Following the disastrous rollout of Biogen’s controversial Alzheimer’s drug, chief executive Michel Vounatsos said Tuesday that he will be stepping down soon, while the company plans another round of cost-cutting that includes “substantially” eliminating the sales division for the medicine, Aduhelm.
The departure of Vounatsos, to take effect after Biogen finds a new leader, is the largest domino to topple inside the Cambridge biotech over the Aduhelm flop. The company’s former top scientist, Al Sandrock, was ousted late last year following Aduhelm’s tumultuous launch, according to STAT, and Biogen has yet to fill the position. It had previously launched a $500 million cost-cutting initiative and confirmed that it had laid off some workers.
“This will be good for everyone involved,” Vounatsos said in announcing his resignation during an earnings call. “My focus will be on the company. It’s not about me. It’s about the company, and the team, and a smooth transition.”
The company reported that it took in only $2.8 million from Aduhelm in the first quarter of the year, and just under $3 million in all of 2021, a far cry from the billions analysts originally predicted for the first new Alzheimer’s disease treatment to be approved in nearly 20 years. By comparison, Tysabri, its blockbuster treatment for multiple sclerosis, generated nearly $521 million during the first three months of this year. In all, Biogen reported revenue of $2.5 billion during the quarter, down from $2.7 billion in the same period a year ago.
Shedding staff devoted to selling Aduhelm, along with “additional cost-reduction measures,” will save the company $500 million, it said. That’s on top of previously announced cost-cutting measures, bringing the annual savings to an estimated $1 billion. The firm has previously confirmed layoffs ― of as many as 1,000 workers, according to STAT News ― but on Tuesday did not specify how many more of its approximately 9,600 employees would be affected by the additional cuts. Biogen said it would write off $275 million in Aduhelm inventory it does not expect to sell.
Vounatsos joined the company as chief commercial officer in 2016 after spending 20 years at pharmaceutical giant Merck, and became chief executive in early 2017. Under his leadership, Biogen expanded its signature offerings of multiple sclerosis drugs and won approval from federal regulators for Spinraza, the first drug for a rare and deadly genetic disease called spinal muscular atrophy.
But Vounatsos’ tenure at Biogen will be remembered mostly for his controversial push to get Aduhelm approved, and the calamitous aftermath of the Food and Drug Administration’s decision to approve its use despite limited data demonstrating the drug’s effectiveness.
Trouble started in 2019 when Biogen halted testing of the drug after a preliminary review of data suggested that it wasn’t working. The company backpedaled later that year, releasing new information that showed Aduhelm slowed cognitive decline in patients participating in one clinical trial, but not those in a second trial. Biogen pushed forward and sought approval from the FDA based on the positive trial.
The drug is designed to remove plaques made up of amyloid-beta proteins that build up in the brains of people with Alzheimer’s. The FDA granted it accelerated approval based on the treatment’s undisputed ability to clear up amyloid, but neurologists disagree about whether removing the plaque actually benefits people with Alzheimer’s.
The approval was immediately the subject of a raging debate, because of the drug’s questionable benefits and its initial price tag of $56,000 a year. Major hospital systems, including Mass General Brigham, refused to offer Aduhelm to patients, and insurance companies said they would not cover it. Biogen later cut the price in half, to $28,000, but the discount wasn’t nearly enough to fix its tarnished reputation.
Then in April, the Centers for Medicare & Medicaid Services dealt Aduhelm a final blow by announcing the federal government would only pay for the drug for patients participating in clinical trials, where its risks and benefits could be better evaluated. Biogen cited that decision as the major reason for its plans to dismantle its Aduhelm commercial division.
Still, the company said Tuesday that it will move forward with two new clinical trials of Aduhelm. One study will give the drug to patients enrolled in Biogen’s previous trials. A second study, this one placebo-controlled, will enroll new patients and address the FDA’s request for answers on whether the drug effectively slows cognitive decline.
Biogen is also working with the Japanese pharmaceutical company Eisai on a second Alzheimer’s drug, called lecanemab, which, like Aduhelm, is an antibody that sticks to amyloid and recruits immune cells to remove it from the brain. The two drugs recognize slightly different forms of amyloid, and preliminary data suggest that lecanemab might be safer, with a lower risk of deadly brain bleeding and swelling sometimes caused by Aduhelm.
Results from the Phase 3 trial of lecanemab are expected in the fall. Biogen and Eisai plan on initially submitting the drug through the same accelerated approval pathway that created such a headache with Aduhelm. They also plan to ask the FDA for full approval of the drug — which would require demonstrating that it slows cognitive decline — in the first quarter of 2023.
In addition to cutting its Aduhelm expenses, Biogen in its earnings announcement outlined four other areas of focus for building its business back. Although details were light, the clinical success or failure of lecanemab, plus drugs being developed to treat depression and schizophrenia, will partly guide future research and development priorities, the company said.
The company’s stock soared when Aduhelm was approved last June, but has since fallen 50 percent. Its price initially rose 2 percent on the news of Vounatsos’ resignation, but closed down nearly 2 percent Tuesday, giving it a market cap of about $30.3 billion.
“I will be leaving at a time of promise for Biogen,” Vounatsos said, emphasizing the potential of experimental drugs in the company’s pipeline and its $4.8 billion in cash on hand. “I look forward [to] working with my successor through a smooth transition.”