Here's a local piece from the Seattle Post-Intelligencer
SEATTLE POST-INTELLIGENCER
seattlep-i.nwsource.com
Job cuts clobber Corixa's stock
Tuesday, March 20, 2001
By MARNI LEFF
SEATTLE POST-INTELLIGENCER REPORTER
Corixa Corp laid off about 60 people yesterday and said that Bexxar, its treatment for non-Hodgkin's lymphoma, is unlikely
to hit markets this year.
Friday, the Food and Drug Administration requested more information from Seattle-based Corixa about Bexxar's safety and
effectiveness. Corixa executives said yesterday that it will take three months to prepare that information and it will then likely
take the FDA an additional six months to review it.
The news sent Corixa's stock tumbling yesterday. It set a new 52-week low of $8.44 a share, before closing at $9.50, down
$1.56. The company's shares have fallen more than 80 percent in the past year and have declined significantly since
November.
"I do think in a market environment like the one we're in right now, most news is viewed as bad news," said Steven Gillis,
Corixa's chairman and chief executive.
The delay will cost Corixa between $5 million and $10 million, Gillis said. The layoffs -- mostly in the company's Bay Area
offices -- will result in a savings of up to $6 million, not including a $1.5 million charge associated with the restructuring. The
company declined to say how many Seattle employees were laid off.
However, Gillis said during a conference call with analysts yesterday that the layoffs will not have any effect on the
development of Corixa's biggest drugs, including its Melacine melanoma vaccine, PVAC psoriasis treatment, MPL allergy
drug and the company's work on treatments for autoimmune diseases including multiple sclerosis and rheumatoid arthritis.
That, Wall Street analysts said, is good news.
"The layoffs really don't affect the five major drugs," said Dr. Mark Monane, an analyst at Needham & Co.
The reduction, which cut the company's work force to 512, will affect other products that are further down the pipeline, Gillis
said, and the company is currently pursuing partnership to help finance the development of those drugs.
The FDA's letter, which included requests for more information about the implications of Bexxar and further documentation of
manufacturing processes, caught some analysts off-guard.
"Essentially it's a bit of a surprise that at this level, this late in the game, the FDA is asking these questions about the product's
safety," said Chris Raymond, an analyst at Prudential Vector Health Care Group.
Raymond works with analyst Peter Drake, who last month cut his recommendation on Corixa's stock from "strong buy" to
"hold" after PVAC failed to show a significant benefit in the treatment of psoriasis.
"We had not anticipated that the drug would get an approval this quickly," added Raymond, whose company handles some
banking for Corixa, "but that the FDA came back with so many additional safety concerns raises questions."
Other analysts played down the significance of the FDA's request, saying that other drug manufacturers have noticed that the
government agency has acted more deliberately in recent months.
"There's a heightened level of caution at the FDA that a number of companies have commented on," said Andrew Heyward,
an analyst at Ragen MacKenzie who has a "buy" rating on the stock. Additionally, analysts said, the FDA has been
particularly thorough with Bexxar because its targeted radioactive immunotherapy is a new kind of treatment. The drug
became part of Corixa's portfolio last fall when the company acquired South San Francisco-based Coulter Pharmaceutical.
"This is a novel therapy, and that's a double-edged sword," Monane said.
"It has the potential to make a major contribution, but because it's such a new drug, the FDA doesn't have a lot of experience
with it."
Ultimately, Heyward thinks Bexxar, which Corixa is developing in a partnership with British drug company GlaxoSmithKline
Plc, will win FDA approval.
"I think the bottom line is that the people who are taking this drug are very sick and have failed other therapies," he said. "It's a
last line of defense, when there are no other alternatives."
In addition to the layoffs, Gillis said that Corixa is seeking to contract out some employees in the direct sales and marketing
division, who will ultimately help sell Bexxar.
That division includes 30 to 35 people, in Seattle and other locations, Gillis said. If a deal is not negotiated, some of those
employees could lose jobs, too, he said.
Gillis, who co-founded Seattle's Immunex Corp. in 1981 and started Corixa in 1995, said that he still believes in his company
and in the industry.
"I'm amazingly enthusiastic about my company and its prospects," he said.
"In the long term, I am a huge believer in biotechnology and a huge believer in Corixa."
Despite the stock's poor performance after yesterday's announcements, Gillis and his company certainly have their believers
on Wall Street.
"The company's expecting a new product every year from 2002 to 2005, and I see positive signs for growth and development
in the future," Monane said.
P-I reporter Marni Leff can be reached at 206-448-8142 or marnileff@seattle-pi.com.
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