[Updated 3/10/15 4:48 pm. See below.] Amgen subsidiary Onyx Pharmaceuticals delivered good news last week. But it has received bad news in return. Thousand Oaks, CA-based Amgen (NASDAQ: AMGN), which bought Onyx in August 2013 for $10.4 billion, is shutting down Onyx’s South San Francisco, CA, facility and plans to lay off about 300 people, Xconomy has learned. That’s about 40 percent of Onyx’s remaining staff of 750. [Editor’s note: This story’s headline has changed to read “About 300” instead of “At Least 300.”]
The news was announced Monday in a company wide memo from CEO Bob Bradway, obtained by Xconomy. Bradway wrote that the layoffs are part of a larger restructuring of Amgen’s oncology business. A company spokesman confirmed the news Tuesday.
Just last week, Onyx reported that its flagship multiple myeloma treatment carfilzomib (Kyprolis) outperformed rival bortezomib (Velcade) in a head to head Phase 3 study. With the caveat that the results were not final, Amgen and Onyx said that patients taking a combination of carfilzomib and the steroid dexamethasone lived twice as long with their disease stalled—what’s known as progression-free survival—as patients taking bortezomib and dexamethasone. The full data set will be presented later this year at the American Society of Clinical Oncology conference.
[This paragraph has changed to reflect a request for clarification that we received from Amgen.] Bradway’s memo stated that oncology development and commercial activities will be moved to Amgen’s Thousand Oaks headquarters on the outskirts of Los Angeles. He also wrote that “all Onyx U.S. field (sales and medical) staff will be offered roles” within Amgen. “The layoffs will affect primarily non-sales force commercial staff,” Amgen spokesman Cuyler Mayer told Xconomy.
Of 750 total Onyx employees, about 300 will be laid off, 250 field staff will be offered jobs, and the status of the remaining 200 or so employees is to be determined, which means the layoff count could grow in coming months. Some Onyx staffers will move to Amgen’s South San Francisco R&D site, about a mile away from Onyx headquarters. The site will “continue to grow,” according to the memo.
Bradway said Amgen will notify Onyx workers of their long-term status by late April. The layoffs will take place at the end of the year.
“To build on our competitive presence in the rapidly evolving oncology field, and as part of our ongoing transformation across the company, we have decided to combine Amgen’s scale and immuno-oncology expertise with Onyx’s highly successful approach to hematologic malignancies,” Bradway wrote in the memo. “These combined oncology capabilities will create the focus and efficiency Amgen requires to progress our vision in oncology, and to remain a world leader for the long term.”
Amgen has grown from a big biotech into one of the world’s biggest biopharma companies; it even began paying investors a dividend in 2011. With that growth has come turbulence. In recent months Amgen has battled a breakup effort by New York hedge fund investor Dan Loeb of Third Point, who lobbied last fall to split Amgen into two parts: one to house its mature products, the other to house its R&D efforts.
Meanwhile, Amgen has announced a series of layoffs—including more than 1,000 combined last summer in the Seattle area and Colorado. The Onyx decision is the latest move to reduce and consolidate staff.
Carfilzomib was approved to treat multiple myeloma in 2012. One year later, Amgen paid a hefty price for Onyx. Carfilzomib brought Amgen $331 million in 2014 revenues. It has also had ups and downs in R&D, with some late-stage success, such as the head-to-head results with bortezomib, and some failures, such as a Phase 3 trial to treat relapsed/refractory multiple myeloma that did not meet its primary endpoint.
These types of layoffs are common in biopharma when a big deal goes down: jobs become expendable or up for review. Just last week, for instance, Merck reportedly revealed plans to shut down Cubist’s drug discovery efforts and eliminate 120 jobs, according to the Boston Business Journal. Merck closed its $9.5 billion buyout of Cubist in late January.