Biogen CEO George Scangos has spent the last several years focusing the company’s research efforts on drugs for tough-to-treat neurodegenerative diseases like Alzheimer’s and Parkinson’s. That made the Cambridge, MA-based company’s hemophilia drugs outliers, which is why perhaps it’s no surprise that today the company has announced plans to funnel those drugs into a separate, standalone business.
Biogen (NASDAQ: [[ticker:BIIB]]) will spin off its hemophilia business into an independent, as of yet unnamed, publicly traded company. The hemophilia business is based around two FDA approved drugs known as Eloctate and Alprolix—replacement clotting factor drugs for hemophilia A and B that generated about $640 million in sales combined for the 12 months ending on March 31—as well as an experimental gene therapy and other experimental therapies Biogen has been developing for the chronic blood disease.
“We believe that the best way to realize the full potential of this growing and vital business is to enable it to operate independently with a management team dedicated to providing therapies to people living with hemophilia,” Biogen’s Scangos said in a statement.
Scangos referenced Biogen’s conundrum—whether it should keep or get rid of these hemophilia drugs—earlier this year when he spoke at a fireside chat at the BIO CEO & Investor Conference in New York, as Xconomy reported in February. Scangos originally aimed to divest Biogen’s hemophilia assets when he arrived as CEO in 2010, because they “had no strategic ties to anything else we were doing.” Biogen’s pipeline is full of drugs for neurodegenerative disorders like Alzheimer’s, multiple sclerosis, amyotrophic lateral sclerosis, Parkinson’s, and other candidates for pain and eye diseases. Though the hemophilia drugs were outliers, Scangos kept them because they were less risky to develop than some other treatments and cheaper and quicker to test and get to market. “So now we have it, and it still has no strategic alignment with the rest of what we’re doing,” he said in February.
Biogen experimented with delving deeper into the disease. Beyond its two FDA approved products, the company invested in a potential gene therapy for the disease, and began developing longer-lasting treatments than the drugs it already has on the market. Yet the issue of keeping these assets or flipping them was clearly on Scangos’s mind.
“If all we were going to do was market those two compounds and let them run their life cycle, then we should probably just sell them, right?” he said at the conference. “If we’re gonna be in it we need to be making investments for the future and the next generation of products, and care about this.”
Reuters, citing unnamed sources, reported two months later that Biogen was indeed trying to sell them. No deal was made, however, and Biogen instead chose an option Scangos didn’t reference in February—spinning the drugs out into a new company. The hemophilia spinout will be based in the Boston area and run by John Cox, currently Biogen’s head of pharmaceutical operations and technology; the rest of the management team and board will be named later. Biogen will continue to manufacture Alprolix and Eloctate for the next “three to five years” during the transition, the company said in a statement.
Biogen will close the deal by the end of 2016 or early 2017. The deal is a tax-free spin-off, through which shares will be distributed to current Biogen stockholders. Biogen will host a conference call this morning to discuss the transaction.
