News
Corixa moves to trim costs
Corixa cut 130 jobs yesterday in South San Francisco and
sold six antibodies in animal testing, moves that will
conserve money in the midst of its latest standoff with the
Food and Drug Administration.
By Luke Timmerman
Seattle Times business reporter
The decisions come two months after the FDA said the Seattle biotech company’s leading drug
candidate, Bexxar, wasn’t showing enough evidence of safety or effectiveness for the sickest
patients with non-Hodgkin’s lymphoma.
In an announcement after markets closed, the Seattle biotech company said it had cut 60 percent
of its jobs in South San Francisco, partly by sending 30 employees to Medarex, a Princeton,
N.J.-based biotech company.
The job cuts leave Corixa with 375 employees, and are expected to save $30 million per year.
The sale of the antibodies, equipment and subleasing of office space raised another $23.5
million. Corixa retained some of the future rights if those antibodies turn into approved drugs.
Corixa also said research-and-development operations will be consolidated in Seattle. Its
Hamilton, Mont., offices will continue to manufacture vaccines and vaccine boosters, and South
San Francisco will keep clinical and regulatory affairs staff. Those people will continue to work on
Bexxar, a drug that uses antibodies loaded with radiation to zero in and kill tumor cells like a
biological smart bomb.
Corixa Chief Executive Steve Gillis and other company leaders were in South San Francisco
yesterday to deliver the news to employees personally. In a statement, Gillis said the moves will
"strengthen our balance sheet and allow us to pursue priority programs more aggressively and
efficiently." The company said it would discuss the news in a conference call this morning.
Responding to shareholders
Tom Dietz, a biotech analyst with Pacific Growth Equities, said the decisions address shareholders’
desire to reduce Corixa’s cash-burn rate. Dietz said the move makes sense regardless of Bexxar’s
status, and it allows the company to better focus on that drug, which many oncologists are
awaiting.
"They got rid of projects they don’t really need; they get Medarex to do the work for them; they
save $30 million annually, and they maintain their biggest asset," Dietz said. "It’s a smart strategic
move."
Corixa and its partner, GlaxoSmithKline, are still betting on Bexxar. The companies appealed the
FDA’s decision earlier this month. When the FDA stuck to its contention that Bexxar needs to show
better effectiveness than competing drugs such as Zevalin and Rituxan, they appealed again. The
ordeal has helped drive down Corixa’s stock 53 percent this year. Its stock was unchanged at $7.05
a share in after-hours trading.
Shareholders and analysts say they are concerned about Corixa’s cash. It had $95 million in cash
at the end of March, $26 million less than year’s end. In January, Corixa said it expected to lose
$80 million to $95 million this year, but that number was based on Bexxar being approved and
becoming its first money-making product.
When saga began
Corixa’s Bexxar saga began in December 2000, when it officially bought the drug and the
company that created it, Coulter Pharmaceutical of South San Francisco, for $502 million. At that
time, Coulter had already sent its Bexxar application to the FDA, which had assigned it a six-month
accelerated review. Three months later, the FDA raised questions about the drug’s safety and
effectiveness that triggered several delays.
Besides Bexxar, Corixa has 15 other programs in clinical trials.
Luke Timmerman can be reached at 206-515-5644 or [email protected].
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