Millennium to trim 600 jobs
Plans research cuts as it turns focus to profit, products
By Naomi Aoki, Globe Staff, 6/6/2003
Millennium Pharmaceuticals Inc., one of the state's largest biotechnology concerns, yesterday said it will eliminate 600 jobs by the end of next year and cut certain research programs, as it shifts from a research-based outfit to a products-driven company.
The Cambridge company plans to close operations in South San Francisco and in the United Kingdom, sites it gained through its acquisitions of Cor Therapeutics Inc. last year and Cambridge Discovery Chemistry Ltd. three years ago. About 360 people are employed at those two locations.
Millennium came under pressure from Wall Street to reduce the amount of cash it was burning through every year. The 10-year-old company has two marketed products: Integrilin, a heart drug it acquired when it merged with San Francisco's Cor, and Velcade, a cancer drug that regulators approved last month to treat multiple myeloma. With a staff of 2,300 people and a dozen drugs in clinical trials, however, Millennium is already too large to become profitable based solely on the projected revenues from Integrilin and Velcade.
Last year, the company lost $590 million, and analysts said it was on track to lose $420 million this year. To meet its goal of profitability by 2006, analysts said, the company had to lower costs. Millennium said the aim of the restructuring, which will trim the company's work force to 1,700 people, is to lessen its traditional focus on early-stage research, streamline operations, and increase its ability to market products.
''No one ever wants to see people being laid off, but I think it was a necessity for Millennium,'' said Yaron Werber, an analyst with SG Cowen in New York.
The news comes at a time when many biotech companies have trimmed their work forces or have frozen hiring. Millennium laid off 103 people late last year. Another Cambridge biotech firm, Transkaryotic Therapies Inc., is laying off 100 people, or roughly 20 percent of its work force. A slew of smaller biotech companies have cut their staffs by 10 or 20 people, and others aren't hiring.
''These people are running out of places to go,'' said Pearl Freier, a managing director with Cambridge recruitment firm Talent Capital. ''Especially on the research side, there's just not enough hiring going on.''
Others are more optimistic. Biotech shares have rallied in the past month, raising hopes that a turnaround might be underway.
Novartis Pharma AG, the world's sixth-largest pharmaceutical company, plans to hire several hundred scientists as it establishes its research headquarters in Cambridge over the next year. Companies such as Cubist Pharmaceuticals Inc. in Lexington are hiring as they refocus research programs, and venture capitalists said the state's start-up ventures are hungry for talented scientists.
''Millennium is laying off scientists who focus on discovering new drugs,'' said Michael Lytton, a venture capitalist with Oxford Bioscience Partners in Boston. ''That's exactly the skill set that is most needed in younger companies.''
The layoffs alone are not enough to carry Millennium to profitability. For that to happen, analysts said, Velcade will have to prove a powerful cancer-fighting weapon against more common cancers. The drug was approved in an unusually rapid development and review process, reaching the market at least a year ahead of schedule, and is proving a valuable tool in the fight against multiple myeloma, a deadly blood-borne cancer. Millennium is currently studying its use in treating solid tumors.
The company said it will revise its outlook in July when it releases second-quarter earnings. Earlier this year, Millennium predicted a loss of $290 million to $320 million in 2003, excluding costs related to the Cor acquisition. The layoffs, which affect about 25 percent of its work force, will begin this quarter and continue through 2004. In the short term, analysts said, the cuts should make it easier for Millennium to meet its financial forecast this year.
''These are good steps in the right direction,'' said Matthew Geller, an analyst with CIBC World Markets in New York. ''They are a prerequisite for profitability.''
Shares in the company rose 93 cents yesterday to $17.08. They are up 115 percent this year.
Naomi Aoki can be reached at naoki@globe.com.
This story ran on page E1 of the Boston Globe on 6/6/2003. |
