RESEARCH TRIANGLE PARK — Two years after Biogen Idec announced it was laying off 13 percent of its workers and revamping its research efforts, the biotechnology company is prospering and has reason for optimism going forward.
Biogen’s stock has more than doubled in the past two years and Cowen and Co. analyst Eric Schmidt recently projected that the company, best-known for its multiple sclerosis drugs Avonex and Tysabri, is in position to “post above-average revenue and EPS (earnings per share) growth for the next decade.”
Biogen generated $5.05 billion in revenue in 2011 and, in the latest quarter, enjoyed a 6 percent rise in revenue and a 13 percent jump in net income. The company is based in Massachusetts but employs more than 1,000 workers at its RTP campus, where on Thursday it dedicated a new five-story, 190,000-square foot office building.
“I think it’s a hugely different company,” CEO George Scangos, who ordered the corporate belt-tightening not long after taking the company’s helm in June 2010, said in an interview after the dedication. “We have made the company leaner, more focused. ... It’s a more cost-efficient company.”
More importantly, the company has a strong pipeline of experimental drugs.
“We have had a string of positive Phase 3 readouts,” said Scangos – industry-speak for a series of promising test results for experimental drugs in the final stage of testing required before seeking regulatory approval.
“I can’t take credit for those,” Scangos added. “These are 10-year processes. They were put in place long before I got here.”
Biogen has an experimental MS drug called BG-12 that has completed the gauntlet of required tests and is seeking the green light from the Food and Drug Administration. It also is preparing the documentation to seek approval for two experimental hemophilia drugs that have completed testing, and has four other medications in Phase 3 trials.
If the hemophilia drugs make it to market, they will be manufactured in RTP, where workers also make Avonex and Tysabri.
BG-12, which would be made elsewhere, has the potential to become Biogen’s best-selling drug ever. Schmidt, the analyst, projects peak annual sales could reach $4 billion.
“I hope Eric’s right,” Scangos said.
In addition to encouraging test results regarding its efficacy and safety, BG-12 would join a new generation of MS drugs that can be taken orally. By contrast, Avonex is injected and Tysabri is administered by infusion at the doctor’s office.
The buzz about BG-12 is so strong that analyst Geoff Meachum of J.P. Morgan Chase recently cautioned that investors may end up being disappointed.
“While we do believe BG-12 has a compelling clinical profile, we believe high expectations for the launch are a risk,” he wrote in a recent research note.
Scangos said that overhauling the company’s ongoing R&D efforts actually made them stronger even though it included dropping projects focused on developing oncology and cardiovascular drugs.
“We’re not a big enough company,” Scangos said. “We’re not Pfizer. We’re not J&J. We can’t compete effectively in so many therapeutic areas.”
By paring back, he added, “it freed up resources so we can compete with real critical mass” in the remaining programs.
Biogen’s gains have redounded to the Triangle’s benefit. The company has added 150 or so employees in RTP since it unveiled the plans for its new building – the sixth major building on its campus – in April 2011.
The company anticipates further growth here as well, but to what extent is dependent on how its experimental drugs fare in clinical trials and with the regulators.
“Look, the company is growing because of the number of (potential) new products,” Scangos said. “As we start to manufacture more drugs, we’ll need more people. The reason I am being a little squishy about it, the growth really has to reflect the success of the products.”