Gensia Sicor Inc. Restructured to Minimize Risk
Gensia Sicor Inc., a once-high-flying biotech firm that crashed, has embarked on a more modest mission.
The company, which failed to develop its own new drug for heart patients, has merged with another firm, moved its headquarters to Irvine from San Diego and opened a new plant to manufacture both experimental and commercial drugs for other companies.
The 1,000-employee firm, including 250 workers locally, will also pursue another low-risk endeavor at the new Irvine factory: manufacturing its own generic drugs for treating cancer. The company will make copies of branded drugs when they go off patent, thereby eliminating the high costs and risks associated with developing proprietary drugs.
The modest strategies have renewed some interest on Wall Street. Analysts say the company could post its first quarterly profit this year. But they remain cautious about the future.
“The business has undergone a restructuring,” said Charles Engelberg, a biotech analyst at AmeriCal Securities in San Francisco. “It’s very interesting now, but it’s a little too early for us to tell how [it] will play out.”
Robert Klein, a Smith Barney broker who toured the new plant Wednesday, said he’s pleased that the company has narrowed its focus. But he said he won’t encourage his customers to buy more shares until the bottom line turns black.
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Gensia’s stock--valued six years ago at more than $40 a share--now trades around $5. The company changed its name from Gensia Inc. to Gensia Sicor Inc. last year.
The company’s leadership adds to the uncertainties. David F. Hale, who led the company through the highs and lows of its biotech days, resigned as chief executive last November.
The company has yet to name his successor. At an opening ceremony at the plant Wednesday morning, Irvine Mayor Christina L. Shea cut the ribbon. The company’s Atlanta-based chairman, Donald Panoz, who serves as interim chief executive, wasn’t there. Officiating for the company was Thomas Speace, vice president of marketing and business development, who is part of a three-person team temporarily running the Irvine operations.
Still, Gensia Sicor is speeding ahead with its contract manufacturing business.
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Among other customers, it is targeting small biotech companies that need a place to make experimental drugs in test quantities but don’t want the bother or expense of putting up their own plant.
The company’s new plant stands beside an older facility that Gensia bought in 1991 from another drug maker. Some of the work in the older plant will be shifted to the new one.
The new $25-million plant is equipped to handle the super-clean production of injectable drugs for cancer. It provides special gear, including a glove box, to protect workers handling hazardous materials used in making cancer drugs.
It also strives to create production conditions 1,000 times more sterile than hospital emergency room standards.
Employees--the source of most contamination--must train for an entire day on the multi-step process of dressing for clean-room work. They change from street attire into a company uniform and shoes and don a hair cover, booties, coveralls, a hood with a face mask and goggles, and a second pair of gloves. The final stage? An air shower to blow off particles.
One biotech customer, Sequus Pharmaceuticals Inc. of Menlo Park, has contracted with Gensia Sicor to make quantities of an experimental cancer drug there later this year. Michael Ramsay, Sequus’ vice president of manufacturing operations, said that he knows of no other company offering such contract manufacturing on the West Coast.
James Moose, Gensia Sicor’s vice president of Irvine operations, noted that the company started advertising its contract manufacturing services in trade journals in the last year.
He said the typical reaction from a prospective client visiting the Irvine plant is: “You have a beautiful facility and capable people. Why didn’t we hear about you earlier?”
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Gensia Sicor at a Glance
Headquarters: Irvine
Chairman: Donald E. Panoz
Employees: 250
Business: Pharmaceuticals
1997 sales: $149.7 million
1997 loss: $82.7 million
Status: Public
Exchange: Nasdaq
Sources: Gensia Sicor, Bloomberg News
