Biogen's CEO Takes a French Leave

Few answers emerge as to why top man Tobin walked away from it all.
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Abrupt departures scare the bejeezus out of investors.

The well-respected Jim Tobin, president and CEO of

Biogen

(BGEN)

, said goodbye to it all today, right in the middle of Christmas week without so much of a hint or a successor.

The Cambridge, Mass., company, which sells the multiple sclerosis drug

Avonex

, dropped the announcement on investors in the early afternoon, sending the stock south for the winter. (Please send kind condolences to the

Everen

biotech analyst this holiday season, for he picked up the company with an outperform rating this morning.) The stock closed the day down 6 15/16 to 79 13/16. It fell to as low as 70 3/4.

Jim Vincent, the former CEO from 1985 to 1997 and current chairman, will step in. Tobin was upgraded from chief operating officer to CEO in February 1997.

At a conference call Wednesday afternoon, Vincent said all the things that new CEOs are supposed to say: The company is fine and Tobin resigned for personal reasons. "It was initiated totally and solely by Jim," Vincent said. "It's not connected with anything happening at the company. We've had an excellent quarter and an excellent year." He emphasized, "This was not a discharge, not a gentle push, not whispering in the ear."

Vincent said that there were no differences in the two men's strategic vision thing. He also said that Tobin did not ask for the chairman's job.

Vincent assured nervous analysts and investors that he wasn't going to keep the CEO post indefinitely, perhaps only one or two years. Then Biogen will promote from within. A couple of analysts and two buy siders couldn't come up with logical candidates, simply because the company has been dominated by Tobin and Vincent for years.

Not everyone was assured. "It takes three, six months of business going fine with the numbers in place for people to say, 'OK, maybe it was a nonevent," says Lisa Tuckerman, a portfolio manager for

Spears Benzak Salomon & Farrell

, who is long the stock. "But it raises a huge number of questions."

The sudden departure could mean another shoe might drop, analysts say, although there was plenty of wild speculation with little weight. "It's so weird. The company is cooking and he did such a great job," says Franklin Berger, the biotech analyst for

J.P. Morgan

who does not cover the company. J.P. Morgan has not underwritten any recent offerings from the company.

Just this November, Biogen had an analysts meeting that Tobin conducted. Tobin's sudden departure may mean that he probably left a sizeable amount on the table. He had 510,142 options and 31,526 shares as of the most recent proxy, last April. He was granted 240,000 options last year, which, most likely, are in the money and the majority of which have not vested yet.

Vincent is euphemistically described as "difficult" by Wall Street people, and analysts assumed that Tobin may have just gotten sick of it. Biogen did not return a call for comment and Tobin could not be reached.

Vincent "is a tough personality," says Tuckerman, echoing her colleagues on the Street.

"He is a strong-willed guy. He's been criticized by the Street as too conservative about making acquisitions of products," says one hedge fund manager who is personally long the stock.

Biogen faces the strategic challenge of coming up with an encore to the highly successful drug Avonex. Biogen's growth has been fueled by the MS drug. It had product sales of $107.5 million in the most recent quarter, compared with $60.4 million for the same period a year earlier and net income of $37.6 million, or 49 cents a share, compared with $20.5, or 27 cents a share, a year earlier. Perhaps, analysts speculated, Vincent and Tobin differed on whether Biogen should make acquisitions or license products in from other companies.

But at the end no one really knew what happened. "You get the feeling there's something they are not telling us," says an analyst.