Biotech company Biogen Idec Inc. said Wednesday it is laying off 13 percent of its work force, or 650 employees, in a restructuring and cost-cutting move.
Biogen, based in Weston, Mass., said it will have 4,275 employees after the cuts, which include exiting development of cancer treatments and cardiovascular drugs. The company said it will focus on neurology and leverage its strengths in biologics research and development and manufacturing to pursue select biotechnology-based therapies.
The company sells multiple sclerosis drugs Tysabri and Avonex and cancer drug Rituxan.
Biogen expects to post annual savings of about $300 million after the restructuring, which will lead to charges of about $115 million, including about $70 million in the fourth quarter.
"The loss of jobs at Biogen Idec is something I deeply regret but is an unavoidable outcome of our new focus," said CEO George Scangos, who was appointed CEO in July.
But, he said the company is currently spread too thin, specifically saying Biogen is a "mile wide and an inch deep," during a conference call Wednesday morning.
"We need to be an agile, focused company," he said.
The restructuring plan comes weeks after the company reported a 8.5 percent drop in third-quarter profit because of higher costs and expenses. While sales of Tysabri rose 9 percent to $307 million, revenue from Rituxan fell 9 percent to $258 million.
Biogen markets Rituxan with Roche AG's Genentech division. Under the restructuring plan, Biogen will eliminate its current sales force for Rituxan, and Genentech will assume responsibility for U.S. sales and marketing.
Overall, the company is exiting 11 programs and condensing its work force to three facilities from six. Facilities in Waltham and Wellesley, Mass., and San Diego will close, leaving open facilities in Weston and Cambridge, Mass., and in Research Triangle Park, N.C.
Biogen highlighted several programs it believes could reach the market by 2015, including several potential drugs for MS along with hemophilia and ALS, or Lou Gehrig's disease.
Biogen also said it terminated a three-year-old collaboration with Cardiokine Inc. The companies were working on lixivaptan, a treatment for hyponatremia, or a lack of salt in bodily fluids outside the cells. Cardiokine has regained all rights to lixivaptan, which is in late-stage clinical testing.
Meanwhile, the company said it is still searching for a new research and development director and has already taken steps to become more agile. Biogen has already consolidated committees to simplify decision making, Scangos said, and has a new program management group that is accountable for all aspects of each project portfolio.
Looking ahead, the company now expects full-year adjusted profit of $4.85 per share, above prior guidance which called for annual profit of at least $4.70 per share. Analysts expect $5.02 per share.
Shares of Biogen were unchanged at $63 on Wednesday. The stock has traded between $42.54 and $64.92 over the past year.