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news.Cell Genesys has begun restructuring its business operations to focus resources on its most advanced product development programs. The plans include discontinuing other clinical programs and selling a manufacturing plant at the expense of 95 jobs.
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The company intends to deploy the majority of its resources to advance the Gvax vaccine for prostate cancer, leukemia and pancreatic cancer. All of which are currently undergoing clinical trials. The Gvax programs for the treatment of lung cancer and myeloma will be discontinued.
In the oncolytic virus therapy program, priority will be given to its CG0070 compound which recently entered clinical trials for recurrent bladder cancer and which could be evaluated in multiple types of cancer in the future. Other clinical programs will be discontinued as soon as feasible.
As a result of these and other related portfolio decisions, the company plans to sell its San Diego manufacturing facility for viral products and will reduce its operations in Memphis from manufacturing to product distribution. In addition, the company will eliminate approximately 95 positions and expects to end the year with approximately 285 employees.
These personnel and operating site decisions are expected to reduce the company’s current annualized operating expenses by approximately 15%, excluding one-time personnel-related restructuring costs estimated at $1.9 million. Cell Genesys ended the first quarter of 2005 with approximately $190 million in financial assets including approximately $145 million in cash and 6.6 million shares of its former subsidiary Abgenix.
As yet it seems investors are unclear whether the new plans are a sign of trouble or purely designed to increase prosperity. Shares in the company fell 11.4% following disclosure of the restructuring plans.
Seeking to dissuade negative appraisals of the move, Stephen Sherwin, chairman and CEO of Cell Genesys said: “As with similar decisions in the past, we are implementing this restructuring from a position of financial strength and at a time when encouraging progress in our clinical trials gives us the opportunity to optimize portfolio management. While the decisions made and actions taken are difficult, we are now better positioned than ever to pursue our principal strategic goal of developing and commercializing biological therapies for cancer.”