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Corixa cuts 75 jobs, sets tighter focus on products

Corixa cut about 75 jobs and halted a skin-cancer drug in the final stage of development to conserve cash and tilt its priorities toward drugs with a chance of making money soon.

By Luke Timmerman
Seattle Times business reporter

The job cuts represent about 18 percent of Corixa’s workforce, leaving it with 344 employees at its base in Seattle, and at branches in South San Francisco and Montana.

Chief Executive Steve Gillis said most of the jobs cut were in Seattle. Many were researchers who had made prolific discoveries of biological drug targets in the lab but whose skills couldn’t be transferred as the company studies how safe the drugs are and how well they work in patients.

The company made the cuts after some of its income from research partnerships began to shrink. Pressure is rising for it to start showing sales of its newly approved cancer drug, Bexxar.

By saving $8 million a year through job cuts, the company said it can stay in line with its projected loss this year of $70 million to $90 million. The company had $200 million in the bank at the end of September.

The company is looking to sell its Melacine program for skin cancer, Gillis said, because it will take five to seven more years to develop and will take up too much manufacturing space that can be used for other things.

The company will focus on its strengths in antibody drugs, vaccines and immune-system boosters and on a promising field of protein receptors on cells that are thought to be useful targets for drugs.

In the past, Corixa has pursued many new therapies for cancer, autoimmune diseases and infectious diseases and worked on as many as 16 approaches at the same time.

"We’ve been criticized in the past, perhaps appropriately, for having too much on our plate," Gillis said in a conference call with analysts.

The company did not report specific third-quarter numbers for Bexxar, but Gillis said they were minor. The drug was approved by the Food and Drug Administration in June and made available to patients a month later. In September, with just two weeks left in the quarter, the company persuaded the federal government to pay for it.

Corixa and its partner, GlaxoSmithKline, are working fast to train cancer doctors and hospital radiation handlers how to give Bexxar. The company has trained or nearly trained 150 centers and aims to train 200 by the end of the year, Gillis said.

The company is initially marketing Bexxar toward patients with lymphoma who have failed on the blockbuster antibody drug Rituxan and is preparing to study the drugs in a head-to-head trial.

Paul Latta, an analyst with McAdams Wright Ragen in Seattle, said he thinks Corixa could still benefit by slimming down its pipeline of 11 experimental drugs.

"It has been a fair criticism of Corixa that they have a lot of programs, and to simplify that would benefit shareholders," said Latta, who owns the stock.

Despite the cuts, Gillis said the company was "not throwing out the baby with the bath water." It intends to pursue science it thinks is worthy.

Mark Monane, an analyst with Needham & Co., cheered the new strategy.

"It makes sense," said Monane, who doesn’t own the stock. "Now they’re becoming a profit story. Before you have an approved drug, you can be out there in never-never land, but once you have a drug, you have to prove you can sell it. The rules do change."

Luke Timmerman: 206-515-5644 or [email protected]

http://seattletimes.nwsource.com/html/businesstechnology/2001785134_corixa07.html

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