September 2, 2016
By Alex Keown, BioSpace.com Breaking News Staff
BASEL, Switzerland – As was expected, Novartis began to hand out pink slips to employees of its now dissolved Cell and Gene Therapy Unit, including a number of the senior executives who ran the operations.
According to a portion of a memo obtained by Endpoint news, which appears to be the second half of one the news agency obtained earlier this week, alluded to the cuts. The memo sent by Usman Azam, the head of Novartis’ gene unit, informed employees of the dissolving of the unit, as well as of job cuts for everyday staff and also executives.
“Unfortunately a number of colleagues will be impacted by this change as many positions are being eliminated. Impacted US-based associates are being notified in meetings today. Associates based in Basel will learn more about their individual circumstances on Thursday. The majority of the CGTU Leadership Team members, who are among the best I have worked with, are also impacted,” Azam said in the memo, according to Endpoints.
It is not clear if the senior leadership team members being terminated are included in the expected 120 positions that Novartis said would be cut as a result of the move. The unit had about 400 employees total. The bulk of them are expected to be absorbed into other Novartis departments.
The elimination of the senior executives of the CAR-T program may be a signal that Novartis’ move is more than just a consolidation of Novartis resources as part of a company realignment. Is it a signal that Novartis is stepping away from a leading role in CAR-T research altogether, even though two years ago Joe Jimenez, chief executive officer of Novartis, said he was fully behind, including financially, CAR-T research? For their part, Novartis said it was committed to developing CAR-T therapies, particularly the company’s investigational leukemia treatment CTL019. In late 2015, the company reported mid-stage trial results that the treatment wiped out the blood cancer in 93 percent of patients. CTL019 is a chimeric antigen receptor T cell (CAR-T) therapy for the treatment of children with relapsed/refractory acute lymphoblastic leukemia. The company plans to file with the U.S. Food and Drug Administration and the European Medicines Agency for regulatory approval in 2017.
Is Novartis stepping back from the development of CAR-T therapies due to the high costs? If that is the case, that would support an analysis by Cai Xuan, GlobalData’s analyst covering Oncology and Hematology. In February, Xuan told BioSpace the cost of potential T Cell treatments as ranging between $300,000 and $500,000 per patient, while existing treatment options, which include stem cell transplantation, have a price point of $100,000 to $200,000. On Thursday, David Pinniger, manager of Polar Capital Biotechnology Fund, told Bloomberg that Novartis’ decision to terminate the Gene and Cell Therapy Unit could be a signal the company believes CAR-T therapy has a limited application.
“This smacks of someone big, knowledgeable and sophisticated just pulling back,” Pinniger said, according to Bloomberg. Karine Kleinhaus, North American vice president of Pluristem Therapeutics told BioSpace that larger pharmaceutical companies such as Novartis have a better option to partner with smaller companies focused on therapies like CAR-T because they are more “able to deal effectively with every aspect of the discovery and development of new therapies, including the complex manufacturing needed to produce highly sensitive biologics.
If Novartis does step back from CAR-T research, that would leave the field more open for the other two leading CAR-T companies, Juno Therapeutics and Kite Pharma . While both companies said they were committed to developing CAR-T treatments, some investors had a momentary crisis of doubt and sold off stock, causing the two companies to drop in share price after Novartis shut down its unit.
