Biogen will replace its CEO and largely abandon marketing of its controversial Alzheimer’s drug Aduhelm less than a year after the medication’s launch triggered a backlash from experts, doctors and insurers.
Greek-American CEO Michel Vounatsos will continue to lead the Biogen until a successor is found, the company said Tuesday. Vounatsos has been CEO since 2016 and was the chief architect of the company’s strategy built around Aduhelm.
For now, Biogen announced it is “substantially eliminating” spending on Aduhelm as part of a $1 billion dollar cost-saving plan designed to refocus the company’s flagging pharmaceutical business.
The announcement represents a stark acknowledgement that the Cambridge, Massachusetts, company has failed to find a place for a drug that was expected to drive its business for years to come.
Aduhelm was the first new Alzheimer’s drug introduction in nearly two decades. Initially priced at $56,000 a year, it was expected to quickly become a blockbuster drug that would generate billions for Biogen.
But doctors have been hesitant to prescribe it, given weak evidence that the drug slows the progression of Alzheimer’s. Insurers have blocked or restricted coverage over the drug’s high price tag and uncertain benefit. Even the company’s decision to slash the drug’s price in half— to $28,000 a year — did little to improve uptake.
Last month the federal government’s Medicare health plan imposed strict coverage limitations on who can get the drug, which brought in $2.8 million in sales in the first quarter, which just ended. The vast majority of U.S. Alzheimer’s patients are old enough to qualify for Medicare, which covers more than 60 million people, including those 65 and older, and disabled people under 65.
Biogen said Tuesday that it booked about $275 million in charges from Aduhelm inventory write-offs in the quarter, and it would essentially shutdown the commercial infrastructure supporting the drug.
Aduhelm expenses dragged down the company’s quarterly results and Biogen fell short of Wall Street projections, reporting adjusted net income of $535 million, or $3.62 per share. Analysts forecast earnings of $4.34 per share, according to FactSet.
Biogen executives said the restrictive Medicare decision essentially denied Aduhelm to most eligible patients in the U.S. The company said it would continue running a federally-mandated confirmatory trial designed to establish if the drug truly slows Alzheimer’s.
Last month the company announced it was pulling its marketing application for the drug in Europe.
Biogen’s quarterly revenue fell 6%, in part due to lower sales of the company’s multiple sclerosis drugs in the U.S. due to cheaper, generic competition. The company also reported lower sales of its specialty drug Spinraza, which is used to treat a rare spinal disorder.
For the year, Biogen reaffirmed earnings guidance of between $14.25 and $16.00 per share.
Shares of Biogen Inc. rose 2% before the opening bell.