(Reuters) -Biogen Inc said on Tuesday it expects to slash about 1,000 jobs, or about 11% of its workforce, under a fresh cost-cutting program as the company ramps up the launch of a new Alzheimer’s disease drug in efforts to return to growth.
Investors have pinned their hopes on Leqembi as the U.S drugmaker’s money spinner multiple sclerosis and spinal muscular atrophy (SMA) treatments face fierce competition from cheaper versions and rival drugs.
Shares of the Massachusetts-based company rose 1.3% to $280.55 in premarket trading.
“Biogen’s business is in transition,” CEO Christopher Viehbacher said in a statement.
“While we will be making significant investments in our newly prioritized pipeline and new product launches, we will also need to invest less in other areas,” he added.
The company had said in April it would pause or discontinue at least four studies of experimental drugs to focus on more lucrative options including the Leqembi launch and trim costs.
The U.S. Food and Drug Administration in early July granted a standard approval to Leqembi, which Biogen sells with Japan’s Eisai, clearing the way for wider insurance coverage.
However, Biogen has said it expects costs related to the launch are likely to offset “modest” sales this year.
The company said on Tuesday it expects the new cost-cutting program to reduce about $700 million in net operating expenses by 2025.
Biogen had 8,725 employees worldwide, as of the end of last year.
In the second quarter, the company earned $4.02 per share on an adjusted basis, compared with estimates of $3.77.
Multiple sclerosis treatments Avonex and Vumerity, as well as SMA therapy Spinraza, beat analyst estimates, while Tecfidera missed expectation as it faced generic rivals.
Sales of Spinraza rose slightly to $437 million, above estimates of $434.79 million, according to Refinitiv data, while Avonex sales of $220.3 million beat expectations of $214.96 million.
(Reporting by Manas Mishra and Mariam Sunny in Bengaluru; Editing by Sriraj Kalluvila)
