Biogen said it considered a number of alternatives including a sale before deciding to split the business in a tax-free transaction, which it said would deliver the most value to its shareholders.
The new company will include treatments Eloctate and Alprolix for hemophilia A and B, which had total sales of $554.2 million in 2015, about 5 percent of Biogen’s revenue. Hemophilia is a group of hereditary genetic disorders that impairs the body’s ability to control blood clotting.
Biogen began a sweeping restructuring program in October to cut costs and focus on core areas such as neurology and autoimmune diseases. In April, Reuters reported that it was looking at selling the hemophilia assets. It expects the transaction to occur by the end of this year or early next year.
Biogen will focus on developing drugs for neurodegenerative diseases such as multiple sclerosis, spinal muscular atrophy (SMA), Alzheimer’s disease, Parkinson’s disease, amyotrophic lateral sclerosis (ALS), and neuropathic pain. It will keep its bestselling MS drug, Tecfidera.
The company’s promising Alzheimer’s drug candidate generated excitement last year after early data showed a reduction in amyloid plaque in the brain and some cognitive improvement.
Biogen’s collaboration on Eloctate and Alproprix with Swedish Orphan Biovitrum AB will continue, CEO George Scangos said during a conference call with analysts. The move to spin off the hemophilia drugs would have been premature 6 or 12 months ago, he said.
“It’s not really a shift in strategy. It is the fact that the business has matured. It is doing very well. It is profitable. It can stand on its own,” Scangos said. The area of the company focused on hemophilia also has a pipeline of experimental products that need to be “aggressively” developed, he said.
Biogen’s executive vice president, pharmaceutical operations and technology, John Cox, will be the chief executive officer of the new company, which will be based in the Boston area, Biogen said.
Biogen shares were largely unchanged in early trading at $273.97, versus their Monday close of $273.67.
(Reporting by Amrutha Penumudi and Rosmi Shaji in Bengaluru and Caroline Humer in New York; Editing by Savio D’Souza and Frances Kerry)