NEW YORK - American biotechnology giant Biogen Inc. Wednesday reported revenues of $2.8 billion in the third quarter 2015, an 11 percent increase compared to the corresponding period in 2014, while announcing corporate restructuring, which includes the termination of a number of pipeline programs and an 11 percent reduction in workforce.
"These changes are expected to reduce the current annual run rate of operating expenses by approximately $250 million. The company plans to reinvest these savings to support key commercial initiatives, including increased sales and marketing activities behind Tecfidera , and the advancement of high potential pipeline candidates in areas such as Alzheimer's disease, multiple sclerosis, and spinal muscular atrophy," said Dr George A. Scangos, Biogen Chief Executive Officer, in a statement.
"The decision to reduce the Company's workforce was extremely difficult, but we believe these actions are necessary to fulfill our mission of bringing important new medicines to patients. We have several high-quality programs that are now or soon will be in Phase 3, and the cost savings from the restructuring will be reinvested to carry out those programs aggressively and hopefully to bring them to patients as quickly as possible," Dr. Scangos stated
The company plans to substantially complete the targeted 11 percent reduction of its global workforce by the end of 2015. Biogen is in the process of notifying employees affected by the restructuring, and has initiated the required consultation processes in European countries where employees may be impacted.
Biogen has also discontinued several programs, including its Phase 3 program for Tecfidera, used to treat relapsing forms of multiple sclerosis(MS), the development of anti-Tweak in lupus nephritis, and certain activities in immunology and fibrosis research.
The company has discontinued the phase 3 program for the recently launched oral therapy Tecfidera in secondary progressive multiple sclerosis after disappointing trial results.
"Implementing these changes is expected to reduce the current annual run rate of operating expenses by approximately $250 million. Biogen expects to incur a charge of approximately $85-$95 million, primarily in the fourth quarter of 2015. Additionally, the company plans to identify additional savings in non-labor expenses by the end of the year," Biogen stated in a press release.
The restructuring is expected to yield savings for 2016 and beyond and provides additional financial flexibility to support marketed therapies and focus on a number of meaningful pipeline opportunities
In the third quarter of 2015, Biogen's non-GAAP diluted earnings per share (EPS) were $4.48, an increase of 18 percent over the third quarter of 2014. Non-GAAP net income attributable to Biogen for the third quarter of 2015 was $1.0 billion, an increase of 16 percent over the third quarter of 2014.
On a reported basis, GAAP diluted EPS for the third quarter of 2015 were $4.15, an increase of 15 percent over the third quarter of 2014. GAAP net income attributable to Biogen for the third quarter of 2015 was $966 million, an increase of 13 percent versus the same period in the prior year.
In light of the restructuring, change in capital structure, and significant share repurchases, Biogen in an update to its full year financial guidance for 2015 projected revenue growth is expected to be approximately 8 percent to 9 percent compared to 2014, a modest increase versus prior guidance.
This guidance implies a sequential decrease in revenue in the fourth quarter of 2015 based on the assumption of stable US wholesaler inventory levels for the balance of the year in MS and a reduction in US wholesaler inventory for Rituxan.