Biogen Idec's Agenda
New CEO must revive Biogen Idec's commercial performance, streamline its R&D
Of all the first generation big cap biotechs, Biogen Idec Inc. has always been known as the stodgy one. Ironically, it has taken the intervention of activist investors - generally thought of as green eyeshade wearers with a singular focus on the short-term bottom line - to finally bring in a quintessential biotech CEO with the kind of R&D background that is still at the heart of what biotech is all about.
At the end of June, the company announced it was hiring George Scangos as CEO. Scangos, who had been president and CEO of Exelixis Inc. since 1996, is a microbiologist by training. He was previously president of Bayer Biotechnology.
The hiring brings to a close the first chapter in Carl Icahn's involvement in the company, which began when he made an initial investment in August 2007. Soon thereafter, the company put itself up for sale, a process that proved unsuccessful.
In February 2008, Icahn proposed three nominees for the board of directors and proposed to restructure the board in hopes to restarting efforts to sell the company. He also said that if the company "failed to act to enhance shareholder value" he would come back the following year to nominate four more directors.
Icahn didn't get his initial slate elected and indeed came back the following year with four more nominees, two of whom were elected to the board in June 2009. Among Icahn's critiques at the time were that the 2004 merger of Biogen Inc. and Idec Pharmaceuticals Corp. failed to create shareholder value and that the biotech might need to be split up into a neurology company and a cancer company.
He also noted that the company hadn't introduced a new product since 2004, saying the R&D group needed to be reinvigorated, and called for an examination of Biogen Idec's cost structure.
In June of this year, a third Icahn nominee was elected to the board.
With three Icahn directors, several new directors chosen by Biogen Idec, and a new CEO, chapter two now begins.
After three years of fights between investors and management, both in public and in private, of aborted efforts to sell the company, of changes to the board, of talk of splitting up the company, it finally looks - at least from the outside - as if everyone left standing is on the same page.
Given where Biogen Idec was in 2007 before the turmoil began, the facts argue that the company was in need of more than a little shaking up.
The company has produced far less over the years than its brethren from the first biotech generation. Its nearest comps are Amgen Inc. and Genentech Inc., and Biogen Idec has under-performed both of them.
In terms of products on the market, Amgen has seven marketed drugs for which it breaks out sales, including five that sell more than $1 billion annually. Genentech has nine marketed products, including four with more than $1 billion in sales. Biogen Idec has only four products on the market, two of which sell more than $1 billion a year (see "Blockbuster Drug Counts").
The company has not had a commercial launch since