By Mrinalika Roy and Leroy Leo
(Reuters) -Biogen Inc said on Tuesday that chief executive Michel Vounatsos will step down and that the company is pulling back on selling its controversial Alzheimer's drug Aduhelm, in what appears to be a final blow to its prospect of becoming a big seller.
The future of Aduhelm has been in doubt since the U.S. government's Medicare program restricted coverage of the medicine to patients in clinical trials.
Aduhelm was expected to be the company's next big blockbuster treatment, but controversy over its approval without clear evidence of patient benefit and the U.S. decision to severely limit access cast serious doubt on its sales potential.
Biogen (NASDAQ:BIIB) said on Tuesday https:// it was looking at "substantially" eliminating commercial infrastructure related to Aduhelm and plans for more cost cuts, in addition to the current program to save $500 million annually.
Biogen last month decided to withdraw its marketing application for Aduhelm in Europe after failing to convince the European regulator of the treatment's benefits.
The company said it will retain minimal resources to make Aduhelm available to patients currently taking the drug in the United States.
Vounatsos, who was named as the CEO in 2016, will continue in his role until a successor is appointed, the company said. Under his leadership, the U.S. biotech developed and launched several important growth drivers including spinal muscular atrophy drug Spinraza and multiple sclerosis drug Vumerity.
"The news (about Vounatsos) is not surprising, given the many setbacks the company has faced," said RBC Capital Markets analyst Brian Abrahams, adding that it "may help add to the perception that Biogen will turn the page from being overly levered to Alzheimer's to assembling a more diverse pipeline."
Biogen shares were up about 1.3% at $210.03 on Tuesday. The stock is down 47% since Aduhelm was approved in June.
The company was betting on Aduhelm, the first new treatment for the memory-robbing disease in nearly 20 years, to act as a buffer as its main established revenue drivers face rising competition.
The U.S. Food and Drug Administration approved the treatment last June despite a lack of clear evidence that it slowed cognitive decline and over objections of the agency's panel of outside expert advisers.
Aduhelm had sales of just $2.8 million in the first quarter, missing analysts' diminished estimates. The company said its earnings were hit by a $275 million Aduhelm inventory write-off.
Excluding items, Biogen earned $4.38 per share, in line with analysts' estimates.
Vounatsos called the setbacks faced by the company in the last 12 months "significant," but said Biogen remained committed to Alzheimer’s disease.
Biogen is still counting on a second Alzheimer's drug, lecanemab which, like Aduhelm, was developed with Japanese company Eisai Co (OTC:ESALY). Ltd.
Biogen plans to complete a rolling submission of data for lecanemab under the U.S. accelerated approval pathway in the current quarter before submitting it for full approval in 2023.
On Tuesday, Eisai revised down its operating profit forecast for the year ended March 31 by 31.4% to 53.5 billion yen ($411 million), citing the impact of the U.S. coverage policy for Aduhelm.
($1 = 130.1300 yen)