A Biogen facility in Cambridge, Massachusetts.
Brian Snyder | Reuters
Biogen on Tuesday said it expects to cut approximately 1,000 jobs, or about 11% of its workforce, to save costs as the biotech company prepares to launch its newly approved Alzheimer’s drug Leqembi.
Biogen had 8,725 employees worldwide as of the end of last year. The layoffs are part of the company’s ongoing cost-cutting and reorganization plan, which also involves shaving down its research and development pipeline to prioritize Leqembi and other drugs.
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Biogen, in its second-quarter earnings report, said the larger plan is expected to generate approximately $1 billion in gross operating expense savings by 2025.
About $300 million of those savings will be reinvested into product launches and R&D programs.
The company also said the plan will result in $700 million in net operating expense savings by 2025.
Biogen’s stock price rose more than 1% in premarket trading Tuesday.
The new layoffs follow landmark approvals of Leqembi and the company’s ALS drug Tofersen this year.
Investors are pinning their hopes on the new medicines as Biogen’s blockbuster multiple sclerosis and spinal muscular atrophy treatments face fierce competition from cheaper versions and similar drugs.
Biogen CEO Chris Viehbacher said during an earnings call that the cost-cutting plan is “an opportunity really to make sure that this year, before we get into the product launches, that we are truly fit for growth.”
“There are an awful lot of patients who depend on Biogen products,” he said during the call. “There’s a need, obviously, to have a strong investment in our new product launches.”
Wall Street analysts were pleased with the layoff announcement.
Wells Fargo analyst Mohit Bansal said in a Tuesday research note that the broader cost-cutting plan is “in line with our expectations and was the reason for our bullish stance on the name.”
“We expect the stock to be up on this news as investors were waiting for this move,” he said.