When a top biopharma executive abruptly shoves off, what comes next? Questions. Make that departing exec a sales-and-marketing chief, and couple that departure with slowing sales of a key product, and the questions multiply.
That's the situation at Biogen ($BIIB), after EVP Tony Kingsley left Friday, replaced temporarily by operations chief John Cox. In announcing Kingsley's departure, Biogen CEO George Scangos lauded his "significant contributions" to the company. "He led the successful introduction of five important new products," Scangos noted, one of which was Tecfidera, the multiple sclerosis pill that stormed out of the starting gate in 2013, but has faltered this year in the face of competition and amid reports of a rare-but-serious brain infection among its users.
For the second quarter, Tecfidera sales disappointed analysts at $883 million, compared with $700 million the same period last year, and the company cut its full-year earnings forecast, too. Since then, a New England Journal of Medicine article predicted more cases of progressive multifocal leukoencephalopathy in Tecfidera patients and called for additional monitoring of PML risks.
|Biogen CEO George Scangos|
The timing of Kingsley's departure worried investors, RBC Capital Markets Michael Yee wrote in an investor note. Biogen reports third-quarter earnings Oct. 21, and some saw the announcement as a sign that results might fall short. Indeed, RBC's numbers suggest Tecfidera's U.S. sales are flat to slightly down for the quarter, and international sales, while expected to grow by about 5%, are still only about one-fifth of the product's revenue. A DTC campaign in print and online began during Q3, but the new efforts will take time to pay off, Yee wrote.
As Evercore ISI Group analyst Mark Schoenebaum noted, the Biogen's sales projections for Tecfidera for the year likely came from its commercial group, and turnaround predictions probably originated there as well--and Tecfidera hasn't turned around. "My guess is that the company felt it needed a fresh set of eyes looking at the franchise," said in his weekly market update video.
RBC's Yee said his firm is hearing similar assessments. "[T]he company appears to be starting fresh, finding new leadership to reinvigorate things and holding folks accountable," Yee said in his Friday note. "In fact, bulls argue that this could be an incremental long-term positive to obtain new commercial leadership and energy."
There's more potential trouble looming for Biogen's MS franchise, however. Roche's ($RHHBY) late-stage med ocrelizumab has some impressive new data in both relapsing-remitting MS and the tougher-to-treat primary progressive MS. Bernstein analyst Tim Anderson said in a note last week that the drug's success in PPMS could have a "halo effect" in the relapsing-remitting market, where Biogen's drugs compete.
- see the Biogen release
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