Biogen Layoffs Confirmed For 2023 as Attention Shifts to Launching Alzheimer’s Drug
Key takeaways
- Biogen is cutting 1,000 roles in its second big layoffs round
- The company’s earnings report showed better-than-expected results, generating $2.5 billion in revenue for the second quarter
- Biogen shares have cratered due to the layoffs announcement and uncertainty over FDA approval for Biogen’s new antidepressant
Biogen is the latest healthcare company to announce it is cutting roles. It’s the second time the company has done so in a year as it embarks on saving money and slimming down its R&D dossier to focus on launching its new Alzheimer’s drug. The news sent Biogen shares down — and it got worse from there. Keep reading.
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What’s the latest with Biogen layoffs?
The healthcare sector has had a rough ride this year as pharma companies have struggled to bounce back from the halcyon days of the pandemic. As a result, several have shared cost-cutting measures to stay afloat — with Biogen being the latest to announce layoffs.
Biogen will be shedding 1,000 roles, totaling roughly 11% of its workforce. The company had already slashed 900 jobs last year, ending 2022 with 8725 employees. Biogen predicts the layoffs will generate around $1 billion in gross operating savings by 2025.
Biogen introduced the measures to cut down on costs, including slashing some of its ongoing research and development to prioritize launching its new Alzheimer’s drug, Leqembi, and other medicines.
The layoffs were announced alongside Biogen’s earnings, which came in stronger than anticipated. Q2’s non-GAAP diluted earnings per share arrived at $4.02, higher than the $3.77 predicted, while revenue came in a smidge higher than expected at $2.5 billion.
The market reaction
The layoffs news caused the stock to decline 3% in early trading on Tuesday, plunging another 2.5% during trading on Wednesday. So far in 2023, the stock has fallen 3.3%, which is roughly in line with the broader healthcare picture.
Part of Wednesday’s decline comes from Biogen CEO, Christopher Viehbacher, who didn’t touch on the pending FDA decision about Biogen’s antidepressant drug, Zuranolone, which is meant to start working in just two weeks.
Sage Therapeutics, Biogen’s partner, also saw its shares plummet — on Wednesday, the share price had plunged by 13.7% to $36.12.
The bottom line
Despite the upbeat earnings report, Biogen’s share price has taken a hit. Investors should be cautious about the upcoming FDA decision due in August, which could cause Biogen’s stock to decline further. The silver lining could be the Alzheimer’s drug launch; if successful, it could propel the stock to new heights. All is to play for.
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