Biotechnology giant Biogen said Wednesday it will cut about 11 percent of its workforce and end some development programs in a restructuring aimed to save $250 million a year.
Biogen's stock zoomed up more than 7 percent after the announcement of the cuts and release of the company's better-than-expected earnings report.
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The job cuts come after a slowdown in growth of Biogen's multiple sclerosis drug, Tecfidera. The company also reported better-than-expected third-quarter adjusted earnings of $4.48 a share on sales of $2.8 billion. Analysts had estimated earnings of $3.80 a share on $2.65 billion in revenue. Tecfidera sales also topped estimates, at $937 million for the quarter, versus expectations of $892 million.
Separately, Biogen reported that another of its multiple sclerosis drugs, Tysabri, failed in a late-stage clinical trial in a form of the disease known as secondary progressive MS.
Biogen's 11 percent reduction amounts to about 880 employees off its 8,000 base.
Shares in the Cambridge, Massachusetts-based drugmaker lost 22 percent this year through Tuesday as Tecfidera missed expectations. The company said Wednesday it plans to increase commercial support for the MS pill, including new direct-to-consumer marketing programs.
Biogen raised its full-year forecast, projecting revenue growth for 2015 of up to 9 percent, compared with a previous projection of as much as 8 percent. It expects adjusted earnings of $16.20 to $16.50 a share, up from $15.50 to $15.95.
As part of the restructuring, Biogen has stopped development programs including Tecfidera in secondary progressive MS, a less common form of the disease, as well as a medicine known as "anti-TWEAK" in lupus nephritis.
"We remain committed to maximizing the potential of our commercial portfolio, with a particular emphasis on Tecfidera," Biogen Chief Executive Officer George Scangos said in the statement. "The decision to reduce the company's workforce was extremely difficult, but we believe these actions are necessary to fulfill our mission of bringing important new medicines to patients."
The savings from the restructuring will be invested in late-stage development of experimental drugs for Alzheimer's, spinal muscular atrophy and a new approach to MS. Biogen said it will take a charge of $85 million to $95 million in the fourth quarter.