end of the company's hopes that Aduhelm would become a significant source of new revenue, as well as the departure of a second executive who championed the drug and pushed ahead with seeking approval from the Food and Drug Administration based on mixed results from two incomplete clinical trials.
With few health insurers willing to pay for the drug, Alzheimer's patients who had hoped to start using Aduhelm will now have to either pay its $28,200 annual price tag out of their own pockets at one of the relatively few clinics offering it, or enroll in a clinical trial.
For patients already taking Aduhelm, Biogen said it would provide the drug to them free going forward.
The company will substantially eliminate the sales infrastructure it built to support Aduhelm's launch, including employees to promote the drug to doctors and provide logistical assistance for navigating the complex process of administering it to patients. The cuts will comprise the bulk of an estimated $500 million in annual savings that the company is targeting.
The downsizing is in addition to the $500 million cost-cutting program Biogen implemented in December and brings the total annual cost-cutting target to $1 billion.
"This will be good for everyone involved," Mr. Vounatsos said on an earnings call. He said that while the company's core business was doing as well as could be expected and that the company's product pipeline is strong, it would be good for "somebody else who comes with the support of the board and basically revisits the assumptions."
Meanwhile, he said, "Business continues, and I will be at the top of it until the last second."
Wall Street analysts once projected Aduhelm to become a blockbuster, achieving billions of dollars in annual sales from some of the estimated six million people in the U.S. living with Alzheimer's, the progressive neurological disease that gradually robs patients of their memories and self-sufficiency.
Biogen said Aduhelm sales were $2.8 million in the first quarter, representing 0.1% of the company's product sales.
The sales were far from initial forecasts. Some analysts had expected Aduhelm would help transform Biogen, diversifying its product suite beyond its traditional strength in multiple sclerosis and compensate for declining sales of older drugs, including Tecfidera and Avonex.
Biogen's development of Aduhelm was marred, however, by missteps in its handling of two key clinical trials. The company halted the studies in 2019, after a statistical analysis of data from the halfway point predicted the drug was unlikely to be successful in slowing patients' mental decline.
Biogen then soon backtracked, saying that it had erred in its analysis and that one of the studies was on track for success and another showed positive signals despite trending toward failure.
FDA officials were largely receptive to Biogen's view and worked with the company to reanalyze the data. But many external experts were skeptical and said that Biogen should complete an additional study to prove the drug worked. An external committee of FDA advisers voted unanimously against the drug, some of whom later resigned in protest when the FDA approved the drug anyway.
Then Biogen's launch of Aduhelm sputtered. Many doctors disagreed about the drug's effectiveness, utility and cost, which was initially set at $56,000 annually before being slashed in half in response to criticism from patient groups and others.
The Cambridge, Mass., company's market value reached $62.5 billion in the days after Aduhelm was approved in June 2021, but has fallen more than 50% since then as large insurers refused to pay for the drug because of concerns about its effectiveness and side effects.
Last month, Medicare's parent agency said it wouldn't routinely pay for Aduhelm except if patients enrolled in clinical trials testing the drug.
After a short stint as Biogen's chief commercial officer, Mr. Vounatsos was appointed CEO in 2017 and was paid $17.7 million in total compensation last year, including $1.5 million in salary and $14.1 million in stock awards.
His tenure was marked by the loss of patent protection for the multiple sclerosis pill Tecfidera, Biogen's biggest product by sales; the launch of an innovative new therapy for infants struck by a rare disease called spinal muscular atrophy; and wild swings in Biogen's stock price based on Aduhelm's prospects.
Biogen's research chief Alfred Sandrock, who shepherded Aduhelm's development, resigned from Biogen in November after more than 20 years with the company.
Biogen shares rose slightly Tuesday.
Biogen has reached "a pivot point, effectively throwing in the towel on Aduhelm and announcing a CEO transition," Brian Abrahams, an RBC Capital analyst, said in a note to clients. "Though [the] go-forward strategy remains somewhat vague . . . we believe these changes will be well received over the long term, and give the company a fresh start."
The company said it would continue to support programs that provide Aduhelm free to U.S. patients already taking it.
Biogen also said it would continue to fund ongoing Aduhelm studies and the start of a planned new clinical trial that was mandated by the FDA as a condition of the drug's approval last year.
Under its new move, Biogen will effectively eliminate the sales and support staff it assembled for Aduhelm, a complex treatment to prescribe and administer.
Biogen also reported its first-quarter results Tuesday. Sales fell 6% to $2.5 billion, down from $2.7 billion in the year-earlier quarter." [1]
1. Biogen to Abandon Alzheimer's Drug, Part With CEO
Walker, Joseph.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 04 May 2022: A.1.
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