Is Biogen's New CEO (Reportedly) a Good Fit? - TheStreet

Is Biogen's New CEO (Reportedly) a Good Fit?

A scientist like Exelixis' Scangos faces challenges running Biogen but may also bring new life to the biotech firm's research efforts.
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CAMBRIDGE, Mass. (

TheStreet

) --Investors gripe all the time about

Biogen Idec's

(BIIB) - Get Report

anemic drug pipeline and lackluster research efforts, so perhaps putting a scientist in the chief executive's office is the way to go.

Biogen Idec has reportedly selected

Exelixis'

(EXEL) - Get Report

George Scangos as the company’s new CEO, according to various media reports Wednesday.

If these reports are confirmed, Scangos, a microbiologist with a doctorate from the University of Massachusetts and the current CEO of biotech firm Exelixis, will replace Jim Mullen, who retired earlier this year as Biogen's CEO after a protracted proxy fight with

activist shareholder Carl Icahn

.

The selection of Scangos as Biogen's new CEO comes as somewhat of a surprise for investors, who were probably expecting someone with more commercial experience. One potential candidate rumored to be mulling the Biogen job was Deborah Dunsire, the current CEO of

Millennium Pharmaceuticals

, a wholly owned subsidiary of

Takeda

.

Scangos may know his way around the research lab, but investors will be asking if he has the management experience to lead a commercial operation like Biogen Idec -- one of the largest biotech companies with revenue of $4.4 billion and net income of almost $1 billion in 2009.

Exelixis, by comparison, has no commercial products and loses lots of money -- $135 million in 2009 and $162 million in 2008.

Scangos' new job will be made tougher by the challenges facing Biogen's two leading multiple sclerosis (MS) drugs. Tysabri sales have been pinched by safety concerns while both Tysabri and Avonex face competition from new oral MS drugs, including

Novartis'

(NVS) - Get Report

Gilenia, which could be approved in the U.S. this fall.

But Scango's lack of commercial experience could be overlooked if he can breathe new life into Biogen's internal drug research efforts or help the company license or purchase new drugs from the outside. Under Scangos' direction, Exelixis brought more than a dozen new drugs -- mainly in cancer -- into human clinical trials and negotiated several partnerships with Big Pharma, including

Bristol-Myers Squibb

(BMY) - Get Report

and

Sanofi-Aventis

(SNY) - Get Report

.

None of those Exelixis drugs have been approved yet and Scangos has been criticized for excess spending and for trying to develop too many drugs at the same time. Still, Scangos' expertise in drug research could benefit Biogen and help the company diversify and become less dependent on its core multiple sclerosis drug franchise.

"We believe George Scangos has ample experience effectively managing a research organization and in the area of business development having been CEO of Exelixis for the past 14 years. That said, Biogen is a commercial stage company and George’s limited experience in this area does pose some challenges," said J.P. Morgan biotech analyst Geoff Meacham in a note to clients Wednesday.

Biogen shares were down 50 cents, or 1 percent, to $48.23 in recent trading.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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