Biogen’s facility in Cambridge, Massachusetts.
Brian Snyder | Reuters
Biogen expected on tuesday About 1,000 layoffsemployees, who make up about 11 percent of its workforce, to save costs as the biotech prepares to launch newly approved Alzheimer’s drug Leqembi.
Biogen had 8,725 employees worldwide at the end of last year. The layoffs are part of the company’s ongoing cost-cutting and restructuring plan, which also includes cutting its R&D pipeline to prioritize Leqembi and other drugs.
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The larger plan is expected to save about $1 billion in gross operating expenses by 2025, Biogen said in its second-quarter earnings report.
Approximately $300 million of the savings will be reinvested in product launches and R&D projects.
The company also said the plan would save $700 million in net operating expenses by 2025.
Shares of Biogen rose more than 1% in premarket trading Tuesday.
The new layoffs follow the landmark approval this year of Leqembi and the company’s ALS drug Tofersen.
As Biogen’s blockbuster multiple sclerosis and spinal muscular atrophy treatments face stiff competition from cheaper versions and similar drugs, investors are pinning their hopes on the new drugs.
Biogen CEO Chris Viehbacher said on the earnings call that the cost-cutting plan “is really an opportunity to make sure we’re really fit for growth this year before we launch.”
“There are a lot of patients who rely on Biogen products,” he said by phone. “Obviously, we need to invest heavily in new product launches.”
Wall Street analysts were pleased with the layoff announcement.
The broader cost-cutting plan “is in line with our expectations and is why we are bullish on the name,” Wells Fargo analyst Mohit Bansal said in a research note on Tuesday.
“We expect the stock to rise on the news as investors await the move,” he said.