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Surprise! Biogen goes with commercial chief Vounatsos in replacing CEO Scangos

Biogen is promoting chief commercial officer Michel Vounatsos as its new CEO, replacing outgoing CEO George Scangos and focusing directly on its late-stage pipeline and new deals for future growth.

The Merck vet arrived at Biogen last March to oversee the company’s global commercial strategy. The French native stayed at Merck for 20 years, rising to president of the company’s primary care business line.

Biogen’s shares are down about 1% in after-market trading.

The selection may surprise some observers who were thinking that Biogen would bring in an outsider to replace Scangos, who headed Exelixis while it was focused entirely on R&D when he was recruited to head Biogen. Over the next 5 years, Scangos would ride the success of the company’s new flagship product, Tecfidera, to new highs. But Tecfidera’s inevitable wane, at a time when its portfolio of experimental meds remains highly speculative, erased the rosy hue of Scangos’ turnaround rep.

Vounatsos won’t make as much as Scangos did last year, but he won’t be hurting either. His base pay is pegged at $1.1 million, according to an SEC filing. And he’ll be able to shoot for a 2017 bonus worth at least 125% of his salary, plus a package of stock worth $10 million as a longterm incentive. Scangos earned $2.7 million in income and bonus last year plus a stock award of $13 million in 2015.

As a commercial specialist, Vounatsos’ promotion marks a new era for a company — provided it doesn’t get bought out — that will depend on its pipeline and the deals analysts are clamoring for, for its future growth. For now, the new CEO says he’s focused on the pipeline and implied that he has plans to beef up work on neurosciences, which is its specialty.

But everyone had their own take on this announcement.

Geoffrey Porges, Leerink

Geoffrey Porges, Leerink

“Biogen’s stock is likely to sell off modestly over the next few days on this announcement, given the perception that acquisition of the company is less likely,” responds Leerink’s Geoffrey Porges. “We don’t completely disagree with this inference, although we believe that the magnitude of the change in assumed probability of a transaction is only modest. An $80bn+ transaction is always a low probability, and remains so in our view; nevertheless the opportunity in Biogen for an acquirer remains real, and with the scarcity of assets in the industry, it remains a significant source of option value for Biogen shareholders. On the other hand, investors are unlikely to view Vounatsos’ appointment, with his strictly commercial background, as a great source of near term upside or improved strategic, tactical or financial decision making.”

Our near-term priorities are clear,” Vounatsos said in a statement. “We intend to gain approval for SPINRAZA to provide the first treatment for spinal muscular atrophy; continue to grow our global MS franchise; fully enroll our phase 3 trials for aducanumab as we advance our lead candidate in Alzheimer’s disease; reinvigorate our pipeline in the areas of neurology and neuro-repair; and invest in our employees as we work together to define our future.”


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