Malloy Responds To Alexion Pharmaceuticals Moving To Boston

NEW HAVEN, CT — Alexion Pharmaceuticals has announced that it’s moving its corporate headquarters to Boston. The move is calling into question the state’s “First Five” business initiative that provides grants and loans to help companies relocate or grow in the state.

Alexion will turn its New Haven location into a research center in mid-2018 and will have about 450 employees there. There will be about 400 positions in Boston. The company said the reason for the move is a large biopharmaceutical talent pool and a variety of life-sciences partners that can help it grow. The departure comes on the heels of GE announcing it would move its corporate headquarters to Boston.

“Alexion’s 25 year history began in New Haven, and Connecticut remains a critical part of our future,” said Ludwig Hantson, CEO of the company. He went on to say the company values its relationship with Connecticut.

The company specializes in the treatment of ultra rare diseases. Its banner drug Soliris is often called the most expensive drug in the world with a cost of $500,000 a year, according to the Boston Business Journal.

Connecticut officials have demanded the company return its “First Five” money which includes a $6 million grant, $20 million loan. The loan was forgivable if Alexion hit certain job creation numbers. The money was made available to move the company from Cheshire to New Haven and establish a large downtown headquarters. Tax credits of up to $25 million were also offered. The company moved to New Haven in March 2016.

"Alexion’s decision to move its headquarters out of the state is very disappointing, especially in light of how supportive the state has been to the company over the years as it has grown into what it is today," said state Department of Economic and Community Development Commissioner Catherine Smith in a statement. "While Alexion will maintain a significant number of employees in state, we are requiring that all of the $20 million loan and $6 million grant be repaid—with interest and penalties—to the department in accordance to the terms of our agreement."

Gov. Dannel Malloy said the state would move to get its money back. Even with the move Alexion will have more Connecticut-based employees than it did prior to the agreement with the state, he said. Alexion will also close its Smithfield, RI plant and some 250 people will lose their jobs.

Malloy said the company has gone through some difficult times lately, but that it doesn't pertain to research which is what will remain in state.

In a letter obtained by the Courant, Hanston wrote that it acknowledges repayment obligations in the agreement with the state and will work with the state on the repayment process and timing.

Alexion is under investigation by the U.S. Department of Health and Human Services Office of the Inspector General. It is related to an investigation into the company's charity support that aids Medicare patients, according to Bloomberg.

Last year the company's CEO and top financial officer resigned amid allegations of shady sales practices.

It isn’t the first time the First Five program has come under fire. A bill was raised earlier this year that would require legislative approval of any funds under the program. The bill didn’t make it to a vote.

In total the state has offered $125 million in tax credits, $256.6 million in direct assistance, $140.5 million in forgivable loans and $92 million in grants under the First Five program to 13 companies as of August 2016, according to a financial report. The state investment is accompanied by company investment. For the 13 companies it was estimated that more than 13,300 jobs would be retained and between 2,608 and 5,264 jobs would be created.

ESPN, another First Five recipient also announced layoffs earlier this year. Other businesses that has received money include NBC Sports, hedge fund Bridgewater Associates, Pitney Bowes and Synchrony Financial.

The move is part of a company restructuring that will reduce its global workforce by about 20 percent. The decisions are expected to save $270 million annually and allow the company to reinvest $100 million a year into research and development.

U.S. Rep. Rosa DeLauro criticized the company’s decision.

"Alexion's decision to move their headquarters out of New Haven is shocking and shameful,” she said. “New Haven is home to some of the most talented and brightest minds in the world, and Alexion will be worse off for leaving, both financially and intellectually.”

Republican gubernatorial candidate Tim Herbst said the company’s move to Boston is another blow to the state that follows GE’s departure.

"This news is particularly discrediting for the Malloy administration since Alexion was a participant in the governor's 'First Five' program that attempted to bribe companies into looking past the dysfunction and wrongheaded priorities of policymakers in Hartford," he said.

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