After a patient taking Biogen's Tecfidera died in 2014, the hot MS drug was slapped with a new FDA warning, lost ground in the marketplace—and soon, Biogen faced a securities lawsuit claiming it hid the negative fallout. Now, with a new ruling at the 1st Circuit Court of Appeals, Biogen has put that action to rest.
Based on statements from 10 confidential witnesses, the plaintiffs had argued that Biogen executives knowingly concealed damage to Tecfidera’s growth after that patient death. A district court previously tossed the case which named Biogen, former CEO George Scangos, former EVP Stuart Kingsley and CFO Paul Clancy. The plaintiffs appealed.
That effort turned out to be fruitless as the appeals court agreed with the earlier ruling, stating that the plaintiffs' claims didn’t meet a “rigorous standard” required of such securities suits.
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The plaintiffs contend that Biogen and its management didn’t disclose the true damage to Tecfidera following the patient death. In mid-2015, when the drugmaker finally lowered its sales guidance for the blockbuster MS drug, the company’s stock fell by more than 20% in one day.
In her opinion, U.S. Circuit Court Judge Sandra Lynch wrote that the “allegations here clearly fall short" of requirements. She added that the court wants to “discourage any expectation that there will be ‘leisurely repeated bites at the apple’” in appeals. Further undermining the plaintiffs' arguments was the fact that Biogen execs increased their share purchases during the time.
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The win in court follows another big victory for Biogen in a Tecfidera patent dispute after it fought off a challenge from Kyle Bass and his Coalition for Affordable Drugs earlier this year. Before that, the company agreed to a $1.25 billion patent settlement with Forward Pharma on the key MS med, which made up about 35% of Biogen’s sales last year.
After its 2013 launch, Biogen's big-selling oral MS option Tecfidera got off to a quick start, quickly surpassing Novartis' Gilenya and Sanofi's Aubagio, which each beat Biogen's med to the market. But increased competition and pricing pressure have taken a toll in recent years, hurting the med’s sales trajectory.
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In response to the slowdown, Biogen cut 800 staffers in 2015 and used part of the $250 million in annual savings for DTC advertising. The company’s TV ad was controversial but did the job, according to execs, and Biogen stopped advertising on TV last year when the campaign expired.
Now, facing even more pressure in MS from Roche’s Ocrevus, Biogen has said in recent weeks that it will look to sign value-based deals with payers and to strike M&A deals for growth.