Alexion cuts 20% of its workforce in latest restructuring
- Alexion Pharmacueticals Inc. is moving its headquarters to Boston and cutting its workforce about 20% as the rare disease drugmaker continues restructuring efforts.
- The latest initiatives should, before taxes, cost the company between $340 million and $440 million, yet amount to roughly $250 million in annual savings, according to a Tuesday announcement. Alexion anticipates those savings will allow it to invest $100 million per year (starting in 2018) into R&D for key programs and therapeutic areas.
- In addition to the relocation and job cuts, Alexion CEO Ludwig Hantson said during a Sept. 12 investor call that his company is shuttering "multiple" manufacturing plants, including a production facility in Rhode Island that "can no longer accommodate our future pipeline, including [ALXN1210]." The Rhode Island closure is scheduled to begin in late 2017 and wrap up in mid-2018.
Alexion has been in the throes of a large-scale restructuring for the better part of 2017. The shake up comes as Soliris (eculizumab), the company's blockbuster rare disease drug and main source of income, rapidly approaches loss of exclusivity. The treatment's composition of matter patent runs out in the U.S. in 2021, while other exclusivities are slated to end even sooner.
In the wake of that potential loss, Alexion has tried to free up cash to pursue more R&D for its trophy drug and vital follow-on treatments. One of its main focuses, for instance, is locking down new Soliris indications for two uncommon illnesses: relapsing neuromyelitis optica spectrum disorder and refractory generalized myasthenia gravis (gMG).
So far, the company has turned to cutting staff and non-core programs as a means of saving money. Earlier this year, Alexion disclosed plans to trim 7% of its workforce, terminate development of its investigational candidate for for mucopolysaccharidosis (MPS) type IIIB, and scrap three partnerships with Arbutus Biopharma Corp., Blueprint Medicines Corp. and Moderna Therapeutics, respectively. And it's clear from Tuesday's announcement that the restructuring is far from over.
Alexion's operations will now take place across two main locations. The new Boston headquarters should be established by mid-2018, employ about 400 people and provide Alexion with access to more collaborations and talent acquisitions. It will also focus on the development of both complement and non-complement therapies.
The company's Center of Excellence, which focuses on complement research, will conversely stay in its current home base of New Haven, Connecticut. Roughly 450 employees will operate out of New Haven.
The new job cuts, meanwhile, will take place over the next 12 months. Notably, Alexion leadership said it has a "keen interest" in keeping in tact the development team for ALXN1210, the company's most vital pipeline asset.
"We have a business continuity plan to mitigate as much risk as we can there, and to that end we're actually keeping the 1210 team based in New Haven," company leadership said during the Sept. 12 investor call. "For those who are New Haven-based, we will keep them here through submission and approval of the 1210 lead indications."
Alexion has also earmarked $100 million annually for R&D of treatments targeting the company's four therapeutic areas of focus — hematology, nephrology, neurology and metabolic disorders — and into as many as two proof of concept (POC) studies for drugs that affect the complement system, part of the body's immune system. The POC studies are projected to begin next year.
What's more, the company intends to grow its sales force in key commercial markets, including Germany, Japan and the U.S. for the anticipated launches of Soliris in gMG.
Alexion shares were down about 1% to $141.61 apiece in late morning trading on Tuesday.
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