March 12, 2015
By Alex Keown, BioSpace.com Breaking News Staff
Monday’s decision by Amgen to terminate 300 employees at San Francisco-based Onyx Pharmaceuticals, Inc. was hardly unsurprising for biotech watchers, but some, especially those in the Bay Area, have expressed concern the layoffs signal a loss of “what could have been” – especially in light of clinical results of Onyx’s blood cancer drug, Kyprolis.
A column in the San Francisco Business Times laments the fact that Onyx, which was working on cancer therapeutic drugs, was not allowed the room to develop into the next biotechnical powerhouse, such as Bay Area star Genentech , due to investors wanting to see a healthy return quickly on their investments in pharmaceutical companies. Instead, the columnist asserted the acquisition did not allow the company to thrive on its own and help define the biotech industry in the Bay Area.
“As I wrote in Tuesday’s story about the layoffs at Onyx, mid-level biotech companies are rare to build. When you have one, as a region, you want to keep it, nurture it, grow it. Maybe it will become another Genentech or a Gilead Sciences, Inc. , and feed off the others’ energy and inspire more to reach the same level,” well-known biotech reporter Ron Leuty said in his column.
Amgen acquired Onyx in the fall of 2013 for $10 billion, about $125 per share. On Monday Amgen Inc. announced the layoffs, saying the cuts were part of a plan to consolidate oncology research between the two companies. Layoffs after an acquisition are not uncommon. Earlier this week Merck & Co. announced plans to lay off approximately 100 employees after acquiring Cubist Pharmaceuticals, Inc. .
Earlier this month Phase III clinical trials showed patients taking Kyprolis as part of their drug regimen lived approximately 18.7 months without their multiple myeloma worsening, which is about twice as long as patients taking Velcade, a popular treatment produced by Takeda Pharmaceuticals and Johnson & Johnson . Multiple myeloma is a blood cancer that kills more than 10,000 patients in the U.S. annually.
Kyprolis patients showed fewer cases of weakness or numbness in their hands and feet, but had higher rates of cardiac and renal failure than those taking Velcade, Amgen said.
“Demonstrating superiority over Velcade in this head-to-head trial supports our goal of ensuring continued improvement of patient outcomes and potentially establishing Kyprolis as the backbone of therapy for patients with multiple myeloma,” Pablo J. Cagnoni. President of Onyx Pharmaceuticals, Inc., said in a press release.
In addition to the 300 San Francisco employees losing their jobs, Amgen announced it was closing Onyx’s 400,000 square-foot facility in South San Francisco, a site that was leased through the next decade.
Following Amgen’s acquisition, a California law firm launched an investigation into the deal to determine if shareholders were receiving “maximum compensation.” Attorneys with Robbins Arroyo said 14 financial analysts listed Onyx’s value at above $125 per share, which was the per-share sale price when Amgen acquired the company. The company traded as high as 136.87 less than a month before the deal was finalized. Additionally, lawyers said Onyx second quarter earnings in 2013 showed revenue was up 110 percent to $153 million.
Onyx workers haven’t been the only Amgen employees to find pink slips. The Thousand Oaks, Calif.-based company is in the middle of terminating about 20 percent of its employee roster, part of an effort to slash $15 billion in expenses by 2018. The company has eliminated more than 4,000 global jobs from its payroll.
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?
