Washington Editor

In announcing a plan to restructure its organization, Millennium Pharmaceuticals Inc. said its goal is to focus on the commercially attractive items in its pipeline and to reach profitability by 2006.

As part of the initiative, Millennium will cut about 600 jobs (out of 2,300) and consolidate operations at the company headquarters located in Cambridge, Mass. Therefore, the plants in South San Francisco and Cambridge, UK, will be shut down.

All this is on the heels of some pretty good news related to Velcade (bortezomib), a multiple myeloma treatment recently cleared for marketing by the FDA. Longer-term data on Velcade showed the product works beyond the period studied in the major trial on which the new drug application was based. (See BioWorld Today, June 3, 2003, and May 15, 2003.)

A spokesperson for Millennium told BioWorld Today that officials would not respond to media questions on the restructuring, saying the company's immediate concern is with employees who may be phased out.

Instead, the spokesperson referred questions to a prepared statement released by Mark Levin, Millennium's chairman and CEO.

He said: "The recent approval and launch of Velcade for injection has reinforced our commitment to bring breakthrough products to market that will make a real difference in people's lives. In the current environment, however, we realize that to keep delivering on this commitment we need to focus more sharply on the most attractive opportunities in our pipeline.

"Unfortunately, this means that we will no longer have roles for many outstanding individuals who have made significant contributions to the development of the company," Levin said. "This saddens me deeply, and I wish to express my heartfelt appreciation for the exceptional efforts of these employees."

Millennium's research and development efforts are focused on cardiovascular, oncology, inflammatory and metabolic diseases. The company has a healthy pipeline of 10 - mostly Phase I and II - product candidates, including Melastatin, a diagnomic test used to detect the presence or absence of melastatin, currently pending commercialization.

Employee positions, particularly in research, will be eliminated throughout the remainder of the year and next year. The press statement said the reductions would be connected to early stage discovery collaborations and administrative functions.

The company spokesperson would not elaborate on Levin's statement.

Of the overall restructuring, Bill Tanner, managing director with Leerink Swann & Co. in Boston, said, "It's probably a good thing, I would argue, in the sense that obviously over the last few years they've built a fairly sizable corporate structure to support very broad drug discovery efforts and a lot of that was really relying upon their ability to access capital, especially since they are not profitable and the capital markets over the last couple of years, I would say, have prevented a model like that, perhaps, from enduring. So if they are going to prioritize their R&D programs and if they are going to sell some nonessential assets and cut costs, that will move them perhaps closer to profitability. I think it's a good thing."

As for money, a company spokesperson confirmed that Millennium anticipates a cash position of $700 million at the end of 2003. Financial guidance reflecting the restructuring will be released in the second-quarter earnings report July 22 after the market closes.

According to the company's quarterly report, as of March 31, 2003, Millennium had about $1.7 billion in cash, cash equivalents and marketable securities.

For the three months ended March 31, the company reported a net loss of $137.9 million, or 47 cents per basic and diluted share, compared to a net loss of $303.9 million for the three months ended March 31, 2002.

Revenue increased to $81.7 million for the 2003 time period, from $68.6 million for the same period in 2002.

Velcade, which was launched in late May, is expected to peak at about $200 million to $250 million in the U.S. in multiple myeloma. Millennium is considering partnership options in both the U.S. and Europe. (The product has not been approved in the European Union.)

The company also co-promotes Integrilin (eptifibatide), a cardiovascular injection, with Schering-Plough Corp., of Kenilworth, N.J. Millennium acquired Integrilin via a stock merger with COR Therapeutics Inc. valued at $2 billion. (See BioWorld Today, Dec. 7, 2001.)

Millennium said it has paid down the debt associated with the COR merger.

This year Integrilin is expected to generate about $350 million in worldwide sales. Millennium gets about 60 percent of the profits, Tanner said.

Millennium also receives royalties on Campath, a chronic lymphocytic leukemia drug developed with Ilex Oncology Inc.

Millennium's stock (NASDAQ:MLNM) closed Thursday at $17.08, up 93 cents.