March 11, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
This week’s news that Amgen Inc. will close its South San Francisco facility acquired during its $10 billion buyout of Onyx Pharmaceuticals and lay off 300 of Oynx’s 750 workers could be a boon to the Seattle area biotech community, the Puget Sound Journal said Wednesday.
With so many newly unemployed but highly qualified candidates now unmoored and looking for work, the high quality of life and booming biotech scene in Seattle could make is a key area for recruitment, said the paper.
“There are fewer biotech companies here in the Northwest than in other hubs, and that makes recruiting more challenging,” Washington Biotechnology and Biomedical Association President Chris Rivera told the Puget Sound Business Journal in February.
Amgen announced the news in a memo to employees sent Monday. Cuts will begin in December. It comes after Amgen pulled out from its Washington State operations, laying off 274 employees at its sites in Seattle and Bothell.
All of Oynx’s 250 sales and medical staff will now be moved to Amgen’s Thousand Oaks, Calif.-site, while the remaining 200 employees will either be moved to Thousand Oaks or a separate Amgen San Francisco site at Oyster Bay—if they do keep their jobs.
“To build on our competitive presence in the rapidly evolving oncology field, and as part of our ongoing transformation across the company, we have decided to combine Amgen‘s scale and immuno-oncology expertise with Onyx‘s highly successful approach to hematologic malignancies,” wrote Amgen Chairman and CEO Robert Bradway in the memo. “These combined oncology capabilities will create the focus and efficiency Amgen requires to progress our vision in oncology, and to remain a world leader for the long term.”
The news was not wholly unexpected because Amgen had long said it would do at least some streamlining of functions in order to get redundancies within the Oynx/Amgen deal sorted out.
In October, the world’s third largest biotech, Amgen, said it will use the money it saves from cutting 20 percent of its workforce, or 4,000 jobs, to double down on research, new products and the rollout of its existing blockbuster drug pipeline.
Amgen will improve margin costs by 15 percent by cutting an additional 1,100 jobs to the 2,900 it announced it would axe last summer, the company told analysts Tuesday. The new corporate model will see a total enterprise annual savings of up to $1.5 billion by 2018, said Amgen in a statement.
As it restructures, the company said it will now focus on the discovery and development of innovative medicines to address serious illnesses, the development of branded biosimilars and global expansion. Amgen saw record high third quarter earnings and revenue and had a blockbuster period for its flagship drugs, despite having to take a $375 million haircut related to massive restructuring moves announced last summer.
“[They] announced about $800 million in operating expense savings by 2018 [which] includes $1.5 billion in savings due to restructuring and future increased Enbre profitability, and partially offset by Onyx Pharmaceuticals, Inc. acquisition costs and growing business costs,” said Mark Schoenebaum, a biotech analyst with ISI Group, in a note to investors. “Due to a new model which includes more variable costs, Amgen has high confidence they can achieve operating margin target going forward.”
Amgen earned $2.30 per share, exceeding analysts’ average expectations by 19 cents, and said it now expects 2014 adjusted earnings of $8.45 to $8.55 per share, an even steeper climb than the enhanced estimate it provided in July of $8.20 to $8.40 per share.
The company told analysts it will be creating new manufacturing technologies at a new unnamed facility in a process that they expect could reduce the cost per gram of proteins by 60 percent or more over time.
BioSpace Temperature Poll
Vertex Pharmaceuticals made news last week when it terminated leases on three properties in Cambridge, Mass, that freed up 313,000 square feet of space in the Genetown area. The company has spent a significant part of 2014 consolidating its operations on the South Boston waterfront, leasing 291,000 square feet of office space at West Kendall Street in Cambridge’s Kendall Square. So we wanted to ask the BioSpace community: Is Boston going to be getting more biotech leases anytime soon, or fewer tenants?
