On the Edge of Drug Discovery

Biogen CEO George A. Scangos discussed advancements in therapies for major diseases at the Robert P. Maxon Lecture.

George A. Scangos
George A. Scangos, CEO of Biogen Inc., speaks to GW audience at the Robert P. Maxon Lecture.
April 04, 2016

Over the next 30 years, the biotechnology industry has the potential to develop new drug therapies for millions of people enduring devastating diseases such as Alzheimer’s disease, according to George A. Scangos, CEO of Biogen Inc.

But the chief executive of the oldest independent biotechnology company noted that while investment is needed for drug innovation, it is being done without a disproportionate impact on overall health care costs.

“We are sitting here at the precipice of what I think is an explosion of improvements in medical care,” Dr. Scangos said.

“We have amazing potential to do amazing good for millions of people around the world,” he said. “At the same time…the industry is under increasing pressure because of the pricing policies some companies have adopted, and there is a legitimate issue with people around the country not being able to afford their drugs.”

Dr. Scangos was speaking at the 17th annual Robert P. Maxon Lecture at the George Washington University, a series established through an endowed gift to the GW School of Business by Dorothy Maxon in honor of her husband, Robert P. Maxon, B.A. ’48.

Biogen focuses on developing medicines for neurodegenerative, autoimmune and rare diseases such as Parkinson’s disease and hemophilia. The company currently has nine major marketed products and 19 drug candidates in clinical trials. Almost 40 percent of patients with multiple sclerosis are on a Biogen therapy, and Dr. Scangos said Biogen’s new emphasis is developing therapies to repair or reduce the damage from these illnesses.

One major area of opportunity in health care is Alzheimer’s disease, which costs patients and caregivers in the United States billions every year. The biotech industry has responded by investing billions in clinical trials to test therapies for the disease.

Biogen will invest approximately $2.5 billion to develop and manufacture a drug therapy called aducanumab that has been shown in a Phase 1 dose-ranging trial to slow the rate of cognitive decline and remove amyloid plaques (toxic proteins) in the brains of Alzheimer’s patients. The investment will include $1 billion in clinical trials and $1.5 billion to construct a plant with the infrastructure to produce enough aducanumab for the large number of patients with Alzheimer’s. Dr. Scangos said this is “a $2.5 billion bet” for the company, but it is worth the risk.

 “It’s the right thing to do,” he said. “We have good data, and it’s a good bet to make, but there are no guarantees.”

Biogen is also working on developing therapies for spinal muscular atrophy, which is the leading genetic cause of death in infants.

The research and development necessary to develop, test and manufacture these therapies requires significant investment and revenue, despite an aggregate 4 percent return on investment for the biotech sector

“I think the industry has a contract with society that we put a lot of money at a risk over a lot of years,” said Dr. Scangos. “A lot of times we fail. When we succeed, we have a limited amount of time – about 10 years – to make money and return money to our investors to pay for the next generation of drugs.”

Paying for drugs is a major issue for consumers as they deal with rapidly rising health care costs, and increasing insurance co-pays and deductibles.  Biogen is working to find “creative solutions” to these rising costs, recognizing that in many cases it may cost healthcare systems more in the long run if they implement new policies that will stymie innovation.  

“Drugs are not the main contributor to the increase of health care costs,” Dr. Scangos said. “I would argue it’s only the development of new drugs to treat diseases like Alzheimer’s disease and cancer that can impact and actually reduce health care costs.”

Dr. Scangos said the industry’s enthusiasm for innovation is “real and tangible,” and the need for new drug therapies is more critical than ever.

“We can’t afford not to innovate,” he said. “We have to have new drugs. We have to find treatments for diseases where we are on the cusp.”

The Robert P. Maxon Lecture brings prominent executives and academics to campus to discuss contemporary global management issues. This year’s lecture at the Jack Morton Auditorium included remarks by GW School of Business Professor John Forrer, GW School of Business Dean Linda A. Livingstone and George Washington President Steven Knapp, who noted the educational impact the Robert P. Maxon Lecture has on GW students.

“Gifts like this are important because they create unprecedented opportunities for our students,” Dr. Knapp said. “They enable us to bring thought leaders to campus and connect theory with practice and help us provide a front-row seat in the theater of history to all of our students.”