Biogen unexpectedly replaces CFO Capello with IQVIA vet, sparking M&A speculation

When Biogen appointed Jeffrey Capello as its new chief financial officer in late 2017, CEO Michel Vounatsos said he would be key to the company’s efforts to seek out new business development opportunities. Now, Vounatsos seems to be signaling that Capello isn’t the right choice to drive the company’s growth strategy going forward.

Tuesday night, Biogen announced that Capello would step down in August and be replaced by Michael McDonnell, CFO of contract research organization IQVIA.

During Biogen’s second-quarter earnings call Monday, neither Capello nor Vounatsos addressed the reason for the CFO switch-out, but it was clear the need for the company to change its business development strategy was on the minds of both executives and analysts.

Biogen has been under pressure to bulk up its pipeline for quite some time. Yes, the company is completing an FDA filing for approval of aducanumab, the Alzheimer’s candidate that it unexpectedly revived last year. But Biogen is facing questions about whether the drug is truly effective enough to drive a significant amount of prescriptions.

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McDonnell brings to his new job a fair amount of experience in business development. In 2015, he joined Quintiles, which merged with IMS Health the following year to form IQVIA. The combined company went on to complete three acquisitions between November 2017 and February 2019.

One analyst noted during Biogen’s earnings call that company cited McDonnell’s “extensive expertise in value-creating, strategic financial considerations” in announcing his appointment as CFO. He wondered whether that implied that Biogen’s management team was displeased with the fact that Capello’s tenure yielded only one major acquisition: the $877 million purchase of gene therapy company Nightstar in March of last year.

“Well, together with Jeff we delivered on 18 deals,” Vounatsos replied, though those deals were focused on early-stage research. “This is where we can add the most value.” Vounatsos said aducanumab’s approval represents the “one big hope” to tide Biogen over until 2024, when those early-stage pipeline assets start to pay off for Biogen.

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The pressure on Biogen to improve its near-term prospects has intensified, given that its recently launched multiple sclerosis drug Vumerity has been slow to catch on because of COVID-19 disruptions.

At several points during Capello’s tenure, Biogen was rumored to be eyeing big deals. In 2018, the company’s name was bandied about as a likely acquirer of neurology drug maker Acorda, though that deal never materialized. Capello told analysts at the time that Biogen was looking “to bring in things that are close to revenue.”

Now, Vounatsos seems to be acknowledging that Biogen needs to step up its game to improve its near-term pipeline prospects. “I can tell you that we continue to be very active on the [business development and] M&A front,” he said during the earnings call. “At the same time, we are very careful,” he added.