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Biogen Fires 11% Of Workers Despite Reporting Stellar Earnings, Boosting Guidance
There may not be many biotechs with positive cash flows out out there, but the 4th most profitable, Biogen (after Gilead, Amgen and Shire), saw its shares halted moments ago ahead of reporting earnings, which were a blowout: the company reported Q3 EPS of $4.48, not only beating consensus of $3.77, but coming ahead of the highest estimate in the range of $4.04, as revenue of $2.78 billion also solidly beat expectations of $2.64 and was also above the highest forecast. The reason: sales of the company's blockbuster drug Tecfidera, which generated sales of $937 million, above the $897 expected, following misses in Q1 and Q2.
Furthermore, the company also raised guidance, and now expects year end EPS of $16.20-$16.50 up from $15.50-$15.95, and well above the $15.78 estimate.
One wonders, however, just how credible the company's optimism is in light of the recent crackdown on "astronomical, non-competitive" pricing practices by specialty pharma companies spearheded by the Democratic presidential candidates.
That remains to be seen, however what is even more confusing is why, in light of the company's glowing earnings and impressive guidance, it also announced it would be laying off 11% of its workforce, or about 800 workers, while cutting a number of pipeline programs.
From the release:
Biogen also announced a corporate restructuring, which includes the termination of a number of pipeline programs and an 11% reduction in workforce. These changes are expected to reduce the current annual run rate of operating expenses by approximately $250 million. The Company plans to reinvest these savings to support key commercial initiatives, including increased sales and marketing activities behind TECFIDERA, and the advancement of high potential pipeline candidates in areas such as Alzheimer’s disease, multiple sclerosis, and spinal muscular atrophy.
Additionally, and what may come as unwelcome news to those tracking the company's future growth prospects, Biogen also announced that its Phase 3 ASCEND study investigating natalizumab in the treatment of secondary progressive multiple sclerosis (SPMS) did not achieve its primary and secondary endpoints.
So the trend continues: strong earnings (and in this case even a top-line beat), at either the expense of capex spending (as is the case for most non-biotechs), or workforce reductions, and makes one wonder just what these companies keep seeing about the future that makes them trim expenses so aggressively, that the BLS' initial weekly claims refuse to see.
BIIB stock will resume trading at 8:00 am.
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in the new normal good news gets a negative reaction.
and bad performance is bullish.
They see the depression and know that it will last a long time. So they are preemptively downsizing to prepare for it. Smart company, successful in a field where others are not.
Despite Reporting Stellar Earnings
Yeah....let's talk about that.
Use the saved wages to buy MOAR stawk!
Otherwise known as battening down the hatches.
No - they are getting the free cash flow EBITDA UP - for a sale
its shortly going to auction
Luckily unemployment in the land of the free is only 5.1%. Anyone who needs a job can find three.
Forward - to more lies by the US BLS
http://data.bls.gov/timeseries/LNS14000000
No capex and no employees. A very simple business model that I use myself. I should go public.
still wouldn't touch it with a ten foot pole
No share buyback ?
They are expecting the final solution.
http://www.healthline.com/health-news/ms-why-are-ms-drug-prices-so-high-...
http://www.goodrx.com/tecfidera
It costs a lot to deal effectively with MS.
Drug costs are heavy political fodder for election time.
A repeat of the 'recovery' - where your company fires lots of workers in order to increase profits - but you hope OTHER companies don't fire THEIR workers, so that someone will be left to buy YOUR products!
It works well for bio techs - because their customer is often Uncle Sam!
Because they can...
that's some good dope right there
Bus 101: Cut overhead, make the company look great for a coule quarters, then either sell out or raise capital.
Executives needed their bonus this year.
Everything's Rosy... Your Fired.
The Jack Welsh model.
Identify and fire the bottom 10% every year.
Biogen is one upping Jack with 11%.
When you think about, every place you have worked, there is a lot of dead wood. (Wait a second, I'm not dead wood, no matter what you hear.)
Just think what Jack could do with the Department of Commerce. Or any of the Department of's
Because, of course, no publicly traded firm ever kept two sets of books.
"However what is even more confusing is why, in light of the company's glowing earnings and impressive guidance, it also announced it would be laying off 11% of its workforce,.. "
Probably because things do not look so rosy downstream...and it does not look appropriate to fire employees during Thanksgiving or Christmas. So Mr. CEO...thanks for looking ahead and doing the right thing..