Genetic Therapy to cut 60 jobs Parent firm Novartis merging subsidiaries


September 15, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

More than 60 Maryland scientists and technicians will lose their jobs under a plan by Novartis AG, the world's largest drug company, to merge its two gene therapy subsidiaries, Gaithersburg-based Genetic Therapy Inc. and Palo Alto, Calif.-based Systemix Inc.

Under the Swiss company's consolidation plan, Systemix will become the headquarters for development of gene therapy treatments, while GTI will take a back seat, focusing on core research and overseeing studies to assess the safety of experimental gene therapies.

The consolidation is expected to result in the loss of an estimated 60 to 80 of the 210 jobs at Genetic Therapy, said Rachel K. King, GTI's president and chief executive officer.

She and four GTI vice presidents are among those losing their jobs. Michael Perry, Systemix president and chief executive officer, will head up the combined operation, beginning Dec. 31.

Another 10 to 12 GTI scientists are expected to be offered jobs at Systemix's Palo Alto facility, King said.

"This is a streamlining of activities into a single coordinated entity," King said. "There were overlapping programs and interests in the two companies."

Dr. Jorg Reinhardt, head of preclinical development and project management at Novartis Pharma, said the consolidation would eliminate overlap and free up resources needed to tackle scientific hurdles in developing effective gene therapy treatments.

"At the same time, we will retain access to the scientific communities and expertise on both coasts," he said.

GTI was among the first, if not the first biotechnology company in the nation that started to focus on developing gene therapies. It was founded by Montgomery County entrepreneur M. James Barrett and former National Institutes of Health gene researcher French Anderson.

The company has focused on developing treatments for diseases based on correcting or altering genetic defects by inserting therapeutic genes into the body.

Its leading experimental treatment is GTI-328, a gene treatment for an aggressive and often fatal form of brain cancer. GTI recently completed a large-scale clinical trial of the treatment, which involved more than 200 patients in 12 countries. Data on its results are expected to be released next year.

Systemix is focused on developing treatments for diseases by attempting to genetically manipulate specific types of cells outside the body and reinserting them so they provide a therapeutic effect.

It has experimental treatments in human studies for HIV and for graft-versus-host disease, a complication of transplant surgery.

King said cost savings would be seen in the consolidation, but declined to give estimates. Sheldon Jones, a Novartis spokesman, said cost-saving estimates were not being disclosed.

Jones said Novartis, which had 1997 sales of $21.5 billion, did not have plans to cancel any of its gene therapy programs as a result of the consolidation.

King said Genetic Therapy still plans to occupy a $20 million state-of-the art research facility being built in Gaithersburg.

The building, which is being built with the help of state and county money, is expected to be completed late next year.

At the time the project was announced in April, King said the 70,000-square-foot, two-story project was a sign of the company's commitment to remaining headquartered in Maryland and of Novartis' commitment to developing and bringing to market gene therapies.

GTI found itself under the giant Novartis umbrella in 1996 when it was announced that its Swiss parent, Sandoz Ltd., would merge with another Swiss pharmaceutical giant, Ciba-Geigy Ltd. The merger resulted in the formation of Novartis.

Sandoz acquired GTI and Systemix in 1991 while on a buying spree for U.S. biotechnology companies and their pioneering research.

Pub Date: 9/15/98

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