With that policy in place, Biogen is further adjusting its expectations. At the time of Aduhelm’s approval, the company and its development partner, Eisai, had earmarked $600 million to help support launch activities. But Biogen now plans to “substantially” eliminate the commercial infrastructure around Aduhelm as part of a larger push to save money.

“We recognize that Biogen is facing a number of near-term challenges,” said CEO Michel Vounatsos on a Tuesday morning call with investors. “These challenges are all part of the biopharmaceutical business lifecycle.”

“However,” he added, “given that we are in a long product cycle business, and in light of the [Medicare] decision, we recognize there is more we must do today to provide better clarity and visibility into the company’s future.”

Vounatsos, who was appointed Biogen’s CEO in 2017, will continue to stay on in the role while the company searches for his replacement.

Over the five years with Vounatsos at the helm, Biogen attempted to expand beyond its core business of multiple sclerosis drugs. Its arguably greatest victory was the development and approval of the rare disease medicine Spinraza, which quickly became a billion-dollar product. The company also invested in gene therapy research through various partnerships and the acquisition of Nightstar Therapeutics.

Yet, Biogen has hit significant setbacks. Revenue from both Spinraza and its top-selling multiple sclerosis drug have been in decline as newer, rival treatments entered the market. Its investments in gene therapy have also not panned out, while a number of closely watched experimental drugs in its neurology-focused pipeline have failed in clinical testing.

Aduhelm was meant to offset these losses, but Biogen underestimated how difficult it would be convincing doctors and payers to use a drug that many considered to be too expensive and backed by conflicting evidence.

Shares in Biogen have fluctuated widely in value over the course of Aduhelm’s unusual development and regulatory review, peaking at $430 per share after the drug’s approval. They now trade for around $210 apiece, below their value in January 2017 when Vounatsos was appointed CEO.

Biogen previously announced a cost-cutting plan that included layoffs and was designed to save approximately half a billion dollars in annualized savings. The company believes the much smaller support for Aduhelm, as well as other cost reductions, will also yield another $500 million in annualized savings.

Such savings could improve Biogen’s bottom line, which shrunk over the last couple years as competition eroded sales of the company’s top products. Biogen ended the first quarter with $2.07 billion in net product revenue, down almost 7% from the same period a year prior.

To Marc Goodman, an analyst at the investment firm RBC Capital Markets, Tuesday’s announcements represent a “pivot point” for Biogen. The company is “effectively throwing in the towel on Aduhelm,” he wrote in a note to clients, while its strategy moving forward is “somewhat vague” and contingent on clinical trial readouts and, likely, incoming management.

Stifel analyst Paul Matteis took a similar view, writing that Biogen’s future appears uncertain. “Are they meaningful buyers? Could they be willing sellers at some point (and, if so, who’s interested)?” he wrote to clients.

One of the key events analysts and investors are keeping an eye on is a late-stage study for lecanemab, an experimental Alzheimer’s drug that, like Aduhelm, is meant to bind and remove toxic buildups of protein in the brain. The study has enrolled nearly 1,800 participants and should produce data by September. For Biogen and Eisai, which are already in the process of filing lecanemab for approval, the readout will be crucial for validating positive findings from an smaller, earlier trial that had mixed results.

Matteis, though, notes how analysts generally see this lecanemab study as “risky” — a term used often on Wall Street to describe Biogen’s neuroscience-focused research programs.

If lecanemab were to succeed, and go on to secure approval, Biogen would again have to address the challenge of selling another Alzheimer’s drug with a checkered history.

While the company could have used the infrastructure it built around Aduhelm to help commercialize lecanemab, Vounatsos explained that maintaining such a large team until the late-stage study readout didn’t make sense. “We could not afford to keep the team unfortunately for that many months,” he told investors.

Biogen spent $635 million on selling, general and administrative expenses in the first quarter, up 7% from the same period in 2021. Its cost of sales also increased nearly 58% year over year, reaching $754 million.