Drug manufacturer Biogen (NASDAQ:BIIB) is seeing some attention this morning after announcing its Chief Executive Officer (CEO), Michel Vounatsos, will step down. BIIB stock is up about 1.5% so far today following Biogen’s first-quarter earnings call yesterday.
So, what do you need to know about BIIB today?
Well, in its earnings call Monday, the biotech group made a number of meaningful announcements related to the company’s future. Following the failed launch of its Alzheimer’s drug, Aduhelm, Biogen has announced it will eliminate its commercial infrastructure for the treatment, saving the company upwards of $500 million in annual costs.
The announcement comes after last month’s news that public insurers in the the U.S. will not fund the drug for most patients. Indeed, the Centers for Medicare and Medicaid Services announced in April that reimbursement for the medicine would be limited to a few thousand clinical-trial patients. This leaves out the roughly 6 million Alzheimer patients in the U.S. Analysts believe the decision may have lost Biogen approximately $10 billion in annual sales.
In its earnings call, the company claimed it’s beginning its “life after Aduhelm,” a life that apparently excludes Vounatsos. The company stated it’s currently searching for a new CEO, while Vounatsos hangs onto the role until then.
What else do you need to know about Biogen?
BIIB Stock Climbs on Transformative Earnings Call
Aside from Biogen’s structural changes, the company also announced its fiscal first-quarter financial results. While the company reported beating sales expectations for a number of its treatments, not everything went as planned. The company’s first-quarter sales fell 6% to $2.53 billion, as a number of its drugs slipped in demand. Biogen reported adjusted earnings per share (EPS) of $3.62, well below analyst expected $4.34.
Despite its shortcomings, Biogen’s transition away from its debut Alzheimer’s treatment has clearly played well with investors.
If you recall, Aduhelm made waves last June after earning fast-track approval from the U.S. Food and Drug Administration (FDA). It remains the only FDA-approved treatment for Alzheimers but has come with its share of controversy.
Some in the scientific community maintain the drug’s efficacy for reducing Alzheimers in a small subset of patients is rendered immaterial by the drug’s occasional side effects, which include bleeding in the brain. Criticisms around the drug range from arguments the drug is unproven, to attacks on Biogen for its pricing. Reasonably so, as the medicine was originally priced at $56,000 per year. While it has since been cut to $28,000, its recent insurance snafu has severely limited its profit-making potential.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.