Biogen to Spin Off Hemophilia Business

Big news for one of our Buy List stocks. Biogen (BIIB) said that it will spin off its hemophilia business into a stand-alone company:

Biogen Inc. said it plans to spin off its hemophilia business as a separate publicly traded company so the biotechnology company can increase its focus on its neurology drugs.

The Massachusetts company expects the planned spinoff will be completed late this year or in early 2017.

According to the rules of the Buy List, the new company would join our Buy List as the 21st stock. This is what happened last year when eBay spun off PayPal.

The hemophilia drug assets represent a small portion of the company’s overall revenue, but could generate more than $6 billion in a sale, Leerink Partners had estimated last month. Reuters had previously reported Biogen was considering selling off the assets.

Biogen Chief Executive George Scangos said in prepared remarks Tuesday that Biogen thinks the best way to realize the potential of the hemophilia business is to let it operate independently “with a management team dedicated to providing therapies to people living with hemophilia.”

It’s a good idea to pay attention when good companies hold garage sales. While mergers often don’t work out so well, spin-offs can be very good for shareholders.

The remaining company will have a greater focus on treatments for neurodegenerative diseases for which there are few or no effective treatment options, Mr. Scangos stated. The company also will accelerate efforts to develop therapies for patients with diseases including multiple sclerosis, Alzheimer’s disease and Parkinson’s disease.

John G. Cox, currently a pharmaceutical operations and technology executive at Biogen, will be CEO of the as-yet unnamed new company. Mr. Cox, who joined Biogen, in 2003, has held a series of senior executive roles and has been closely involved with the hemophilia business.

The new company will be anchored by Biogen’s hemophilia drugs Eloctate and Alprolix, which generated combined revenue of $640 million during the 12 months ended March 31.

The spinoff plans come roughly six months after Biogen announced plans to reduce its workforce by 11% amid slowing revenue growth. At the time, Biogen said it would reinvest the savings in its most promising research and development programs, including an experimental treatment for Alzheimer’s disease, and discontinue others.

Last month Biogen reported its first-quarter profit grew 18% thanks to higher sales of multiple-sclerosis drug Tecfidera and lower expenses.

Posted by on May 3rd, 2016 at 11:09 am


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