Biogen Names Exelixis's George Scangos as CEO, Director to Succeed Mullen

Biogen Idec Inc., the world’s largest maker of multiple sclerosis treatments, named George Scangos, 62, chief executive officer, effective July 15.

Scangos leaves Exelixis Inc., where he has been chief executive since 1996, to replace former Biogen CEO James Mullen, who retired June 8, Cambridge, Massachusetts-based Biogen said in a statement today. Exelixis promoted research head Michael Morrissey, 49, to president and chief executive officer, Exelixis said in a separate statement.

Biogen’s new CEO starts as the Cambridge, Massachusetts- based drugmaker struggles to expand the use of its fastest- growing drug, Tysabri, and has engaged in repeated proxy fights with billionaire investor Carl Icahn. Under Scangos, Exelixis, with no marketed products, made medicine-development deals with companies led by Pfizer Inc., the world’s largest drugmaker.

“We need to protect and enhance our commercial products, advance the late-stage pipeline and review our research and development,” Scangos said today in a telephone interview. “We need to work with a sense of urgency.”

Biogen fell $1.25 to $47.45, or 2.6 percent, at 4:01 p.m. New York time in Nasdaq Stock Market composite trading. Exelixis declined 14 cents to $3.47.

Exelixis IPO

Scangos steered South San Francisco, California-based Exelixis through its initial public offering in 2000. He has a bachelor’s degree in biology from Cornell University and a Ph.D. in microbiology from the University of Massachusetts, according to his profile on Exelixis’s website. He is chairman of San Diego-based biotechnology firm Anadys Pharmaceuticals Inc., the maker of hepatitis C treatments.

“He was the glue holding the company together,” Eric Schmidt, an analyst with Cowen & Co. in New York, said today in an interview. “This may put more of a target on Exelixis’s back for acquirers.”

At Exelixis, Scangos licensed rights to nine compounds to drugmakers including London-based GlaxoSmithKline Plc, Roche Holding AG, based in Basel, Switzerland, and Bristol-Myers Squibb Co. and Pfizer, both in New York. Exelixis is also jointly developing four drugs with Paris-based Sanofi-Aventis SA and Bristol-Myers.

Licensing arrangements helped Exelixis generate $151.8 million in revenue last year. Exelixis has 14 experimental drugs in human clinical testing, all but four for the treatment of cancer, spokesman Charles Butler said in a March 8 interview.

Sanofi Cancer Deal

Sanofi bought the rights to potential cancer drug candidates from Exelixis in a May 2009 deal that may result in the French drugmaker paying more than $1 billion to its U.S. partner, the companies said at the time.

Exelixis signed a deal with Bristol-Myers in 2008, and received $240 million as a result. On June 21, the companies ended the partnership on XL184, a cancer drug that is Exelixis’ most advanced cancer therapy, and returned full rights to the California company.

The two companies were “not able to align on the scope, breadth and pace of the ongoing clinical development of XL184,” Exelixis said in a statement on June 21.

Scangos’ departure was unrelated to the decision on the drug, Stelios Papadopoulos, chairman of Exelixis, said today in a conference call.

Drug Development

Biogen has six new medicines in the third and final stage of testing generally required for U.S. approval, according to the company’s website. Three, for MS, include a long-acting version of the company’s best-seller, Avonex; a pill called BG- 12; and a treatment called daclizumab in development with Abbott Laboratories. Drugs for leukemia, hemophilia and heart failure also are in final testing.

“George has extensive experience managing a research organization that we think we be valuable to steering Biogen’s research efforts,” Geoffrey Meacham, an analyst with JPMorgan Securities Inc. in New York, said today in a note to clients. “That said, a lack of commercial experience could create challenges in managing the increasing competition in MS and bringing additional products to market.”

Mullen became CEO at Biogen in 2000, when Avonex was the company’s lone drug on the market. Mullen oversaw the temporary recall of Tysabri, also for MS, after it was linked to fatal brain infections. Scangos takes over as Biogen has fallen short of its goal for 100,000 new patients to take Tysabri, with about 50,300 in treatment as of March 31.

Biogen Competition

Biogen faces new competition from Novartis AG’s Gilenia multiple sclerosis pill, which won the backing of a U.S. Food and Drug Administration advisory panel on June 10. The drug will threaten Tysabri’s growth, said Bret Holley, a New York-based analyst for Oppenheimer & Co., in a June 11 note to investors.

“We need to be sure our marketing messages and sales force are aligned, and George will get a chance to put input onto that,” said William D. Young, Biogen’s chairman, in a telephone interview. “I’m very excited about Tysabri. There’s a lot of growth potential in Tysabri.”

Icahn has pressured Biogen’s management since 2007 when the company abandoned a plan to sell itself. He gained two board members in a 2009 proxy fight and another two board members this year to avert the company’s third proxy challenge from the investor in as many years.

Exelixis also named Morrissey to its board today. He joined the company in 2000 as vice president of discovery and was promoted to president of research and development in January 2007, the company said today. He received a bachelor’s degree in chemistry from the University of Wisconsin and a Ph.D. in chemistry from Harvard University.

On March 8, Exelixis fired 270 people, or 40 percent of its staff, to focus its efforts on drugs that are closest to regulatory approval, which the company said would save it $90 million through 2011.

To contact the reporter on this story: Elizabeth Lopatto in New York at elopatto@bloomberg.net.

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