Xoma slashes manufacturing to cut costs
pharmafile | January 22, 2009 | News story | Manufacturing and Production |Â Â XomaÂ
Xoma has instigated a major cull of its workforce, with 144 jobs to go in a move that will cut the US biotech's staff levels by more than 40%.
Chief executive Steven Engle laid the blame for the job cuts on idle capacity at the company's manufacturing plant, which will bear the brunt of the reductions.
Xoma has never developed and marketed a drug on its own, but has played significant roles in the discovering and developing a handful of major new biotech drugs now on the market.
Xoma earns royalties from Raptiva (marketed by Genentech/Merck Serono), Lucentis sold by Genentech and Novartis, and UCB Pharma's Cimzia for Crohn's disease.
As the company has no marketed drugs of its own, Xoma's manufacturing operations in Berkeley, California, are given over to producing clinical supplies of its pipeline drugs. Foremost among these is XOMA 052 for type II diabetes, which is due to enter phase II testing in the second quarter of this year.
The Berkeley plant has been working at full tilt in recent weeks to generate the clinical supplies needed for the phase II trials programme. However, Xoma rationalised its development plans for the drug last year – postponing planned trials of XOMA 052 in rheumatoid arthritis other than a small-scale pharmacokinetic study – so the firm is already sitting on sufficient supplies to see out its current programmes.
Xoma will have 197 employees remaining and they will continue to develop Xoma 052 and the firm's other pipeline compounds, which include products for biodefense.
The company hopes to save $27 million a year from the restructuring, but expects to record a $3m charge in the first quarter of this year relating to the reductions.
"Today's actions will bring operating expenses more in line with expected revenue," said Engle in a statement.
The company has announced the cuts just 10 days after it appointed a new finance chief, Fred Kurland, following the departure of David Boyle in July 2008.
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